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Banker Toasts Wine Award, Pours Money Into South African Farm

January 31, 2012

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Jan. 31 (Bloomberg) -- Banker Michael Jordaan is off duty and about to enjoy the fruits of his second job: wine farming.

Jordaan, 43 -- head of FirstRand Ltd.’s retail banking unit, First National Bank -- arrives for dinner at La Cucina Di Ciro, a popular Italian restaurant in Johannesburg’s leafy Parktown North suburb. He’s carrying two bottles of his wines, which he opens as soon as he’s whipped off his jacket and tie.

“I am logical, rational, cash-flow-and-return-on-equity- maximized,” he says, raising a glass of white. “A wine farm is exactly the opposite. Wine is irrational, the cash flow is bad, there’s no return on equity.”

Jordaan is a banker who is using his wealth to indulge his passions. Other FirstRand executives have wine farms in the area. After two years in his current banking job, Jordaan got the chance to buy back the family farm, Bartinney, which had been sold by his dad. The business has long-term potential: His wine has already won an award. He hopes he has the timing right.

Lenders were making a profit in 2006 as consumers borrowed money with interest rates at their lowest levels in more than a decade. Jordaan’s organization, the second largest financial group in South Africa, suffered through the 2008 global financial crisis which forced customers to slow debt repayments as the country slid into its first recession in 17 years.

Memorable Vintage

At Bartinney the grapes kept growing and South Africa’s 2009 harvest, Jordaan’s first, produced “probably one of the most memorable vintages ever,” according to a report from South African Wine Industry Information & Systems. “Thanks to extremely healthy grapes, a cool growing season and lower yields, truly excellent wines were made from all the noble cultivars.”

Jordaan, who has short, curly brown hair, says that while the farm isn’t making any money, this isn’t the whole story.

“I’ve tried to rationalize what’s good about it and what I’ve found is, at the end of the day we bankers produce ethereal things,” he says. “I can show you on Bloomberg that earnings have gone up, but there’s nothing you can touch.

“With a wine farm, there’s a product and I know where the grapes came from, what the weather was like during the year that it was made, how it was harvested, what process it went through and how much time it spent in the barrel,” he says. “And here it is and you can taste it and you can feel it.”

Jordaan, who is permanently tanned with a lopsided smile, has invested in vines, labor, infrastructure, French oak barrels and a wine maker, Therese de Beer.

Terroir Best

Bartinney’s first cabernet sauvignon, harvested by hand in 2009, went on sale in July last year and scooped the Terroir Award for the best cabernet in the Banhoek and Jonkershoek wards of Stellenbosch, a region about 30 kilometers east of Cape Town and renowned for its red wines.

The cabernet sauvignon is “beautifully balanced with good tannins and sexy mocha chocolate overtones,” according to Karen James, a South African wine merchant who tasted the Bartinney red. “For a virgin vintage it’s a spectacular effort.”

Bartinney, which clings to the side of a mountain, belonged to Jordaan’s family from 1952 until 1993. His grandfather, also called Michael, was a physician in Namibia until he went to Stellenbosch, traveled up Hellshoogte Pass, translated as “hellishly high,” and bought Bartinney where he retired.

“A couple of years after my grandfather died my dad sold the farm and it was sad and I never thought I’d have it back, but I dreamt about it,” Jordaan said, adding that both of his grandparents are buried on the farm. “And then about four years ago it came up.”

Chardonnay, Sauvignon

Bartinney, which also grows and bottles chardonnay and sauvignon blanc, is a small piece of land relative to other South African wine farms with 27 hectares (about 67 acres), of which only 12 are under vine. Apart from the grapes, which are grown 550 meters (1,800 feet) and more above sea level, Jordaan and his wife have spent time and cash overseeing the planting of more than 6,000 trees, giving Bartinney carbon neutral status.

After apartheid ended in 1994 the South African wine industry grew, with farms that used to grow grapes for cooperatives turning to producing their own wines.

Add to that the economic boom of the late 1990s and the early part of the last decade, and a number of company executives made enough money to buy their own farms despite the capital-intensive nature of wine production.

Other FirstRand bankers have been bitten by the same bug. Two of the company’s three co-founders, G.T Ferreira and Paul Harris, have farms in the Stellenbosch region called Tokara and Audacia respectively. Jordaan, who commutes between Johannesburg and Cape Town most weeks, also sold the farm next door to Bartinney to FirstRand’s Chief Operating Officer Johan Burger.

“Wine can be very pretentious and complex but in the end, it’s what you like,” Jordaan says. “It’s not what somebody else says. If you like it, that’s what’s good.”

(Renee Bonorchis is a reporter for Bloomberg News. The opinions expressed are her own.)

--Editors: Mark Beech, Farah Nayeri.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net.


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