The latest figures from the UK show the average price of a bottle of wine from its 10 major wine supplying-countries has risen across the board. Shock horror, even unfashionable Germany has managed a price increase!
Cause for celebration? On the surface, yes. It suggests the consumer is trading up, willing to spend more but look deeper and things aren’t as rosy as they first appear.
The average bottle price of a New Zealand wine is up from £6.01 to £6.07 per bottle in the UK off-trade, Australia has seen a 13 pence increase to £4.72 while the average price of a South African wine is up 40 pence to £4.39.
However, increased duty charges and a weak British pound vs. most currencies suggest that the increased costs in the value chain are not being passed on in full. Customers are paying a bit more for wine but it appears that it is suppliers that have to absorb most of the cost increases. This is a problem for profitability.
In South Africa, Australian and New Zealand, strengthening currencies and duty rises meant existing prices were unsustainable. In some instances average bottle prices have increased but total sales have fallen. South African sales have dropped by 15% in value in the past 12 months and 22% by volume.
Australia and New Zealand have increased sales volumes but how much of that is sold at huge discount, bulk shipped and made into supermarket brands? According to Wine Australia, in the past year 47% of all wine shipments from Australia were bulk not bottled. Is this a sign of Australia’s economic credentials (bulk shipping has a lower carbon footprint than shipping in bottle) or is it a consequence of its massive oversupply problems?
What is clear is that consumers are being forced to pay more for their wine in the UK, producer margins continue to be nibbled away. Profitability has to come before volume sales if wineries are to survive. But, as South Africa has witnessed, there’s only so much people are willing to pay.
South Africa has a ‘new’ wine region. The Government’s Wine and Spirit Board has finally approved the Cape South Coast designation encompassing Elgin, Walker Bay and upcoming region Elim.
Andrew Gunn of Iona Wines in Elgin was the force behind the change.
“I believe in time the Cape South Coast will be recognised as South Africa’s premium wine producing area for many varieties as the inland areas become hotter and drier,” says Gunn.
The region is cooled in summer by ocean breezes, giving a longer growing season, higher natural acidities and lower alcohols than other regions included in the wider Coastal region, which includes warmer areas including Paarl. It also has a natural border, created by mountains to the north.
Whether this will make any difference to the consumer is up for debate. Elgin, Walker Bay and Elim are making a name for themselves with some delicious, fresh, cooler climate Chardonnays, Sauvignon Blancs and Pinot Noirs. Do producers need to add Cape South Coast to their labels to sell more wine? Does it make it easier to understand? I’m not sure. Are you?
Amphoras at Hamilton Russell (photograph: Amelia Aragon - thanks chick!)
The New World is not all stainless steel tanks and modern winemaking methods. Many producers are going back to more ‘natural winemaking’ and one of South Africa’s leading Chardonnay producers is planning on fermenting 10-15% of its wine in clay amphoras next year.
Hamilton Russell Vineyards in the Hemel-en-Aarde valley has started experiementing with amphora. In 2009 the Chardonnay component (12%) of its Ashbourne Sandstone Sauvignon Blanc Chardonnay of the 09 blend was amphora fermented.
In 2011, it plans to ferment and mature 10-15% of its straight Chardonnay in amphora – a wine that has become renowned worldwide.
Owner Anthony Hamilton Russell says: ‘People obsess with tasting a barrel influence in their wines but we are experimenting with amphora stoneware to see if they can provide the maturation of a barrel without the flavour pick up.’
He reports that the shape of the amphora promotes natural circulation in the vessel during fermentation. The wine will stay on gross lees for 6-7 months and then go to tank for blending with the barrel-fermented component. As the clay vessels allow micro-oxygenation it mimics barrel ageing.
However, it hasn’t all been plain sailing up to now. They originally tried terracotta amphoras but they were too porous and have moved to clay. Another issue is the amphoras are quite pricey. ‘We need to negotiate harder with the potter who makes our amphora. They are still priced as ornamental vessels and we need to get the prices closer to those of our barrels,’ he said.
If things go according to plan, the wine will be released in 2013.
Confusion surrounds water additions in South Africa
Thursday 9 September
Several weeks ago, I reported on decanter.com that a proposal to legalise adding water to must in South Africa was actually in breach of EU wine law.
The creators of the proposal, Wine Cellars South Africa, claimed that the proposal could come into law as early as autumn 2011. And, having met many winemakers in the Western Cape last week, it seems they also think it will be allowed next year. Guys, it won’t, so you’d probably better not do it or those nasty Wine of Origin inspectors will come and give you a hiding!
Yes, adding water to must to bring down alcohol levels is allowed in California but they have a bilateral agreement with the EU permitting this. South Africa does not have the same bilateral agreement and thus if you want to water down your musts in South Africa, you’ll be flouting OIV and EU rules.
I spoke to Su Birch, head of WoSA at the end of my trip to South Africa over a tasty glass of Chenin in Cape Town. She clarified things:
“There are some producers who only make wine for the local market and they want to be able to do this.” So, perhaps domestically this could be allowed (?) but the EU won’t have any of it.
Birch added: “It’s legal for Californian producers but we will have to negotiate. We would need to have a bilateral agreement and it would need to be passed by the OIV.” And this isn’t something that’s going to happen as quickly as next year.
“Good winemakers are never going to do it but it’s certainly a more natural intervention than, say, spinning cone.”
Current EU laws allow producers to reduce alcohol up to 2% using spinning cone technology.
I hope that makes things a bit clearer. In short, stay away from the black snake.
