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IT'S just past 11 on a fine Sunday morning. The cork eases out of a Quoin Rock Nicobar 2007. That was my daughter's birth year and thus a key vintage for my liquid investments. Eighteen bottles remain.
They sit in dark, cold, damp isolation in my cellar, sentenced to 10 years' solitary before they too will meet their maker - in this case, Carl van der Merwe now with De Morgenzon. This wine is as fine an example of sauvignon blanc as we South Africans have ever made. Yes, fine sauvignons do age magnificently.
Why do people buy land to grow vines, in order to convert the crop into wine? Why do people buy vineyards? Is this where the smart money lies?
Return on income, or equity, drives rational investment decisions. GT Ferreira famously quotes that return on ego fuels vineyard purchases. He has a point. In addition to having an ego, he is also a billionaire.
Borrow R100m or so to buy a posh vineyard, and repay the loan interest in a timely fashion from wine sales? You have to be kidding. Having said that, Tokara and Waterford are two vineyards controlled by two canny moneymen, and both are good examples of big buck investments no doubt now showing a return of sorts. There aren't many others.
Farming is the ultimate land play. It's all about hectares of land rather than bulk factors or multi-storeys. Can you sweat the soil? Can you get a return at all, let alone a decent one?
In Bordeaux, Chateau Carmes Haut-Brion recently sold for €18m. That’s about R160m, a fair whack of dosh for 4.7 hectares. Simply to repay interest would require R8m or R9m per annum before the cost of running the farm and making the wine.
They produce about 1 800 cases for which, dependent on vintage, they might gross an average of around R220 a bottle. That's about R4.7m gross annual revenue. Get the picture?
In Stellenbosch, vineyards might sell from perhaps R750 000 to R1.2m a hectare, quality dependent. A 50-hectare farm with 30 hectares of vineyards, a reasonable brand, cellar and home could sell for R50m, or with luck quite a bit more. By comparison, this may seem like a bargain.
Two totally different potential takers
So who then are the likely buyers of a vineyard? For starters, a lot fewer people today than five or 10 years ago. The two most likely, and very different, current potential new entrants could include, firstly, a passionate, dedicated, and extremely hard-working type.
A lover of life and of wine, and especially of their gorgeous interplay. A deep respect for and commitment to our earth and to nature, as well as a firm belief in the terroir that a tiny patch of land can offer when applied with love and skill over 12 hours of daily toil. A man of the earth, dirty fingernails, dusty shorts, his steed of choice and affordability a dented bakkie. A happy person, a firm handshake, quick to grin and quick to share.
The second, an altogether different person. A hardnosed business type, focused, driven, with a mission to build a trophy and deep pockets lined with gold. An owner of serious marketing skills and brand nous. A passionate vision with a clear sense of route to market, and a bespectacled beancounter in tow with chequebook and calculator in hand.
No bakkie on this vineyard, at least not for the owner. New entrant to the mile-long club, his polished limo glides the brick-paved viewing circuit to the front door of his private viticultural heaven. This dreamy venture is aided, most definitely aided, by a separate cash cow business that spews out wads of hard currency.
Both types, however, share a goal in common. Their aims are to make and to sell fine, award-winning wine, thus enhancing the lives and the lifestyles of others with their versions of the nectar of the gods. Each of these two dissimilar persons is quite likely to succeed, and neither of them is in it for the money.
Both are also likely to see serious long-term capital appreciation on their respective investments enjoyed, however, by their descendants. Unless both are young, it is unlikely that either will live long enough to see these sets of financial results. Both are guaranteed to suffer serious cash flow challenges for a decade - more likely for two decades.
Don't say you weren't warned.
- Fin24
* Von Holdt is CEO of Top 100 SA Wine Challenge.
They sit in dark, cold, damp isolation in my cellar, sentenced to 10 years' solitary before they too will meet their maker - in this case, Carl van der Merwe now with De Morgenzon. This wine is as fine an example of sauvignon blanc as we South Africans have ever made. Yes, fine sauvignons do age magnificently.
Why do people buy land to grow vines, in order to convert the crop into wine? Why do people buy vineyards? Is this where the smart money lies?
Return on income, or equity, drives rational investment decisions. GT Ferreira famously quotes that return on ego fuels vineyard purchases. He has a point. In addition to having an ego, he is also a billionaire.
Borrow R100m or so to buy a posh vineyard, and repay the loan interest in a timely fashion from wine sales? You have to be kidding. Having said that, Tokara and Waterford are two vineyards controlled by two canny moneymen, and both are good examples of big buck investments no doubt now showing a return of sorts. There aren't many others.
Farming is the ultimate land play. It's all about hectares of land rather than bulk factors or multi-storeys. Can you sweat the soil? Can you get a return at all, let alone a decent one?
In Bordeaux, Chateau Carmes Haut-Brion recently sold for €18m. That’s about R160m, a fair whack of dosh for 4.7 hectares. Simply to repay interest would require R8m or R9m per annum before the cost of running the farm and making the wine.
They produce about 1 800 cases for which, dependent on vintage, they might gross an average of around R220 a bottle. That's about R4.7m gross annual revenue. Get the picture?
In Stellenbosch, vineyards might sell from perhaps R750 000 to R1.2m a hectare, quality dependent. A 50-hectare farm with 30 hectares of vineyards, a reasonable brand, cellar and home could sell for R50m, or with luck quite a bit more. By comparison, this may seem like a bargain.
Two totally different potential takers
So who then are the likely buyers of a vineyard? For starters, a lot fewer people today than five or 10 years ago. The two most likely, and very different, current potential new entrants could include, firstly, a passionate, dedicated, and extremely hard-working type.
A lover of life and of wine, and especially of their gorgeous interplay. A deep respect for and commitment to our earth and to nature, as well as a firm belief in the terroir that a tiny patch of land can offer when applied with love and skill over 12 hours of daily toil. A man of the earth, dirty fingernails, dusty shorts, his steed of choice and affordability a dented bakkie. A happy person, a firm handshake, quick to grin and quick to share.
The second, an altogether different person. A hardnosed business type, focused, driven, with a mission to build a trophy and deep pockets lined with gold. An owner of serious marketing skills and brand nous. A passionate vision with a clear sense of route to market, and a bespectacled beancounter in tow with chequebook and calculator in hand.
No bakkie on this vineyard, at least not for the owner. New entrant to the mile-long club, his polished limo glides the brick-paved viewing circuit to the front door of his private viticultural heaven. This dreamy venture is aided, most definitely aided, by a separate cash cow business that spews out wads of hard currency.
Both types, however, share a goal in common. Their aims are to make and to sell fine, award-winning wine, thus enhancing the lives and the lifestyles of others with their versions of the nectar of the gods. Each of these two dissimilar persons is quite likely to succeed, and neither of them is in it for the money.
Both are also likely to see serious long-term capital appreciation on their respective investments enjoyed, however, by their descendants. Unless both are young, it is unlikely that either will live long enough to see these sets of financial results. Both are guaranteed to suffer serious cash flow challenges for a decade - more likely for two decades.
Don't say you weren't warned.
- Fin24
* Von Holdt is CEO of Top 100 SA Wine Challenge.
