Q&A with Rollo Gabb, managing director of Cape Wine Exporters
Can you explain the background to Cape Wine Exporters and your point of difference?
Cape Wine Exporters was set up by my father when he first came to South Africa in 1994 to establish Western Wines SA and the launch of the Kumala wine brand. It has sat dormant ever since until February 2017 when we re-launched it, along with Ben Jordaan (the ex head winemaker of Kumala at Accolade wine).
We aim to provide quality bespoke wine solutions utilising our historic supply base, own vineyards and winemakers in South Africa for customers around the world.
We like to see ourselves as offering a virtual winemaking hub in South Africa where we are able to make wine to specification for different markets. We work hand in hand with the growers and farmers and have long standing relationships with them.
We are also farmers and winemakers ourselves so we understand the importance of paying growers a sustainable and fair price for their grapes.
(When Western Wines was sold in 2004 Rollo Gabb spent the preceding years building up its premium Estate business at Journeys End, before starting this new venture with the volume, bulk market with Cape Wine Exporters in 2017).
What do you mean by virtual winemaking?
Whilst we own and manage our own vineyards and winery, for high volume cuvées we work with 11 core partners, three of which are Fairtrade and all have HACCP & IPW accreditation with the larger wineries being also ISO, BRC and NSF accredited. We take the process from start to finish, with the winemakers often involving themselves at vineyard level, to produce a broad spectrum of wines – from naturally low alcohol through entry level, mid tier to genuinely premium, highly rated single vineyard Estate wines.
How is it going?
We have grown five fold since we began Cape Wine Exporters and are now selling into 22 key markets. The focus has been on the UK, China, USA, Canada, Russia and Japan where we have over 80 different products in the market. We are looking to both expand and combine our winemaker and customer bases. Our business model is to find the right route to market at a fair price. We are looking for sustainable long term solutions for the whole chain from our growers and producers to our customers and end consumers.
Is that hard in such a competitive marketplace?
The marketplace has always been super competitive – especially in the UK. However – there is a real risk with the increasing demand coming from Asia and the more recent fall in global supply, that unless sustainable solutions are facilitated for growers the problem of supply shortages as experienced these past six months will only get worse.
Growers and producers cannot operate at a loss and if vineyards are not profitable they will uproot and plant other products such as citrus. This has been happening too much and is not healthy for the South African industry as a whole.
The ethos of ensuring a sustainable supply chain goes back to our early days at Kumala. It is important to try and look after people all along the chain.
How competitive do you think South African wine is on the international market?
I don’t think you can question the quality and value of South African wine. There is a real quality value perception now which has been helped a lot by the international press and buyers that have visited the country. If you look at bulk varietal pricing and quality now versus say Italy and South America, South Africa is still looking super sharp. That said currency is also a major factor and the Rand goes up and down like a yo yo.
If you consider the premium category there can be no doubt South Africa is producing wines that stand out on the International stage and deliver unbeatable bang for buck. We have great terroir, great innovation, great heritage and great characters in our industry.
What supply and demand issues are you seeing this year?
The South African bulk market has seen massive shortages as a result of the drought. Pricing pressure has further been compounded by global supply shortages resulting from the disastrous European harvest, a short 2017 South American harvest and rapidly increasing consumption from China. On Key varietals like Merlot and Cabernet there has been increasing pressure on supply from South Africa due to growers and farmers uprooting vineyards as they were not getting the yields and pricing required to keep them sustainable.
Demand currently exceeds supply from South Africa which means prices have in many cases gone up.
Do you see prices remaining high even when the market re-calibrates itself?
I think the 2019 South African bulk market will settle at a reasonable level and we won’t see the panic buying that we have seen this year. South Africa has had very good rains these past two months and Spain and Italy also are looking on track to have a decent harvest this year. Chile and Argentina’s 2018 vintage yielded well, and prices are dropping there. I don’t think the prices in South Africa will fall back to where they were in 2016.
One could argue that what has happened in the last six months is good for South Africa in the long term as it has given producers the confidence to keep on the front foot and work profitably, rather than selling at a loss. It’s not good to have 30% of producing farms making a loss – that is simply not healthy or sustainable for an industry and is not a positive statistic.
How do you see the future for Cape Wine Exporters?
We need to integrate more and more into the vineyard and continue to innovate and deliver a wholly bespoke solution to our customers. Every market has a different palate, different taste on brands and packaging – it is no longer a ‘one brand fits all’ market as the consumer has so much choice. In order to protect ourselves against global supply fluctuations, and feed increasing Asian demand we are building supply solutions and a winemaking base in Argentina and Chile following a similar model to what we have in South Africa.
Whilst we see Asia as an opportunity for growth, we think South African producers would do very well not to turn their attention away from the UK. It is still such an important market for South Africa and it has consistently supported it.
If one can support and carry ones UK customers through difficult times (such as this years shortages) one would hope it would further strengthen those relationships.