News
Different levels: President Barack Obama has told Chinese President Hu Jintao that the Yuan is undervalued. No doubt, this is something President Hu Jintao is well aware of and I imagine he will let Obama continue to plead for revaluation. President Obama has also been talking about ‘a level playing field’, and again, this is something I suspect President Hu Jintao is prepared to let Mr President talk himself horse about. I note the Americans haven’t told Australia that its dollar is overvalued and that if it were cheaper it could help exports to the USA, thereby creating a level playing field.
Floating or all at sea? Although talked about for some time the official announcement that Fosters was going to float its wine sector (Treasury Wine Estates) on the Australian Stock Exchange was held back until the release of the half year (until 31st December 2010) results mid February.
Perhaps the ploy was to offer some glitz to what were disappointing results; sales across the whole company (beer & wine) were down 6.7 percent with profit down 12.3 percent to just $312.1 million.
Reading the report is reminiscent of listening to the litany of excuses offered up by a six year old caught out mischief-making; they roll out one after the other and none of them are convincing. Here is a prime example:
•Wine improvement continues despite difficult macro economic environment
‘Difficult macro economic environment’ says it all really, but then it really says nothing
In the six months the report covers Treasury Wine Estates sold 18 million cases, 1.2 million less than the corresponding pervious half.
Wine sales dipped under the billion dollar mark at $923.7 million, but EBITS didn’t move a great deal – in fact, it increased 0.7 million dollars to $99.9 million. The report is presented in four sections: Americas; Australia and New Zealand; Europe, Middle East and Africa; and Asia.
Americas, first half 2011: Case sales 8.3m, totalling $431.3m, EBITS $54.2m
Americas, first half 2010: Case sales 9.4m, totalling $488.6m, EBITS $43.8m
Australia & NZ, first half 2011: Case sales 4.4m, totalling $294.3m, EBITS $39.6m
Australia & NZ, first half 2010: Case sales 4.5m, totalling $304.0m, EBITS $37.0m
Europe, Middle East & Africa, first half 2011: Case sales 4.9m, totalling $166.8m, EBITS ($0.5m)
Europe, Middle East & Africa, first half 2010: Case sales 4.9m, totalling $189.5m, EBITS $12m
Asia, first half 2011: Case sales 0.4m, totalling $31.3m, EBITS $6.6m
Asia, first half 2010: Case sales 0.4m, totalling $25.1m, EBITS $6.4m
The 11.8 percent decline in USA volume is divided between 3.8 percent Californian sourced wine and 25.6 percent decline in Australian sourced wine. The company explains it as withdrawing from the lower priced sectors for US wine and the loss of sales of Australian sales due to the strong dollar.
The American sector is doing okay in America but with American Beringer brands. The Australian sector is not doing well at all. The company hasn’t grasped Asia to the extent that it should have done – even after appointing new staff – and it’s now slipping away from them. In Europe, the high dollar is just one aspect of the problem; there is a pervasive and arrogant belief they can train the UK consumer to pay more for their brands. The reality is that, even though some will, many consumers will not be persuaded to increase their spending from £4/5 to spend £6/8 per bottle. The figures show clearly the sales of the same amount of wine are bringing in less money and more to the point not making any money. The figures also show Treasury Wine Estates are stagnant in the domestic market.
What is happening? Australian wine exports to the USA are in decline as the latest figures from Fosters demonstrate. Fosters as do other companies place the fault on a strong Australian dollar, but is that all there is to the problem?
Leading American wine commentator Matt Kramer in a recent article in Wine Spectator wrote, ‘We pundits are often as puzzled by events as you might be’ (‘you’ being wine consumers). The sorts of issues currently leaving Kramer (along with many others) puzzled include: ‘What the hell happened to Australian wine? Why has it gone into such a nosedive in American esteem? It was only a few years ago that Australian wine was every wine buyer's darling. Wholesalers and retailers reported that they couldn't ship the stuff fast enough, so strong was the demand. Australia's so-called "critter wines" were hopping from shelf to shelf, seemingly from one success to the next. Everyone raved about the quality-to-price ratio. Everyone marvelled at the marketing genius of the Australians. Everyone was talking about how Australia would rule the world's wine shelves.’
‘I mean, what's really changed? Has the American palate transformed so radically in the past five years that the Aussie wines that were once so loved for their smooth textures, juicy fruitiness, light-hearted packaging and you-can't-beat-it pricing are no longer viable in the American market?’
Kramer puts forward a hypothesis: ‘my own theory as to why Australian wines stumbled so badly in the market…. is that the Aussies failed to celebrate and service their high-end artisanal producers as aggressively and as enthusiastically—even lovingly—as they did the low end. Australian wine lost cachet—or rather, never acquired it.’
Who is acquiring our share? Will 2011 be the year of Argentinean wine? It could be, especially in the USA and UK, both of which are key markets for Australian wine. In figures to end of September 2010, Argentinean wine sales increased over 50 percent in the UK on-trade. Interestingly, case imports for the first nine months of 2010 were down from 1.523.578 cases to 1.362.145 (-10.6 percent); however, the total value (US dollars) was up over 6 percent (US$36,136,720) with the average price per case up 19 percent to US$26.53
It may not be a direct threat as yet, but Australia was in the same position just under three decades ago. In the year to September 2010, Australia shipped $398,174,609 worth of wine to the UK; an average of $31 per case for bottled (less for bulk)
In the USA market, Argentinean wine really sparkled; US$187.063.211 worth of exports in the nine months to September 2010, indicating an increase of 19 percent at a value of US$32.29 case. Australian wine in the year to September shipped a total (bottled & bulk) to the value of $534,414,588 (down 17 percent).
It’s not hard to see that, especially in the USA, if Australia continues its decline – and Argentina, its rapid rise – it won’t be long before a crossover is reached.
|
|
|
 |
News Archive
NOW OPEN PENFOLDS AUCTION
A Perfect Partner for Penfolds
Dr Ray Beckwith OAM - a Tribute
The Emergin Wine Scene in Finland
For the love of Chestnuts
2012 En Primeur: Sauternes & Barsac Tasting Notes
Langton's Classification V Set
Len Evans Foundation Auction
Behind Bindi: The Life of a Winemaker
Champagne –all about marketing or worth the hype?
The State of New Zealand Pinot Noir
London Launch of Burgundies 2011
Beauty and Balance the Razor's Edge
Yalumba Tasting – Aussie Rules
Hospices de Beaune Auction 2012
Langton's Classification Auction 2012
Hill of Grace 50th Anniversary Lunch
History of Langton's Classification
Melbourne Private Cellar - An Extraordinary Auction
The Future of the Australian Wine Show System
The Jura's famous yellow wine
Clonakilla - A special Shiraz Viognier Tasting
Key News - September 2012
October Langton's Cellar Club
Single Vendor Flood Damaged Auction
Robert Parker & Jancis Robinson MW
A great Burgundian domaine restored
Seppelt Para Liqueur Vintage Tawny Collection - Special Auction
Vega-Sicilia - A special Single Vendor Auction
Opera Australia Christmas Auction
Out of the Blue Comes a Farm
The competitive Mr. Basset OBE, MW, Best Sommelier in the World
Uncorking Penfolds Clinic
Fruit of the Forest: Wild Fungi
Innovation and Experimentation
The Risk Taking Wine Psychologist
Sydney Single Vendor Auction
Hill of Grace 50th Anniversary Lunch
Australia's Top 100 Auction Wines for 2011
Grenache Day Blogger's Breakfast
A French Sleeping Beauty Awakes
Black Blue & Grey-Wolf Blass Luxury Release
An Enviable Inharitance - Olivier Leflaive
Key News - December Edition
Cross[x]Species Adventures
The China Syndrome: Shanghai International Wine Challenge 2011
Christmas and another great vintage in Alsace
Down in the Woods: Franciacorta and Ca' del Bosco
Foie gras and sweet wine in the Loire
Key News - October Edition
Bordeaux Masterclass & Dinner
Invisible Touch: Benchmark Chardonnay & Pinot Noir
Key News - September Edition
The Unsung Heros of the French Wine Harvest
It's only Natural: Torbreck Natural Wine Project
On Organics, Biodynamics and Sustainable Viticulture
Key News - March 2011 Edition
Langtons is now on Twitter & Facebook
The Nine Network: Burgundy 2009
Key News -February 2011 Edition
2007 Hospices de Beaune Review
Penfolds Rewards of Patience - Decant Guide
The Drinks Interval: Wine & Cricket
Last outpost of the Bristish Empire
Trevor Mast Charity Auction
Shipping for the Festive Season 2010
Keys News - November Edition
From Northern Ireland to New Zealand: Te Mata Coleraine 2006-1991
Charity Lot - 123 Classified Wines
BUY CLASSIFICATION POSTER
Variations on a Theme: Coonawarra Reds 2006-1982
Key News -October Edition
Key News - September Edition
Flaming Ferrari: Yalumba the Signature and Single Site New Releases
Classification V - Coming Soon!
Key News - August Edition
Blood, Sweat & Tears: Peter Lehmann Stonewell Shiraz 1987-2006
Bordeaux 2009 Reflections
A Perfect Ten? Bordeaux 2000 reassessed 10 years on
2005 Grange: Where do the Grapes come from?
Is it a Bird? A Plane? It's 707!
Meet the Winemakers Behind Today's Penfolds Great Reds
Bin Files: Penfolds 389 vs Grange
Treasured Bottles - Yarra Yering
The Evolution of New Zealand Pinot Noir
SINGLE VENDOR AUCTION DEC 2009
Opera Australia Christmas 2009 Auction
Classic Wines of Australia 1961-1970
Parker Review - Tuscany 2006 & 2007
French wine remains the worlds reference point
PINOSOPHY – Brian Croser’s Pinot Noir Manifesto
Penfolds Primary Reds Rise Above Stock Market Blues.
Langton’s Top 500 Australian Wine Prices 2007
The Great Wine Estates of Western Australia “2007 En-Primeur Campaign”
147 Vente Des Vins - Des Hospices de Beaune
LANGTON’S Classic PENFOLDS Wine Auction
Jasper Hill – The life and works of Ron and Elva Laughton
McWilliam’s Mount Pleasant Lovedale Semillon – Hunter Valley
Robert Parker Jr.’s top 180 Wines of the 2006 Vintage + Andrew Caillard's Bordeaux Impressions
Opening Gambit - Andrew Caillard MW en route to Bordeaux
Heritage & Evolution: A Tasting
Certainty! The Claret Drinker's Song
Wine Investment – Swim between the flags
Penfolds Classified Wines
Classic Penfolds Wine Auction
The Siren’s Song – Bass Phillip
Exchange Current Listings
Andrew Caillard MW reviews Bordeaux 2005
Bordeaux 2005 – Does it get any better than this? What the international reviewers are saying
Nicky Riemer – the new Head Chef at Langton’s Restaurant
Langton's Exchange in 2006
Langton’s 2005 Classification IV – International Reception, Predictions and Tastings
Langton’s 2005 Classification IV – International Reception, Predictions and Tastings
LANGTON’S EXCHANGE – BUY NOW and SAVE 15%
Great Wines Estates of WA Live Auction (V) – Open for Bidding Online October 21 to November 12
Langton’s 2005 Classification IV
2005 Classification in Gourmet Traveller WINE
Bordeaux 2004 – A Classic Vintage
Penfolds Grange Auction – Now Open
MCWILLIAMS Celebrity Blend-Off for Charity Wine Auction
Grange Auction Open for Bidding
LANGTON’S EXCHANGE – BUY NOW!
1998: Vintage of the Century
A Vertical Tasting of De Bortoli Noble One
The Story of Grange by Max Schubert (1915–1994)
Penfolds Grange Auction June 13 - July 14, 2003
A Lazy Eye on Pink Cliffs & One Eye
Henschke Hill of Grace and Mount Edelstone
Selling at Langton’s in 2003
Australian Wine Exchange offers Giaconda Chardonnay
Large Format Grange Sets Records
The Sensational 2002 Central Otago Pinot Noir Vintage
Central Otago Pinot Noir Celebration and Barrel Auction
The John (Jack) W Henderson Collection - Auction Closes February 3, 6pm
Shiraz Australia II Auction
Seppelt Para 100 Year Old Liqueur Vintage Tawny Barossa Valley - Vintages 1878-1903
|