Olly Wehring (JustDrinks) has interviewed Paul Schaafsma, CEO of Accolade Wines. It’s a good read but as Just-Drinks is a subscriber site it’s pointless my adding a link to the article. Some quotes:
Wehring: “The change of CEO signals to me that Accolade’s adventures in M&A are now at an end.”
“Probably,” agrees Schaafsma. “We’re about 90 per cent to 95 per cent there in terms of what we need. We were committed to having full New World coverage. We could do with an Argentinean Malbec bolt on, but we can do that through Anakena [Chile], we don’t need to buy a winery to do that. So, we’re not actively searching any new regions.”
Schaafsma: “The supermarkets are actively reducing their supplier base and rationalising their ranges to try to find efficiencies. If I can get our branded product, our private label product and their own label product out of one bottling facility, and if I can do that with offerings from Australia, New Zealand, South Africa, the US and Chile and provide 15 per cent to 20 per cent of their range, it’s going to bring about efficiencies that are helpful.”
Schaafsma: “Aldi has oneandahalf buyers [in the UK] and they can still develop a range. If we can provide a solution to our customers that allows them a simpler buying process, then that’s got to be a good thing.”
The interview gives a few insights to Accolade’s global business. More than half the wine the company produces and sells is in the UK and Ireland; it has 14 per cent of the UK market. Schaafsma admits there is not much growth in such a mature market. Australia is going well for the company, with the acquisition of Grant Burge Wines playing a major part in the higher price sector.
Schaafsma also says Accolade has a good relationship with Coles and Woolworths, which makes a change from the bulk of the industry moaning about them. Looking to new markets, Schaafsma points to South Korea, Malaysia and Indonesia for growth, and, of course, China.
On the US he says: “It’s such a major wine market but from an Australian perspective it’s not the greatest place to sell at the moment. Some brands there have taken the market downwards for Australia. But there are opportunities for other countries. We’re seeing positive growth for New Zealand, for example, and the average price point is still quite high. If we can create relevance for our New Zealand portfolio there, that’s a good opportunity. We want to really ramp up the effort on Mud House, for example.”
Schaafsma is honest about the level of wine knowledge in the UK. It’s not great, he says, which is why consumers go for brands.
On Echo Falls’ fruit fusion range, he says: “Here’s a product that the wine-writing community would never write about, but that has brought more consumers into wine than anything else in probably the last five to ten years. Fifty per cent of people who drink it have never drunk wine before. If we can get 18-25-year-old consumers to come in at an Echo Falls Fruits level, you’re getting people who don’t really understand what, say, sauvignon blanc is. As they come into wine, we can offer them the type of flavour profile that they want. After 12 to 18 months, they may want a different wine experience, and they can be led by a brand that they have an awareness of. All of a sudden, you’ve got a wine drinker. It’s no different to what we’ve been doing the last 20 or 30 years – you bring them in with a sweet wine, like liebfraumilch or Black Tower.”
There is a lot more but it’s not my article so I won’t reproduce all of Wehring’s work. If you’re a subscriber to Just-Drinks, go have a read.
Less is more
The new edition of the annual Australian and New Zealand Wine Industry Directory (WID) is out. The media release has a gloomy start, referring to “industry under increasing pressure and poised for a further downturn in the number of wine producers” Apparently there are 2468 wine producers, down by 13 since 2015, and 105 fewer than the high of 2573 in 2014. No need for gloom. It’s good news, and would be even better if wine producers dropped closer to 2000 and land under vine were further reduced. According to the Australian Bureau of Statistics, total vineyard area (including not-yet-bearing areas) decreased 9 per cent from 148,507 hectares in 2011-12 to 135,178 hectares in 2014-15. If the average vintage were down to about 1.2 million tonnes it would be a healthier business for those that remained. The reduction of wineries is not uniform across the country. There were winery increases in South Australia, Victoria and Tasmania. Those that decreased were from:
- Queensland: down from 85 to 79·
- WA: down from 366 to 358·
- NSW/ACT: down from 469 to 463
WID also contains information on imports: ·
- New Zealand: $340.2 million, up 1.6 per cent from the previous year·
- France: $248.5 million, up 11 per cent ·
- Italy: $57.1 million, up 12 per cent·
- Germany: $5.7 million, up 44.9 per cent ·
- Chile: $5.2 million, up 22.2 per cent·
- Argentina: $4.1 million, up 20.8 per cent
Jacob lost his paddle?
There’s been plenty in the Australian media this past week on Pernod Ricard Australia reporting a loss of $31 million on sales of $518 million (a 4 per cent increase). The reports suggest the Jacob’s Creek brand is struggling against brands such as Hardy’s from Accolade, and Lindeman’s from Treasury Wine Estates (TWE).
Is Jacob up the creek looking for his paddle? Not really, but some past decisions have not worked out the best for Pernod. Focusing on Jacob’s Creek has not paid the dividends it should have. The basic range is of high standard and the reserve range often exceptional value, yet the message doesn’t seem to get across to the consumer.
The company continues to release brands that it says appeal to Millennials, such as Sun Craft. As for the other brands in the portfolio, they appear the poor relations. Could not the company do more with these? Morris gained momentum under the guidance of Nick Blair but seems to be sinking again. Perhaps getting rid of Mr Blair wasn’t the best move.
The full portfolio of Australian wines contains:
- Jacob’s Creek
- Wyndham Estate
- Richmond Grove
- Poet’s Corner
- Russet Ridge
- Jacaranda Ridge
With the set-up Pernod Ricard has in America one would assume a lot more could be done with its Australian wines in the US. However, it appears the company is more focused on its spirit brands. A spokesperson told TKR: “The Jacob’s Creek brand has a 3.1 per cent share of total Australian table wine, while the Jacob’s Creek Classic range has a 54 per cent share of the US$6-$10 Australian wine segment.”
Meanwhile, across the pond, Pernod Ricard is pouring money into marketing to push Jacob’s Creek back into growth. A figure of £1 million has been quoted and a recent article in Off Licence News said sales were up 10 per cent.
The article contains these stats: “millennials make up just 8.3 per cent of the UK wine market, within the Australia sub-category the situation is even more challenging as 18 to 34-year-olds consume only 6 per cent of wines from Down Under” (Nielsen, year to January 2016).