News
Indian survival trick
Indian owned but with global tentacles, Indage Vintners has secured a further period of grace (until mid June) from liquidation. Total debt for the group is estimated at US$100 million. The company’s Australian involvement began with Graham Cranswick-Smith before he sold the company (Cranswick Wines) to Evans & Tate in 2002. In 2007 Indage, under the guidance of Ranjit Chougule, acquired the Monash winery in the Riverland and renamed it Thachi Wines. It was an interesting move as the winery is capable of producing three times the total amount of wine consumed in India. However, Indage also acquired a distributor and bottler in the UK. The apparent intention was to ship in bulk and service the UK trade with cheap Australian wine. Believing he was on a roll, Ranjit bought Barossa Valley producer Vinecrest in 2008 for an undisclosed (but reputedly high) amount. He then made a bid for the Australian Vintage-owned Loxton winery; however, before the sale was completed, Indage Vintners hit difficult times and were unable to complete (losing a $6 million deposit in the process).
Water into Wine
How much water is used when making a bottle of wine? TKR published (unconfirmed) figures showing the litres of irrigation required to produce $1 worth of wine grapes:
Murray Valley - 995
South Australian state average - 505
McLaren Vale/ Barossa Valley - 110-130
These figures are probably quite simplistic and they don’t account for the water used in production, but still, they provide considerable food for thought. It begs the question that if it takes over a thousand litres of water to make a bottle of Murray Valley wine (which then sells at $10 or less) but only a couple of hundred litres for a bottle of McLaren Vale/ Barossa Valley wine (selling for $15 or above), where is the water best used?
This prompted the following response from Chris Byrne, Executive Officer of the Riverland Winegrape Growers' Association: ‘Stung by the usual drivel about the number of litres of water used to produce a bottle of wine and the extrapolation of that to the litres of water to produce a $1 of wine.’ Byrne sent figures showing it took 333 litres to produce a bottle of Riverland wine.
Arguments can go back and forth, but the ultimate question remains: with water as scarce a resource as it is in Australia, where is it best used?
Low it is but is it low enough?
The Winemakers Federation of Australia has released figures estimating the 2010 grape crop at 1.53 million tonnes, The question remains, though, whether 1.56 million tonnes is low enough? With domestic and export sales running between 1.1 and 1.2 billion litres, the 2010 vintage sits well for it translates to around 1.07 billion litres of wine. In short, the amount of wine made in 2010 fits with the amount of sales.
Ah but……… how many million litres have been sold, both at home and abroad, at below cost of production? Furthermore, is the 2010 vintage low enough to drain off the surplus stock built up over the past few years?
The Big Four
This year’s Chardonnay crush was down 24 percent on last year but it still amounted to 314,873 tonnes. Shiraz was reported at being just 4 percent down at 389,267 tonnes. The two varieties accounted for 45.9 percent of the total Australian 2010 crush. If we add Cabernet Sauvignon (13.9 percent) and Merlot (7.1 percent) to Chardonnay and Shiraz, these super four account for close to 67 percent of Australian production.
Lots of words small subject
The amount of wine-column inches devoted to emerging varieties could lead some to assume that Australia is indeed going in a new (grape) direction. Unfortunately, the actual figures are not so encouraging. Those emerging varieties that excite writers, makers and consumers account for very little: Barbera (0.1 percent); Sangiovese (0.2 percent); Tempranillo (0.2 percent); and there are still other varieties that fall into ‘other red’ category but in total they make up only 0.7 percent. White Varieties are harder to pin; none really made the list apart from Viognier (0.8 percent) and that could be considered mainstream now. The rest are in ‘other’, with a very small total of 1.2 percent.
The day has arrived
Earlier this century CEO of the Winemakers Federation of Australia, Stephen Strachan, said something along the lines of ‘I want to talk about health issues.’ I thought he was right and that, indeed, one day health would become ‘the’ big issue for the wine industry. ‘One day’ appears to have arrived in May.
Strachan (on behalf of WFA) argues that wine is different to other forms of alcohol. In a statement to the industry following the Henry Review release he says ‘A volumetric tax is a tax on alcohol because of its perceived social costs.’ He believes ‘it [wine] occupies a different space in the psyche.’ It’s easy to understand where he is coming from and, taking a cultural and aesthetic stance, I agree with him. However, the reality is that a tax on alcohol would apply to all alcoholic beverages and in truth there is no practical way that wine can be separated for special treatment.
Tesco tosh
In the UK the new coalition government has strong views on alcohol and the social abuse they hold it responsible for. Their first move was to talk up a ban on the sale of alcohol at below cost prices. Tesco supermarket were very quick off the mark releasing a statement that equated to little more than a blatant suck-up to the new government: ‘Tesco backs action on alcohol pricing’; ‘retailer will end below cost selling if Ministers take the lead.’
Before producers get over excited that retail price increases will mean more for them, consider this: Tesco will still require its full margin and will still want to remain competitive amongst other UK retailers and the fact that they are not selling wine at below cost does not mean they are adverse to buying wine that has been produced at below cost.
Divide and watch the predators circle
Fosters intends to pursue a demerger of Beer and Wine. The company also flagged a non-cash impairment charge of $1,100-1,300 million (pre-tax) to the carrying value of its wine assets in the 2010 financial year.
Its very frighting that after all the years the company has been involved in beer and wine CEO Ian Johnston can come out with, “while the beer and wine businesses are market leaders, they operate in separate market segments with different strategic and operating characteristics,” And this hasn’t been obvious for a decade?
Although Fosters talks as if it will continue as two separate companies once the beer is stand alone it becomes very attractive to global players and it’s hard to see Fosters Beer operating independently for any length of time. One likely candidate is Molson Coors who have estimated 5 percent stake in Fosters back (hard to define holding as it was acquired via Deutsche Bank). Speculation is the holding was designed to put Molson Coors in pole position for takeover should Fosters get rid of wine and return to being a brewer. Since then, little has happened but in the first quarter Molson Coors report the company declared that ‘other non-core items in the quarter included a US$6.9 million non-cash mark-to-market loss related to the cash-settled total-return swap the Company arranged with respect to Foster’s common stock in 2008.’ SABMiller is also being heavily touted as a possible suitor.
As for wine its also a divided section the USA arm (Beringer) and the Australian collection of brands (Penfolds, Wynns, and Wolf Blass etc.) Would anybody want both parts in the same bundle?
Postcard from Victoria
The State of Victoria is putting up $8 million for a campaign that will promote Melbourne and the state of Victoria to China. According to Premier John Brumby, they want to ‘make China Victoria’s largest international visitor market by 2014’. The wine angle comes in via: ‘Yarra Valley and Mornington Peninsula are becoming increasingly popular as wine, golf and other niche experiences grow in popularity.’
Tony Keys is author of the Key Report a weekly online-newsletter that provides incisive and comprehensive news on the Australian Wine Industry.
His full report can be found at www.thekeyreport.com.au
|
|
|
 |
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
|