Opinionista Michael Fridjhon 21 August 2013

The rebuilding of the Nederburg Auction, one case at a time

Emerging from a rather rough run, the Nederburg Auction is pouring energy and resources into rebuilding the prestige of the sale. It won’t be an easy road, and the winery will need to get the formula right to pull together a stellar showing. But it is possible.

The annual Nederburg Auction has had something of a bumpy run over the past few years. At one time the most prestigious event on the wine industry’s calendar, it has seen its cachet tarnish over time. While this diminished appeal is the result of changes in the event itself, as well as in the way the fine wine market has transformed, the question pundits have been asking for some time is whether the damage can be reversed, and if so, how.

The first auction was held in 1975 and it was anything but a commercial success. While the wine trade was happy to enjoy the generous hospitality of Stellenbosch Farmers Winery (SFW), at that time the owner of Nederburg, the prices achieved for the special auction wines hardly justified their production, let alone the cost of the event. At a time when a regular bottle of Nederburg Cabernet sold for between R2.50 and R3.00, a case of the Edelkeur dessert wine (made specially for the auction) fetched less than R18.00.

Despite this initial setback, SFW persisted with the project and within a few years saw substantial dividends from its investment. Firstly, it was able to move vast volumes of special auction bottlings at a considerable premium to the normal trade stock. Secondly, the event helped to re-position the Nederburg brand. Thirdly, the sheer publicity value vindicated the hospitality cost. Lastly, since access to the auction was rigorously controlled, the winery could use the event to leverage performance from retailers in other sectors of its business.

All good things come to an end, and the demise of over-milked cash cows is swifter and more certain than most. Just as the South African fine wine trade began seeking rare and boutique offerings, Nederburg flooded its auction selection with often quite ordinary bottlings of its own wines, as well as the ever less sexy “old wine” production of a host of hackneyed producers. Prices did not so much rise as plummet, and unsold stock hung over the market like the angel of death above the houses of the ancient Egyptians.

Distell, the country’s largest fine wine and spirits business and the present owners of the Nederburg brand, came to recognise that the auction either needed to be salvaged or closed down completely. It seems to have committed to the former course of action, with a smaller selection of better chosen wines due to come under the hammer on 6 and 7 September. Auction manager Dalene Steyn is clear that rebuilding the sale’s credibility will not be an overnight project, and that the changes evident in this year’s line-up are not simply cosmetic, but will be even more rigorously applied in the future. The right wines, in genuinely limited quantities, lie at the heart of her turnaround strategy.

The question is, will this be enough? Has the Nederburg Auction been overtaken by the far more boutique-like Cape Winemakers’ Guild Sale? Is it now doomed to languish in the unglamorous second place in a two-horse race? Is the mere mention of the Nederburg brand – a high volume premium (but not prestige) product – the kiss of death to the Paarl sale? If this is the case, why should Distell throw any money at the show at all? Its primary purpose was to add value to the image of Nederburg. A few thousand cases of the cellar’s prestige bottlings cannot justify the cost of the event, and the submissions from other producers have never really been more than window-dressing for the main act.

The case for making this last ditch attempt to salvage the sale is stronger than the must simpler expedient of sending it off to join the wreckage of Nineveh and Tyre. Firstly, for all its recent difficulties, the sale undoubtedly has brand value. To build such a thing from scratch would cost vastly more than the current version on life-support. Secondly, the Guild Auction has shown that punters don’t need a sale that comes with all the pomp of a fashionista wedding. A more finely tuned and focused event can achieve the same results at half the price. The trick will be to secure stocks that are truly rare and indisputably desirable, an exercise that will take several years to achieve.

The top end of a mature wine industry comprises a combination of high quality established producers and a chance selection of five minute wonders, and you need both if you want to be successful. The French have the extraordinary momentum of the great Left Bank Bordeaux properties, each with annual volumes of around 20,000 cases. They also have tiny parcels of cult wines – offering less stability but greater sex appeal – from trendy producers in Burgundy, the Northern Rhone and Right Bank Bordeaux.

This is the mix Nederburg needs to get right. The former will provide the volumes to feed the commercial model, while the latter will bring the rich and famous back under the shade of the ancient oaks in the gardens of the manor house. This is not an improbable scenario. It requires the selection process for what goes into the sale to be less about what a tasting panel thinks (though there’s no room for junk) and more about strategy. As for whether or not the aptitude and competence to achieve this exists, on paper there can’t be a moment’s doubt. This is Distell we’re talking about, not some convocation of Boland hillbillies. The real question is whether the great corporation has the stomach and the patience for the task. The early indications are good. There’s an air of sober reality about the Auction for the first time in years, and the line-up for September reflects more a new beginning, and less of a cast for the remake of the last days of Pompeii. DM

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