South Africa must be allowed to reinvest in wine production

01 April, 2014

A South African Fairtrade producer has praised UK buyers for agreeing not to push down prices despite a weak rand so that wineries can invest in the future.  

The teetering rand means South African producers are making their biggest margins in years, but they have urged buyers to allow them to reinvest the capital to ensure the rainbow nation can produce better quality wines in the long-term.

Kobus Basson, owner at Kleine Zalze, which is stocked at retailers including Waitrose, Sainsbury’s and The Co-operative Group, told OLN: “With the UK buyers we said you could ask us to drop the price but instead let’s put more into quality and human resources that will bear fruit over the next 10-15 years. It’s key that that happens.

“We are confident in the quality of wine we can produce. That’s not the problem. The problem is capital. We need to update in terms of human resources and planting.

“In the past five years there has been less planting, which is a concern, because people didn’t have the margin to play with, but now people are saying they will start to plant so it’s great. The young winemakers are finding the right spots. It’s very exciting.

“The primary growers need to buy new tractors and producers need to educate the workers and pay their medical bills and to do that they need a reasonable return, which they didn’t get for five years.

“The rand has given us breathing space. The responsible buyers we are dealing with, they take the point. They know if we look after our people better then it’s better for them.

“The level of quality of UK buyers is at a really high standard. They grasp the South African situation and they don’t want to overkill people. It’s a long-term situation for them.

“Everybody is going to squeeze you, but if we say we will reinvest and we promise we will give you better wine it becomes a good partnership. It was not like that 10 years ago. Buyers move around but there is more of a responsible attitude taking Fairtrade into account. They make an effort to understand your business.”

South Africa is the runaway success story in the UK wine trade at the moment. In the past year it grew volume sales by 15% to surge into the UK's top five supply countries (Nielsen, year to February 1). But the average price of a bottle grew just 2% to £4.72, the lowest rise out of any of the top nine countries and one that does not cover duty rises. 

Basson hopes buyers will allow fellow producers to “reinvest extra margin in the industry so we can make very exciting and consistent wines long-term” instead of pushing prices down due to the rand's weakness.

“Buyers are loyal to South African wines and appreciate our challenges,” he said.  

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