Price me nice
Is South Africa succeeding in levering itself out of the “cheap and cheerful” bracket with several high-priced super premium wines?
The recent release of Plaisir de Merle’s super premium Charles Marais, retailing in the UK for £55, re-ignited the debate around the dearth of South African wines in that bracket, and its struggle to shift their image from “cheap and cheerful” to quality wine producer.
I chatted to Greg Sherwood MW, a London based South African Master of Wine and Fine Wine Buyer at Handford Wines in South Kensington. He is a regular judge at the Decanter World Wine Awards, SA Top 100, Nederburg Wine Auction and WOSA Sommelier Cup, and tastes hundreds of the world's finest wines every week. Kanonkop’s Johann Krige also gave his opinion.
Which SA wines are getting the highest prices in the UK?
The highest prices tend to be for wines that retailers and brokers feel have an “up side” and can be traded in the secondary market ... not just rare odd cases that demand a premium because only one barrel was made, and it got a big score from an international critics.
Consistently high price sellers currently include... MR de Compostella (£45-£50 retail), Vilafonte Series M and C (£35-£60), Vilafonte Archive Releases (£150-£180), De Toren Book XVII (£175-£180), Columella (£60-65), Palladius (£45-£50), Kanonkop Black Label (£110), Vergelegen V (£65).
But often cases of premium stocks are kept back and then re-released into the market at a rarity premium. For example, Crystallum Cuvee Cinema Pinot Noir 2008 was sold at £35 on release and £75 on re-release for his first vintage... and it’s all sold. By doing this we single-handedly create a small secondary market for mature(-ish) premium SA wines, allowing producers to have the confidence to hold stocks back themselves at the wineries as an “appreciating asset”.
What would the current “premium” price point be?
Generally, “premium” for SA wines would imply £25 to £45 per bottle. We are starting to see more wines released at £75-£100pb now - some with a track record, some not. There is definitely cynicism from the trade and consumers when super premium prices are “manufactured” for a wine with absolutely no track record. Mouton and Lafite don’t cost big money because someone one day decided to put the price up – the market, demand, sales history, quality and track record has dictated these price points. It’s hard to do it with one release!
There is a widely expressed sentiment in the SA wine industry that we under-price our wines internationally, and therefore don’t ‘vote for ourselves’ as a player in the premium wine category. Do you think we deserve to be ranked up there with the best, and possibly with which wines and what price point?
We deserve to be ranked up there among the best of the New World and our wines are great value for money in the context of other international brands, eg. Meerlust and Kanonkop. But this underselling refers also a lot to the local market who have traditionally baulked at paying big prices for our very best wines, resulting in most of them being exported instead. There has often been more demand and respect for our best wines overseas than in SA. But you can’t just jack up prices and think that will solve everything. All it will do is price you out of many markets and people will buy other competitor region’s products. Prices have to be grown organically over time, hand in hand with marketing and quality consistency, and communicating the uniqueness of the wine. It can’t just be done on a spreadsheet with a calculator.
I then chatted to Kanonkop Proprietor, Johann Krige:
Are South African wines competitively priced?
In general, definitely not. Our better quality wines are under-priced and more so our top quality wines. I believe this is all about our image being negatively influenced by the cheap and cheerful perception internationally.
Due to cultural connections and a more experimental buying behaviour, South Africa’s image in the UK and Europe is not that bad and in general we do get some sort of recognition for our top wines. However, the average Jo Soap in North America still has to cross the bridge that South Africa is capable of producing top notch products. They see South Africa as ‘Africa’ and associate it with coups, corruption etc.
Do you think Pinotage, a uniquely South African varietal, can claim a high price in the international market?
We have not yet had any negative resistance to our Pinotage pricing, but this relates to our brand image, consistency and credibility. There is no quick fix to image and brand building.
Do you think more SA producers should start charging higher prices for their wines overseas?
I think we could and should. But again, it is of no use if Brand South Africa is driven by cheap and cheerful wines. Rome was not built in one day. To build image takes time, money and effort. Our first mission should be to offer value for money – be it at US$15 or US$200 per bottle. To achieve this we should pay grape growers market related prices for grapes grown and incentivise them to produce better quality grapes.
-Julia Moore
