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October 2011 Key News
KEY NEWS - TONY KEYS

Evolution: The wine business is chock-full of tradition as fine as it is one has to consider that if we fully embraced it the trade/industry would be moribund. Garry Crittenden recently sent a bottle of Crittenden Estate ‘Les Adieux’ Mornington Peninsular Cabernet Sauvignon 2009 along with a note detailing the vineyard history.

The cabernet vineyard was established in 1982 the five acres planted then doubling the total vineyard planted on the Peninsular. Helping on that day was son Rollo (aged six) and daughter Zoe (aged eight.)

Twenty six vintages later both Rollo and Zoe are involved in the family business and Rollo made the last Cabernet from the vineyard he and Zoe helped plant in 2009. Cabernet vines no longer occupy that five acres Rollo convincing Garry it should be grafted over to pinot noir. Death and rebirth the ongoing story of life.

The Mercury (Tasmania) 16 August: Wine writer Graeme Phillips investigates the success of Tasmanian wines in the 2012 edition of James Halliday’s Australian wine companion. Regarding pinot noir, “Although he [Halliday] writes that Tasmania is the “El Dorado” for pinot noir, only one from the East Coast, two from Northern Tasmania and four pinots from the south, each with 96 points, were included in his Best of the Best list of 32.”

The Adelaide Advertiser Wednesday 31 August: ‘Pinot the new sav blanc?’ Wine writer Tony Love puts forward the argument of New Zealand Pinot Noir gaining Australian market share. He says in the past 12 months Australians have increased domestic consumption of pinot noir to $9 million $4 million of that coming from New Zealand.

Wall Street Journal 6 September: Jay McInerney writes about the rise and fall of Australian wine in New York

“Somehow the Australian wine boom went bust in the last few years, at least from the point of view of imports to the States. Despite (or perhaps because of) the success of Yellow Tail, Australia lost its mojo. Overall imports dropped by 15% last year and the wine cognoscenti seemed to snub the category, partly out of a shift in fashion toward alleged (buzzword alert!) finesse and elegance, away from sheer power and alcoholic punch.

Whatever the reality, Australian wines were perceived as being fruit bombs, unsubtle and overripe. Pinot was suddenly king and sommeliers were railing against high alcohol. It certainly didn’t help when Robert Parker, a big champion of premium South Australian Shiraz, stopped visiting, handing responsibility for the country to a subordinate.”

The Weekend Australian Magazine 17 September: James Halliday writes ‘The team at Felton Road led by owner Nigel Greening and winemaker Blair Walter, wouldn’t dream of suggesting they make the best pinot noir (and stellar riesling and chardonnay) to come from New Zealand and Australia. But they do.’

Point for debate: A Burgundian thinks the world should drink Burgundy a New Zealander or Australian winemaker thinks the world should drink Pinot Noir. There is a difference but is it as much of a difference those involved in wine (i.e. reading this article) could bring argument to? James Halliday raises the point of 700 years of winemaking in Burgundy and an appreciation of the fact that pinot noir can be grown elsewhere in the world, but there can only be one Burgundy.

David Bicknell, (winemaker/part owner Oakridge Wines Yarra Valley): says the traditional regions are known, our new world ones are typically not. Bicknell also thinks regions have, ‘greater clout’ but Australia has so many it’s made it difficult for consumers to understand.

Jacob’s ladder

Or is it snakes and ladders? French drinks company Pernod Ricard owners of Australian wine brand Jacobs Creek take the decision to bottle UK exports of the brand in the country of destination.

In Australia there was a small media flurry over decision Somehow Winemakers’ Federation CEO Stephen Strachan was drawn in to an article, saying it was due to the strong dollar.

TKR wrote, ‘A strong dollar will have something to do with it but the main reason is being able to send twice as much wine in a standard 20-foot container in bulk then bottled and boxed. Even if the dollar were better positioned TKR believes UK bottling would still be on the increase. Facilities are first rate and the checks and balances are in place to prevent any adulteration of the wine. There appears to be plenty of concern about the wine, which is not the issue. Not much is being said about the people who lose their jobs on the bottling line, which is an issue.”

The issue had hardly hit the airwaves when Nick Blair, global communications director, Premium Wine Brands, Pernod Ricard responded. Cutting it short, no staff lost jobs, and there is a huge environmental element (23 per cent reduction in our carbon footprint) etc and so on. The point Blair skipped over was the savings.

Over in the UK Simon Thomas, deputy managing director for wine at Pernod Ricard UK, in an interview with The Drinks Business maintained that the bottling of Jacob’s Creek in the UK was “part of the group’s commitment to environmental issues and was not about cutting costs”.

Silence and denial is closely related to smoke without fire. A very smart trade person in the UK told TKR, “savings wise, I would estimate that Pernod Ricard have pocketed about £2.3 million as an annualised saving by moving to UK bottling, this is based on their current off-trade volumes (UK) which look to be 18m bottles of the classic range. They have of course made a significant impact on CO2 emissions with a saving of around 12m tonnes on an annualised basis. These cost saving may not be intact if the supermarket buyers have their thinking hats on.”

Exports: The Wine Export Approval Report to the end of September is out. Read the commentary and be reassured. Read deeper and the sun is not shining as gloriously as the commentary suggests.

Commentary: “The volume is stabilising towards the lower end of the range that has been established over the past five years.”

TKR: Five years ago volume exports were just over 800 million litres. Three years ago they dipped to just below 700 million litres then went back up 758 million. Last year was 772 million, now volume is tabled at 720 million. Wine Australia has no idea if the 700 million litre mark is “stabilizing”.

Next September the figure could be 600 million litres or, worse still, 900 million litres because inferior wine dumping is taking place. Using fictitious words only give confidence to the intellectually challenged. Let’s not forget the influence the overuse of positive Australian Wine and Brandy Corporation (AWBC) stats had on the rabid investment in the industry in the 1990s.

Bottled exports below $2.50 per litre fell by 34 per cent in value to $69 million and 37 per cent in volume to 33 million litres. Taking the maximum figure of $2.50 a litre, that equates to $22.50 for a 12 x 75cl bottle case. Using the WA figure of packaging being worth $15 a case that means the wine is worth 83 cents a litre at the top rate. The question this raises: is the reality that much of this wine was dumped at below cost of production?

The cost of rushed planting decisions in the ’90s, resulting in an over-abundance of chardonnay and shiraz, is beginning to bite. The former declined 24 per cent in export value to $207 million and the latter 4 per cent to $432 million. Shiraz at 4 per cent could be within tolerance levels but chardonnay shows a fashion trend away from the variety.

The bulk value has crept up to 99 cents a litre, from 98 cents in June 2011, 97 cents in March 2011, 94 cents in December 2010 and 95 cents in September 2010. Depending on the scale of production, this should be a profitable price, although margins will still be tight. Bulk wine accounts for $342 million of export value.

There are many ways of reading the figures and it is the job of Wine Australia to highlight the positives. It may be right: the settling mark could be around 700 million litres exported per year and the value around $2 billion. However, two pages of stats (wine exports by country, container and colour; value and volume) have nine columns; the totals in seven of the value columns show decline and in eight of the volume columns show decline. Need more be said?

Tony Keys

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