Wine Investors Flock to South Africa | Wine-Searcher News & Features

History could be said to be repeating itself in the winelands of the Western Cape.

The Franschhoek Valley district has a pronounced French influence (the name means “French Corner” in Afrikaans) thanks to the exiled Huguenots who fled here in the late 1600s, bringing with them vines and winemaking savoir-faire.

Many of the settlers gave their homesteads French names: La Motte, Champagne, La Cotte, Cabrière, La Provence and La Dauphine are examples of farms founded by Huguenot refugees, which have become renowned stops on one of the Cape’s most popular wine tourism routes.

Fast forward some 350 years and the French are back in South Africa but, this time, it’s major players like AdVini and Groupe GCF (Grands Chais de France) who are making bold moves.

The French connection

In October 2022, AdVini consolidated its South African assets by purchasing premium brand Kleine Zalze, having completed its acquisition of Stellenbosch winery Ken Forrester in 2021. The Advini portfolio includes L’Avenir, Le Bonheur and Stellenbosch Vineyards, plus brands Arniston Bay and Welmoed; after a decade in the country, the company now owns almost 300 hectares (750 acres) of vines.

“International investment is key for the wine industry, and for brands,” comments Edo Heyns, strategic development and marketing director with AdVini South Africa. “What Advini brings to the party is route to market, and the clout of being part of a larger group, which can lift brands into international distribution – for example, Le Bonheur Chardonnay has become the SAQ’s second best-selling white wine in Québec. And when you’re shipping a million bottles, you’re keeping vines in the ground and creating jobs: a rising tide lifts all boats.”

Groupe GCF has also been on a spending spree in Stellenbosch. In late 2022 the French group expanded its international footprint with the purchase of historic estate Neethlingshof and, in February 2023, it bagged another trophy, namely Villiera, a leading producer of Cap Classique and still wines.

Neethlingshof is already known for its high-quality wines, including The Short Story Collection and the 1802 Collection, and GCF has announced plans to plant 27 hectares of vines and double annual production by 2024, with a stated aim of 1.2 million bottles a year.

According to Anne-Laure Helfrich, assistant marketing director with GCF, these investments reflect the group’s ambition to become a global wine producer with holdings in premium wine regions around the world.

“We are convinced that South Africa offers a unique potential to produce wines of excellence, and we want to contribute to their development by bringing our know-how and passion for wine growing.”

Business associates Oddo Vins & Domaines are also part of the Cape’s French connection. They have investments in six estates in France, Italy and South Africa; in 2017-2018 they bought and regrouped seven Stellenbosch properties to create Pink Valley Wines (a farm dedicated to making just one, accessibly-priced rosé) and Taaisbosch, a 24-hectare estate with a single, premium, Cabernet Franc-dominated Bordeaux blend named Crescendo, available only to wine club members who can then cellar their purchases in the winery’s temperature-controlled facilities.

A flurry of foreign investment 

According to Rico Basson, executive director of South African wine industry organization Vinpro, around one fifth of South Africa’s wineries are foreign-owned, and the last five years have seen a flurry of foreign investor activity.

In Helderberg, Ernie Els Wines co-owner and German property mogul Hans von Staff-Reitzenstein consolidated his winery holdings with Stellenzicht (2017) and Alto (2020), while San Francisco investment firm Eileses Capital purchased Stellenbosch estate Warwick in 2018. The Belgian Haspeslagh-Herten family staked their claim in Hermanus, founding Hasher Family Estate in 2021, the same year that Franschhoek’s Chamonix was sold to Norwegian real estate company Fredensborg 1994. Most recently, acclaimed Constantia winery Eagle’s Nest was bought by the German family-owned Elleke Group in 2022.

Premiumization push

This new wave of financial commitment is welcomed by industry observers, who feel that investment can help generate premiumization within the South African wine sector.

“It’s encouraging to see more high-quality estates being created and curated by companies who recognize the value and opportunity here,” says Maryna Calow, communications manager for Wines of South Africa. “They are raising the bar with their super-premium and premium portfolios, which is a very positive development.”

According to Calow, South Africa’s entry into the super-premium market is in alignment with the strategy driven by Wines of South Africa in their key focus markets (North America, the UK, Netherlands, Germany) and she cites the recent recognition given to South African names by globally renowned awards and ratings (two Best in Show awards and five Platinum medals at the 2022 Decanter World Wine Awards 2022, for example). 

Priced at around 380 Rand ($20) and made to age, Taaibosch’s Crescendo is designed as a premium product. Launched in 2021, its maiden release (the 2018 vintage) was given a 97-point score by British wine critic Tim Atkin MW, who promptly awarded 98 points to the 2019. Mark Lester, marketing manager at Taaibosch and Pink Valley Wines, comments: “Premiumization of the South African category is most definitely a positive on many levels. If producers are able to be paid more, ultimately this can lift up communities in the area at a social level, create employment, and provide the necessary capital to reinvest in infrastructure and vineyards.”

Pioneers past, present and future

Looking back at the history of high end wines in South Africa, Cape Wine Master Winnie Bowman praises the pioneering producers of Swartland: “They really put South African premium wines on the map and made the world see us differently, not just as a supplier of bulk and supermarket own labels,” she says, stressing the importance that icon wines play in creating awareness and appreciation for the country’s production. 

Bowman welcomes the arrival of international companies for several reasons. “Investors are seeing the potential here and because of this, our wines are finding ways into the markets. It’s happening at the high end so we’re getting better exposure for premium wines. Stellenbosch is a focus for investors right now and that’s great, because it means vineyards will stay in the ground,” she comments, referring to the threat of urban encroachment.

Referring to Swartland producer Boekenhoutskloof’s iconic premium brand, Advini’s Edo Heyns sees a future for larger volume, quality wines. “South Africa really needs several more Chocolate Block-style products, and that’s where companies like Advini can play a big role. Kleine Zalze or Ken Forrester should have a Chocolate Block.”

Kleine Zalze winemaker RJ Botha, concurs. “It’s part of our strategy to create a premium SKU that can run a million bottles, to really lift everything up. We’re focusing on a range with a standalone product that will be designed for this purpose.”

Heyns feels that while investor interest undoubtedly brings benefits to South Africa’s brand image and visibility, there is still progress to made in terms of economic sustainability. He produces a pie chart and points out that in 2022, 39 percent of South Africa’s wine businesses were operating at a loss. “From a broader industry perspective, the main challenge is making grape farming and winemaking more viable. We have to fix the pie chart so those companies can then spend money addressing problems and improving quality.”

After the trials and tribulations of the pandemic which resulted in producers exiting the sector, the arrival of international investment and experience can certainly be seen as a positive development for a country that is starting to turn the corner.