In the past 24 months one of the United States’ largest importers of premium South African wines has seen an 83% increase in demand in the $20+ bottle market, while demand for stock in the $30+ range has risen by 27%.
These figures are supported by annual export reports from the South African Wine Industry Information and Systems (SAWIS), the country’s national wine industry statistical collation agency, which reported that the US imported 2 385 197 gallons of South African bottled wine in 2020.
Changes in US wine consumption patterns have in part been as a result of the Trump administration’s trade tariff wars with the European Union, according to Robert Bradshaw, Chief Executive Officer of New York-based specialist wine importer, Cape Classics.
The stand-off that was finally brought to an end in June with a five-year truce brokered by the Biden administration, saw a 25% tariff levied against European agricultural goods entering the US, including French, Italian and German wines.
But while the tariff has now been dropped, consumers will not reap immediate benefits because most stock on the shelves and in restaurants was purchased when the tax was in place.
And to Bradshaw’s mind, even if prices do start falling, US importers should shop around rather than simply revert to traditional sources, because they might not present the best value in premium wines.
“The (US) market is beginning to look to South Africa for premium wine. European wine … sometimes lives in very rigid price points. An entry level Bordeaux costs ‘X’ or village level Burgundy costs ‘Y’. It’s not as fluid. With South African wine you are much more likely to find a ‘wow’ value – something that brings you right back to the store to buy a case.
“Bottle for bottle I think few places on earth can compete with South Africa for value for money. This is as appropriate for $10 wines as it is $50 Bordeaux Blends. It may actually be even more obvious at the high end.”
The dollar’s purchasing power at European and South African exchange rates also contribute significantly to import values of premium wine. Currently $1 buys approximately €0.85, but at $1/R14.70, the dollar gives major bang for buck in South Africa.
Bradshaw says South African wines still comprise a relatively small section of the overall US market.
“But we’re embracing the challenge to change that and the country itself needs to put forward a more unified and exciting brand image for its wine regions. Brands will win individually, but as a (country) category we still need that rising tide to lift all ships.”
Tasked with that goal is Wines of South Africa (WoSA), the not-for-profit organisation responsible for export promotions of South African wine in key international markets.
WoSA is headquartered in South Africa, with offices in the United States, Canada, Germany, the Netherlands, the United Kingdom, Sweden and China.
Maryna Calow, WoSA’s International Communications Manager, says South African wine has long been gaining traction in international markets due to its exceptional quality and value for money.
“Each bottle of premium South African wine can stand tall next to the best of the best of comparative global categories.
“While South African wine imports into the US still remain comparatively small, there has been a marked growth in volumes over the past 12 months.
“This may have been due to the import tariffs that were imposed on European still wines, but the fact remains that importers readily turned their focus to wine from South Africa and we remain hopeful that their experience calls for an extension of business relations going forward."
South Africa has a viticulture history stretching more than 360 years that has grown to the current worldwide daily consumption of 19 million glasses of South African wine, according to SAWIS’ 2021 South African Wine Industry Overview.
Much of that is premium export wine produced under label by the country’s more than 500 wineries. According to official WoSA figures only 27 producing wholesalers are registered in South Africa, which means most estates deal directly with importers in major markets such as the US.
Bradshaw highlighted the value of individual estate brands when marketing South African wine to US consumers, particularly those estates producing award-winning vintages.
And as is industry tradition globally, prominent vineyards in South Africa that comprise the backbone of the lucrative premium wine export sector are usually passed down in families; rarely changing hands on the open market.
Even rarer still, according to US national real estate auction company
Tranzon’s CEO Tim Mast, is the likelihood of an
historic South African winery with the Cointreau family name attached, being put up for sale.
Mast says with the global wine market valued at $417.85 billion in 2020 (according to Grand View Research) and expected to grow at a compound annual rate of 6.4% over the next seven years, joining forces with High Street Auctions in South Africa to sell Anne Cointreau’s 329-year-old award-winning winery, Morgenhof, was a no-brainer.
Cointreau has owned Morgenhof for nearly 30 years, but her family name has been synonymous with French viticulture for 750 years. Her great grandfather Adolphe also created the famous orange liqueur that carries the family name and her grandfather the luxury Remy Martin brand of cognac.
“The value proposition presented by the purchasing power of the US dollar in a rand-based economy makes an investment in a world-renowned export enterprise such as Morgenhof extremely attractive; even more so when it happens to be exquisite real estate just 30 miles from Cape Town,” says Mast.
“The estate covers nearly 520 acres and boasts two large manor houses, a restaurant, wedding chapel, bistro, conference facilities, guest cottages, winery, tasting rooms and a unique architect-designed octagonal underground cellar.”
Mast says the estate’s entire wine stock currently in the cellar will be included in the virtual auction that will be live-streamed from Johannesburg, South Africa, on 25 August.
Bradshaw has the final word: “We’ve got to keep teaching America to try these wines. If you love high quality Estate Chardonnay, South Africa is really exciting. High quality Estate Bordeaux Blends? South Africa will blow you away. Chenin as magical and transformative as you could imagine? South Africa is the one to beat. Sauvignon Blanc that traverses the wonderful line between new world New Zealand and old world Loire – you guessed it; South Africa will blow you away.”