Member InFocus: Johan du Preez, chief executive, Rooiberg Winery
The Rooiberg Winery, situated in the acclaimed Robertson Wine Valley of South Africa, consists of 29 shareholder members who between them operate 20 farms across the Cape producing wine for both the domestic and increasing export markets.
Founded in 1964 it has gone to show strong growth year in year out over the last 50 plus years, culminating in a record harvest of 16,340 tons of grapes in a year when many in South Africa suffered.
We catch up with chief executive, Johan du Perez, to get his take on the South African wine market and how Rooiberg Winery hopes to make its distinct difference in the future.
How do you see the South African wine market in general in 2018?
The SA wine market is buoyant and while demand out performs supply, causing prices to spiral upwards. This could not come at a better time as producers need higher prices (this is long overdue), in order to sustain and engage in planting and replacing older vineyards, grow and consolidate their activities.
What are the big trends impacting on bulk wine?
Shortages due to drought, frost and a smaller than expected harvest, pushed bulk prices up. These shortages are also experienced in Europe, Chile and other competitive markets. In the SA context the shortages will prevail for at least another five years.
What have been the key challenges and opportunities for bottled wine?
The higher than expected and contracted bulk wine price increases could not be matched by bottle wine. Enough alternative brands, offerings and global markets exit and the average bottle wine price increases are lower than expected.
How do you see the rest of the year going into 2019?
Most of the 2018 wine stock has been contracted and shipment is much quicker than 2017, carry over stock will be lower. I expect white wines to be cleared from the cellar by February 2019 and red wine by May 2019.
How was the 2018 wine harvest?
Smaller grapes, more flavour, leading to all round better wine quality.The 2018 season was very healthy with no or limited outbreak and influence from pests and diseases.
Which grape varieties are most in demand?
All varietals are in short supply and demand is higher than what can be contracted, leading to healthy demand on all varietals.
Do you have examples of changes in pricing for certain grape varieties?
There will be average price increase in excess of 20% + year-on-year across most varieties.
Can you explain your business model?
We from the start opted and committed to retaining and building on medium to long term relationships. This rather than taking short term profits and thus opted for longer term sustainable relationships with existing clients.
How is the domestic market doing compared to exports?
The two markets are in equilibrium and volumes match one another for the first time. I expect this phenomenon to continue over the next three years.
Are you looking to do more work in the domestic market?
The domestic market is made up and driven by approximately 78% sales through the major supermarkets. Most of these institutions are de-listing rather than listing wine SKUs. The local market remains tight with bigger brands dominating. There is, however, a positive and definite upwards increase in retail prices, which seem to have been accepted by consumers.
What impact is the drought still having on the market?
Not very much at the current point in time, but I expect in future there will definitely be a negative impact on the size of the 2019 and 2020 harvests.
Which are the big emerging export markets for you and for South Africa as a whole?
All markets remain hectic and tight and at this stage the global economic outlook is negative, this coupled with influences and fear associated with macro economics and world politics e.g. the USA vs EU, Brexit, China and Russia are causing a general pessimistic rather than optimistic sentiment.
What sort of dynamics do you think will impact on the South African market going forward?
The world economy, expected 2018 harvests in the EU, Chile and Argentina.
Anything else to say?
Nope – I am tired and need a glass of good wine.