Blockbuster start thanks to Wine Australia

Blockbuster start

Wine Australia (WA) has started the year in blockbuster fashion with the news that it is to spend $5.3 million on new research. The centrepiece research will be on understanding and refining the expression of Australian shiraz terroir.

One can understand the interest but not the reasoning. Deputy chair of Wine Australia, Brian Croser AO, said:

“Australia makes wines of exceptional quality and finesse that reflect their provenance and terroir, but they don’t currently receive the international recognition they merit.”

A true enough statement, but does Croser really think the average global wine consumer is that interested in Australian terroir? If he does then he has lost touch with the majority of the Australian wine industry and has little understanding of the average wine consumer. What he appears to be doing is pandering to the incredibly small wealthy cohort of global elite consumers who are interested in wine.

Croser: “It is these wines that will most quickly elevate the image and reputation of all wines we produce. We are focused on building international recognition for our wines to increase demand and the price paid for all Australian wines.”

This may be Croser’s belief but it’s conjecture or arrogance that says “will”. What has he to back this up?

Look at the success of Accolade Wines in the UK or Casella in the US. Neither is based on terroir wines. Consider the incredible rise of New Zealand sauvignon blanc and prosecco, or chardonnay before that, and earlier still liebfraumilch in the UK. It happened but no one is really sure how.

Observe Constellation Brands acquiring the Prisoner and Meiomi brands, and seek the terroir there. Ask why Treasury Wine Estates (TWE) puts its emphasis on Penfolds as a brand, and slips in regional and terroir aspects behind the brand name.

Wonder why TWE is doing well with the 19 Crimes brand in the US. Because it’s not region-based, with most of the fruit coming from inland regions. Compare this with Yellow Tail, which is half the price yet has much the same origins.

Casella tried to introduce higher priced regional offerings in the US but they were not well received. In the end Casella acquired Peter Lehmann. It’s a brand that has a strong regional connection to the Barossa Valley but at the end of the day it’s the brand that fronts the wine.

Croser: “What these projects seek to do is to understand how these environmental signals translate into physiological changes in grapevines that result in changes in berry composition and in turn result in the expression of terroir in wines.

“When we understand how these environmental signals work, we can then understand how winegrowers can refine the expression of terroir and uniqueness in their vineyards, so that they can produce wines that express their unique terroir with greater confidence and obtain the premium such wines warrant.”

Yes to the first part. It will be interesting and insightful to winemakers and, in turn, growers. The wines may warrant higher prices, but if Croser or any in Wine Australia think this avenue of research will result in higher prices they are in la-la land.

There is also some slippery figure work in the WA release, boasting how 40 per cent of Australia’s exports valued at more than $10 a litre FOB are shiraz.

Total exports over $10 FOB totalled $547.31 million in the year to end of September 2016; 40 per cent of that is about $219 million. All wine exports to the end of September totalled $2.17 billion. This puts the 40 per cent quote in a clearer perspective.

Putting aside the Croser waffle about rising prices and greater recognition for Australian shiraz in global markets, the research team is first rate. TKR has spoken to a couple of people who, preferring not to get too involved, have heaped praise on:

  • Dr Leigh Schmidtke from Charles Sturt University at the NWGIC
  • Associate Professor Cassandra Collins at the University of Adelaide

It was amusing to note Max Allen’s first Australian Financial Review article. We quote:

I would like to suggest that Australia’s most famous red wine grape, shiraz, might not in fact be the best variety for many of our most famous warmer-climate wine regions such as the Barossa Valley and McLaren Vale. I would like to suggest that if you want a grape variety that most faithfully expresses terroir – that captures the unique combination of country, climate and culture in a glass – then in many cases, in many places, grenache might be a better option.”

A comment from retired marketer Richard Warland:

“Spending that sort of money on academic research is misguided!

“I believe we have a 4-to-5-year window of opportunity to dominate the wine market in China – and if we achieve that, Australia’s grapegrowers and winemakers will have prosperity for a century or more.

“Leave the academic stuff (which also benefits our competitors by the way) until the industry is profitably stable!”

Dudley Brown, proprietor of Inkwell Wines in McLaren Vale, agrees with TKR that this research will not result in selling more wine and at higher prices. But he is reassured about the quality of the research as it is being conducted by Cas Collins” and puts forward the following positive aspects:

“It is research investment that is unlikely to be used to any other country’s benefit. This is unlike much wine research investment made by Australian levy and taxpayers. Unique and impossible to copy are of value in themselves in wine.”  

“It starts to address the question of ‘why Australia?’ as it relates to wine in a way we have never articulated fully or well for the rest of the world. This cannot be answered at a national level (despite 20 years of Wine Australia’s best efforts) but could go a long way to address the ‘why’ of our best regions. Jumping-off points such as the McLaren Vale Geology Map should provide a fertile test bed for research.” 

“It is not of the ‘immediate now’ that everyone wants addressed. Setting aside 150 years of foundational history, Australian wine took 20 years to get to its relatively unglamorous current spot in the world of wine. We have to expect it will take as long to change that. So, projects that embrace the ‘long now’ that can bring producers, researchers and the wider world along with them on a serious journey of discovery could be huge. The sooner everyone gets that the short term is a mirage in both research and marketing, the better.” 

“The research is a major departure in that most researchers reject any scientific notion of ‘terroir’ (as should we but on linguistic grounds). I once asked the former head of the AWRI [Australian Wine Research Institute] about research into differences in terroir between regions less than 10 years ago and was told that the ‘AWRI doesn’t engage in marketing related research’. As you know, I am rarely at a loss for words. I was then.” 

“There are two unstated possible big outcomes here. One is that terroir exists and matters. The other is that it does not. Either way, Australia will have a better story to sell wine with.”

There is also climate change to consider. By the time this research is completed climate could have moved the terroir in another direction. There’s plenty there to debate. Please post any comments you feel will add to the argument.

Damn lies and statistics

Damn Lies and Statistics: The demonisation of the alcohol industry is a report by the Menzies Research Centre with the assistance of Cadence Economics.

At last, a report that puts forward a balanced argument about the effects of alcohol and its cost to Australian society.

For years the anti-alcohol brigade, whether health, state or church, has been issuing reports on the cost to society from alcohol-related issues.

Damned Lies and Statistics (DL&S): “In recent years the alcohol industry has come under sustained attack from public health activists. Groups with deep pockets, like the Foundation for Alcohol Research and Education [FARE], have been increasingly strident in their demands for punitive taxes, regulations on labelling and restrictions on sales and advertising. Unsurprisingly they frequently recommend that the proceeds of those taxes should be given to public health activists like themselves.”

The Australian National Preventive Health Agency (ANPHA) in the Medical Journal of Australia in 2013 estimated the annual gross cost of harm caused by alcohol to be $36 billion. The DL&S report says this astronomical amount was achieved by “adding together separate analyses reflecting different purposes and different concepts and methodologies and some double counting. These figures inflate the assessment of likely costs.”

DL&S refers to the American Anti-Saloon League of the prohibition era, saying today’s temperance organisations also put forward simplistic, moralistic arguments in which the negative effects of alcohol are exaggerated.

Alcohol should not be portrayed as the sole agent of social problems. The reality is complex, multi-factor causes. The self-styled do-gooders present restrictions on alcohol as solutions to solve a broad range of social problems, from premature death to child abuse and domestic violence.

DL&S: “The researchers from Cadence Economics who attempted to review FARE’s claim were hampered by a lack of transparency. A crucial report that appears to be the basis of FARE’s $36 billion figure has never been released. Even without this document, however, it is clear that any attempt to assess system-wide costs and benefits is doomed to failure. It requires the addition of inconsistent data metrics and introduces double counting errors relating to timing of the impact of alcohol consumption. Data sets are cherry picked and manipulated to suit pre-existing assumptions.”

It’s about time organisations such as ANPHA and FARE stopped conning the public and government for their own greed for grants.

The most often quoted report is The costs of tobacco, alcohol and illicit drug abuse to Australian society in 2004/05 by David J Collins of Macquarie University and Helen M Lapsley of the University of Queensland and University of New South Wales.

This report estimated the cost of alcohol to society to be $15.3 billion. Since its release it seems all other reports have used Collins and Lapsley as the base and built from there.

TKR awaits the announcement from Wine Australia about how much money will be granted for research into the use of manipulated figures that point to wine being a bigger factor in alcohol abuse than it really is.

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