VALUE VS WORTH

VALUE OR WORTH? PRICE / COST

ONE OF THE WORLD’S SAVVIEST INVESTORS AMERICAN WARREN BUFFETT IS OFTEN QUOTED AS SAYING: “PRICE IS WHAT YOU PAY; VALUE IS WHAT YOU GET.” FIONA MCDONALD LOOKS AT SOUTH AFRICAN WINE PRICES THROUGH THIS PRISM.

Afew weeks ago Johannesburg fine art auctioneers Strauss & Co held its inaugural fine wine auction. On the block were rare South African wines such as a single bottle of 1966 GS Cabernet Sauvignon and another of 1987 Klein Constantia Vin de Constance. The reserve prices set on these single bottles were R28 000 to R30 000 for the first, and R20 000 to R30 000 for the second, which was coincidentally only the second bottling of the recreation of the famous Constantia sweet wine.

Strauss & Co deal in art: South African works from renowned painters such as Maggie Loubser or Irma Stern whose Still Life With Dahlias and Fruit sold for R15 million in May. The fact that they are testing the waters with wine is indicative of the emergence of a secondary market for local wine.

Have South Africa’s top wines come of age now that they can be bought almost as an investment commodity – like a piece of art? In the United Kingdom this secondary market is nothing new. Since the turn of the millennium, in fact, wine as a commodity has been outperforming traditional stocks and shares. Not just any old wine, but special wines – wines with pedigree and established track records of increasing in value and desirability as their availability decreases.

In an article for Drinks Business, the head of sales at Liv-Ex, a specialist wine investment firm, James Fletcher said: “Over the last 15 years fine wine has not only outperformed equities but provided investors with far more stability in comparison of the turbulence of the equity markets.”

And the reason for this? “Demand and interest in fine wines is growing around the world and supply of the top wines cannot increase - supply is limited,” said Simon Staples of world famous wine merchant Berry Bros & Rudd in The Telegraph in 2017.

“The best performing wines are great examples. They become

ABOVE: No expense was spared in the crafting of Tokara Telos, the unashamedly ambitious flagship offering priced at R4 000.

increasingly unattainable over time as bottles are consumed, and fine wine matures and improves with age.”

Wine is like any investment: it needs to be researched and should be a good product. Putting your hard-earned money into a dodgy company with folks who fiddle the books is not a great idea! You might as well take a match to your hard-earned R100 and R200 notes for all the benefit that such an investment will have ...

It comes down to track record and value. So what makes one wine “worth” more than another? It’s easy enough to look at the fixed costs that go into a single bottle of wine. Here one needs to factor in things like the cost of the land, how much money was spent on trellis poles, wires, irrigation pipes and even tractors in establishing the vineyard.

A vine takes four to five years to mature and bear a commercial crop – but it still needs to be pruned, trained onto the trellis wire, suckered and maintained. There’s the establishment cost of the winery: buildings, stainless steel tanks, pumps, presses. A single oak barrel from France costs in excess of a €1 000. At today’s exchange range that’s roughly R17 000 – and will yield enough wine for about 300 bottles. If you

Demand and interest in fine wines is growing around the world and supply of the top wines cannot increase - supply is limited.

do the math that’s around R56 per bottle of wine – if only used once, but they’re generally used three times which reduce the per bottle cost to R19. And that’s before taking the winemaker’s salary, the electricity or water cost, farm labour and the investment in time of those 300-litres of wine sitting in barrel for 12 months. Or the cost of the bottle, the cork or screwtop, the label design fees ...

Asking the cost is the wrong question, Brad Gold, general manager of Iona Vineyards maintains. It’s not just the input costs which factor into price. Everyone has costs – whether you’re cropping your vines at 20 tons of grapes per hectare or six. Gold cited the example of perceived worth. “You go round to a mate’s house for a braai with a bottle of The Chocolate Block and there’s another bottle which is a third of the price at R80. It’s not about one bottle being three times the price or any better quality. You’re going to enjoy the R80 bottle with a braaied steak or lamb chop anyway – it’s about the Chocolate Block being perceived as something special.

“Is it the wine’s fault that one is ‘less’ than the other? No. The audience is the one that decides it. “It’s exactly the same with a Louis Vuitton handbag. Is an LV handbag REALLY all that superior to something you bought at Edgars – also made of leather with brass clasps and solid stitching? No. It’s still a handbag which will carry your purse, your mascara and lipstick and tissues. It’s about how YOU are viewed with a Vuitton slung over your arm!”

The same goes for a pair of

Nike trainers or Hi-Tec sneakers, a Versace outfi t or a non-branded item, Montblanc pen or a Bic. They do the same thing but are priced diff erently.

There was a magnum of Domaine Romanée Conti which was on the wine list of Johannesburg restaurant Marble for R150 000 Gold said. “It’s been sold! If you were the person doing a R50 million or R100 million deal, spending R150k on a unique, rare and special bottle of wine to sweeten the deal is money well spent.”

Wine is a luxury product maintained Gold – and South Africa has a slew of wines challenging price barriers. In the 1990s Hamilton-Russell fi rst broached the R100 a bottle ceiling. Nowadays, R100 is almost the starting point with the Ultra Value Wine Challenge using it as the threshold while Winemag. co.za has set R120 as the upper limit of its recently announced Value Competition.

In 2018, Stellenbosch wine estate Tokara launched Telos, a Cabernet Sauvignon-led red blend

BELOW:Named for Pliny the Elder’s book on winemaking philosophy this red blend has been described as “turbocharged” but also silky smooth, seductive and irresistible by wine critics.

with dabs of Malbec (5%) and Merlot (3%), in London’s famous wine club, 67 Pall Mall. The wine was confi dently tasted alongside 2010 Chateau Latour and Chateau Cheval Blanc – wines considered ‘perfect’ by infl uential American wine critic Robert Parker who scored them 100 points.

Telos, blended from the best four barrels of Cabernet Sauvignon in the Helshoogte winery’s cellar, more than comfortably held its own against these world wine heavyweights according to wine critics who were present at the launch. Both French red blends (if you can get them) will set you back a pretty penny: R12 500 for Cheval Blanc and around R14 000 for Latour. The Telos sells for northwards of R4 000.

Makes it seem like a bargain, doesn’t it? And Telos is not alone in occupying that seemingly stratospheric – from a South African perspective – price bracket. A wine selling in the same league yet seldom seen in South Africa is G, made by former Meerlust cellar chief Giorgio dalla Cia for partners in 4G wines, Philipp Axt and the late Professor Denis Dubourdieu, former consultant to Cheval Blanc and professor of oenology at the university of Bordeaux. Its ‘baby brother’ Echo of G retails for between R1 500 and R2 000. Then there’s the Cabernet Franc 2014, a collaboration between Niels Verburg of Luddite and Brian Smith of Elgin Ridge

Wines which came in a threebottle case selling for R15 000. De Toren’s Book XVII sells for R2 750 while its Black Lion costs the same. Kanonkop’s Black Label Pinotage started off in 2009 at R1 000 for the fi rst 1 000 bottles produced from gnarled, nearly 60-year-old bush vines, the oldest on the Stellenbosch estate. It’s now at R1 850. Waterford’s The Jem sells for R1 600 and Mvemve Raats’ MR de Compostella is R1 300.

One of the men involved in setting up the Strauss & Co fi ne wine auction was local sommelier Higgo Jacobs. In the catalogue introduction he wrote: “The concept of South Africa’s fi nest is a fl uid and dynamic one.” His inference being that fl uctuating fashion and tastes mean that things will change over time. New producers will arrive while other established ones will fall out of favour.

One wine available on the auction was the 2015 Kanonkop Paul Sauer, a wine that scored a perfect 100 by international wine critic Tim Atkin. At the time of its release in September 2018 the wine sold for R515 from the farm. The Strauss & Co catalogue had its reserve price at R6 000 for a six bottle case – double what the wine sold for on release.

That’s an indication of how fl uid and dynamic the local scene is, as well as the fact that people could soon be buying wine as an investment rather than as a superbly tasty beverage.

ABOVE: A case of wine, bought for investment rather than drinking enjoyment, could potentially outperform shares.

BELOW: Because of its track record and unwavering quality, Kanonkop wine estate’s Black Label Pinotage is considered a South A ican icon.

WINNING FIERY HEARTS AND MINDS

LONG ASSOCIATED AS A PARTNER TO SWEET COLA AND ENJOYED BY THE MASSES, DR WINNIE BOWMAN WRITES THAT BRANDY HAS TURNED A CORNER IN BOTH PERCEPTION AND SALES. BRANDY IS SEXY AND BRANDY IS BACK!

South Africa’s collective brandy trophy cabinet is buckling under all the national and international awards, and that trend of winning medals and cups galore shows no sign of abating. Brandy is back in a big way and after a blip has shown a 20% year-on-year growth over the last five years. So swiftly has the brandy following grown that Cape Town sports a dedicated brandy cocktail bar, Cause + Effect, owned by internationally renowned mixologist, Kurt Schlechter. This is where brandy becomes sexy: either neat, or in a host of cocktails that celebrate Cape Town’s oceans, mountains, fynbos and the vineyards. Think next level cocktails such as Karoo Oyster, Brandy Marigold, Pearsonality (with Pear eau de Vie) and The Bowman. Brandy has long been a staple in South Africa, consumed both for pleasure and remedy during times of malaise. Almost every Voortrekker ox wagon that left the Cape for the uncharted northern territories from 1835 onwards, had its own barrel as an essential part of the mandatory provisions. It was imbibed during late nights around the fire, soothingly rubbed on the

gums of teething babies, as well as trading for fresh produce with locals encountered on the trek. Brandy has been used throughout history as a medicine, thought to ward off everything from pneumonia to plague. A book of medicinal recipes passed down since 1688 has just recently been sold in London for £11 250. They include “plague water”, made with herbs and brandy. By the mid-19th century, the grape spirit was regularly used as a medicine, primarily as a cardiac stimulant as it was believed to be good for the heart and blood

RIGHT: Mixing business with pleasure: the director of the Brandy Foundation, Christelle ReadeJahn promotes the spirit throughout South Africa

pressure. Incidents of heart disease in Gascony, where Armagnac is made, remains extremely low to this day.

Brandy was included in the British Pharmacopoeia (“Spiritus Vini Gallici”) and the belief in its superiority was not confined to lay people: the eminent British Medical journal, the Lancet, stated that “… brandy is so universally regarded as superior to all other spirits from a medicinal point of view …”. He might have been pipped to the southernmost pole but nineteenth century Arctic explorer, Robert Scott, had no other alcohol on any sledge journey, except for a small can of brandy for emergencies. Other reputed and reported health properties of brandy range from weight loss, insomnia, boosting the immune system, lowering cholesterol levels, combating ageing all the way through to alleviating congestion in the arteries. Indeed a wonder drink!

So who is behind this renewed interest and revival of the South African brandy industry? Four dynamic women lead the way:

Christelle Reade-Jahn is the director of the South African Brandy Foundation (SABF) and a lady of many talents. (She has completed 10 Two Ocean half

Combining organic chemistry with artistry and creativity is within the job description of Dr Mare-Lou Prinsloo of Distell.

marathons, and has her own permanent light-blue racing number for the event!) You will find her trail running in Stellenbosch’s Jonkershoek or Helderberg mountains on weekends. The SABF aims to facilitate the long-term growth and preserve the integrity and heritage of the South African brandy industry and represents more than 95% of South African brandy producers. Reade-Jahn has a clear vision for the brandy industry: “I believe firmly in the quality and excellence of our brandy industry and the brandy masters. In an ideal world everyone would share the understanding and value of creating products of such excellence. I’m proud to work for the brandy industry and would feel satisfied when everyone in the value chain prospers from bigger global exposure and understanding of the quality that underpins our production methods”.

This shows one that brandy production is actually a team sport and that we are privileged to be part of the journey and the challenge of building the ongoing legacy of brandy.”

Dr Mare-Lou Prinsloo is the head of the brandy and other spirits excellence for the Distell group and holds a law degree as well as a PhD in organic chemistry. Brandy excites Prinsloo, because it is a direct application of her field of chemistry study. “This is the space where science meets art – the wonder that wine is distilled from grapes, which is a natural product, and then aged for at least three years in oak (also a natural product). This evolves into a very special product, and it is always a wonderful experience to use the building blocks to produce a consistent, high-quality product year in and out that is enjoyed by consumers,” says Prinsloo.

“Furthermore, how special is it to enjoy older brandies, such as those of 20 years plus, which were distilled, aged and produced by several different people over the years? This shows one that brandy production is actually a team sport and that we are privileged to be part of the journey and the challenge of building the ongoing legacy of brandy.”

Marlene Bester, master distiller at Van Ryn outside Stellenbosch hails from a sheep farm in the Northern Cape. Her love for brandy developed at the James Sedgwick Whisky Distillery in Wellington: “At Van Ryn I can indulge my passion of distillation, but also the aging and blending processes to make the best brandy possible.

“Brandy gives me such pleasure because there are so many facets to the process where one has to bring the finer nuances of the building blocks into the glass. It’s a very time consuming process, but oh so satisfying. And to think that some of these blending building blocks that I’m working with were distilled 40 or more years ago by another generation! This comes with huge responsibility to produce a product that will be enjoyed long after I’m gone.

“I want to produce a brandy that consumers can enjoy, whatever the occasion. As far as South African brandy goes, I am excited about the potential, and the reach – we dominate the international brandy awards. This keeps us on our toes and forces us to be creative and relevant in the changing spirits market.”

Ilse du Toit joined KWV in 2008 as Brandy Blending Manager. Her experience in maturation of brandy, and blending supported her passion for perfecting the blending process: “I believe brandy, although perceived as a tough product, wants to be treated with respect, passion and time. The craft of brandy making is perfected in the blending: different barrels, styles, flavours, ages and aromas come together to make the product of highest quality, perfect balance and ultimate enjoyment.

“To be part of the team that won numerous World Best brandy awards is one of the highlights of my career. Seeing people enjoy the products that I make is even more rewarding. I also believe that I have one of the best jobs available – I get to taste brandies from 8am in the morning!”

ABOVE: Marlene Bester’s ability to make fine brandy has been proven time and time again – with gold medals draped over the necks of the bottles she’s shepherded onto shelf.

BELOW: “Treat it with respect and the rewards will follow,” says Ilse du Toit of the KWV.

SO HOW DO THESE WOMEN ENJOY THEIR BRANDIES? Reade-Jahn enjoys 15-year old potstill brandies neat over ice whilst listening to her favourite opera or classical music. Her cocktail of choice is a Sidecar by Kurt Schlechter, which contains brandy, Triple Sec, fresh lemon juice and finished off with a fragrant Absinthe tincture spray – delicious! Prinsloo doesn’t believe that there is just one way to enjoy brandy: “In Summer I love brandy and ginger ale or tonic with loads of ice and a slice of lemon, and after dinner, a good potstill is a treat!” Bester is a bookworm, and enjoys a refreshing brandy cocktail in summer whilst reading under the trees, or a stately old potstill in a large snifter after dinner, while du Toit prefers having her favourite brandies neat, or with a block or two of ice during the hot Paarl summers.

The fact that brandy can be enjoyed in such a range of ways is exciting for the future of this unique product. It truly is South African sunshine in a glass. Brandy is back in a big way, and has become the sexy drink for all ages and occasions. Pass the bottle!