In the 1960s and 1970s, when the Rand was strong and the market for Cape fine wine was in its infancy, the KWV, acting as the custodian of the industry, railed against them. Most people at the time couldn't appreciate the delicious irony: the management policies of the KWV and its partners-in-crime, the major wholesalers, had deprived South African consumers of the range and choice of fine Cape wines we enjoy today – yet there they were calling for regulation to block the smattering of imports which trickled into the country.
When the newly promulgated wine of origin legislation brought an end to fraudulent product labeling of South African wines in the early 1970s, suddenly there was a lot less “cabernet” about than had previously been offered for sale. The same authorities charged with policing local producers then wielded their powers to constrain potential foreign substitutes. No one can say there wasn't a state-sponsored mafia at work, happy to use its statutory powers to preserve local monopolies.
By the mid-1980s the Rand was in precipitate decline. This alone served to staunch the flow of premium imports. The timing was doubly bad for South Africa's wine cognoscenti: interest in classical wines had started to take off across the globe, thus launching the upward pricing trend of most prestigious international appellations. Even then, the wine police in South Africa never relaxed their vigilance: South Africa's increasing isolation made the KWV's job as the buyer of last resort (and the major export conduit) considerably more difficult: there was no chance that the scapegoat could be put out to pasture.
They tightened up on import regulations and imposed massive ad valorem duties on the foreign wines still trickling into the country. Almost all the commercial importers gave up. Those whose business focus had always been spirits and liqueurs simply walked away from wine. Those who were purely wine merchants either went bankrupt or reinvented themselves as wholesale distributors for the evolving local estate wine market. By the time the Mandela and Mbeki administrations completed the negotiations for the SA-EU trade agreement (thus ending the punitive tariffs which had almost wiped out the imported wine trade), there was only one fine wine importer of any significance left in the country - and that business was on life support.
Happily, at this point (for those who can even remember the days when the economy boomed), money flowed freely, and an enriched middle class flourished. The new elites – who owed no debt of loyalty to the Cape wine industry – fuelled the incipient boom in foreign product. The imported wine sector came back from the dead: new companies entered the game. Champagne became the beverage of choice, transforming the top end of the wine trade in much the same way as deluxe whisky altered the composition of the spirits market.
Of course, it hasn't lasted. Every one of the new generation wine importers has had to amend its business model and take on the marketing and distribution of local boutique wineries. What remains is a remarkably buoyant Champagne trade, dominated by one company (LVMH) whose various brands account for around 80% of the business. Their prices haven't moved significantly for at least three years, an indication of how fragile the Champagne market actually is. The only other segment of the imported wine still showing resilience is Portuguese table wine, where a single wholesaler-distributor dominates the market, a situation which has prevailed (admittedly with fluctuating volumes and at fluctuating price points) for several decades.
Just how big the total market might be is a matter of some dispute. No one believes the accuracy of the customs and excise figures: even assuming the declarations are correct, they don't take account of an apparently considerable re-export trade. Tallying the totals of known stats, and assuming that the CIVC figures for Champagne are net of re-exports, it would still be difficult to argue that the total domestic volume of the bottled imported wine market exceeds 3 – 4m litres. If this is correct then imports account for about 1% of the total wine market. Imports are also not affecting the pricing aspirations of the Cape's premium producers There are considerably more South African wines selling above the R600 per bottle mark than imports in the same pricing bracket (and this includes Champagne).
