Poor UK showing, Australia supporting USA

The UK Association of Wine Educators (AWE) has been going for close on 20 years, yet it only has 90 members. This not because people don’t want to join; it’s because since day one it has had a strict policy of only admitting those who have knowledge and can pass that knowledge on in an interesting and articulate way.

Each year the AWE publishes The 100 AWEsome Wines brochure. This publication is compiled through members submitting wines for inclusion. When several members select the same wine, it’s in. Below is the 2016 selection of Australian wines and the categories in which they appear.

  • Under £10 White: The Exquisite Collection Riesling 2013, Clare Valley, Aldi, £6.99 ($11.80)
  • Under £10 Red: Zero
  • £10-£25 White: Zero
  • £10-£25 Red: Tim Adams Shiraz 2014, Australia, Tesco.com, £11
  • Rosé: Zero
  • Sweet: Zero
  • Under £25 Sparkling Wines: Jansz Premium Cuvée Brut NV, Tasmania, Oddbins, £17

Just three Australian wines are considered interesting enough to be chosen. Three out of 100. France was way out in front with 23 wines; Italy and Spain were both in double figures; South Africa had nine; New Zealand and Chile had five apiece. Australia only three.

If these educators are not including Australian wines it’s likely they are not using them in lectures and educating consumers.

I have been a member of AWE since its foundation. I have asked before for companies to send samples with a note saying where they are available in the UK, and at what price. It’s up to the companies. If they can’t be bothered, so be it.

Trump this

Should the American public use their democratic right and vote for Mr Trump to become the 45th President of the United States, Australia’s relationship should survive. In 2015 Australia flogged $14.226 billion worth of goods to the US but bought $33.027 billion worth. The figures from the Department of Foreign Affairs and Trade:

  • The US accounted for 27.2 per cent ($758.2 billion) of Australia’s total foreign investment stock as of December 2014.
  • The US was Australia’s largest destination for investment abroad, accounting for 30 per cent (or $575.5 billion) of Australia’s total overseas investment stock as of December 2014.
  • In 2014-15 the US was our third-largest two-way trading partner in goods and services, worth $64.5 billion.
  • Australia’s goods exports to the US were $14.226 billion in 2015.
  • Australia’s total imports from the US were $33.027 billion in 2015.
  • Bilateral services trade to the US was worth $7.1 billion and imports $13.7 billion in 2014-15.
  • In 2015 alcoholic beverages mostly wine was the fourth largest export amounting to $491million

Trump’s rant on trade with China was based on US goods exported in 2015 totalling US$116 billion ($151.3 billion), while goods imported from China amounted to US$482 billion.

The hatred Trump shows towards Mexico is not really founded on trade. In 2015 the US exported good worth US$236 billion to Mexico and imported US$295 billion. That’s a deficit for sure, but the US$59 billion gap is bridgeable.  He like Australia’s Turnbull government with backpackers is not considering the benefit the Mexican workforce brings to Californian agriculture.

Shifting Sands

Marvin Sands established the company now known as Constellation Brands in 1945. His sons, Rob and Richard, are still major shareholders. They hold senior positions: Rob is CEO, and Richard the chairman. There is a full management team but the Sands still hold sway.

It was the brothers who led the growth spurt when they bought at overinflated prices BRL Hardy for $1.9 billion in 2003, and Canadian producer Vincor for US$1.3 billion in 2006.

Both businesses did not do as well as the brothers expected; 80 per cent of BRL Hardy was sold to CHAMP Private Equity in 2011 for the knockdown price of $290 million and renamed Accolade Wines.

Now Constellation Brands, probably under the direction of the brothers, is about to offload its Canadian assets for a reported price in excess of US$1 billion ($1.3 billion). This is being tied in with CHAMP floating Accolade Wines, possibly early in 2017, according to media reports. Constellation will also offload its 20 per cent holding.

This is an opportunity to exit all Australian involvement, but if CHAMP, as is being reported, is expecting Accolade to perform along the same line as Treasury Wine Estates, Constellation would be better off holding on to its 20 per cent stake for a couple of years.

It’s also reported that Constellation’s Canadian assets already have potential buyers, including the Ontario Teachers’ Pension Plan (OTPP). The OTPP has had wine investments before; for a time it held a chunk of Australian Vintage Stock. Now its Australian holdings include:

  • A 50-year lease of the Sydney Desalination Plant, in partnership with Hastings Funds Management.
  • About 70 per cent of three Australian telecommunications companies (acquired from Leighton Holdings Limited). The companies are Nextgen Networks, Metronode and Infoplex.
  • 99 per cent of Aroona Farms, one of Australia’s largest growers of almonds. The company has 20 full-time employees between its main offices in Adelaide and two farms in Victoria and South Australia. The operation consists of 590,000 trees, covering about 20 square kilometres.

It makes sense for Constellation to pull out of Canada and focus on the US with high-volume, high-profile and high-profit wine brands, along with beers such as Corona Extra and Modelo Especial.

It’s also upping its spirit portfolio. In September the company entered into a bidding war for craft spirit producer High West Distillery (HWD) of Park City, Utah. HWD sold 50,000 cases of product in 2015 and is projected to sell 70,000 cases this year. According to Shanken Daily News, Constellation won the day with an estimated bid of more than US$150 million.

The company has this week released its second quarter/half year 2017 results. Net sales for the quarter were up 17 per cent pushing past the US$2 billion mark. Second quarter profit was also up an incredible 27 per cent.

The beer sector continues to support the company with net sales increase of 20 per cent. Wine and spirits amounted to 8 per cent growth.

The Pernod diet

Pernod Ricard continues to carry out its promise to slim the company down by offloading minor brands and giving greater focus to its core business.

The latest move is selling the Danish vodka brand FRÏS to Sazerac Co, which appears to be the go-to company for Pernod Ricard’s unloved brands. Earlier this year PR sold the Paddy Irish whiskey brand to Sazerac, which is based in New Orleans.

Paddy was sold so Pernod Ricard could fully focus on Jameson Whiskey, and FRÏS so it could focus on Absolut Vodka.

TKR expects more offloading of brands, including wine. Staff numbers are also being slimmed down.

It’s been interesting to observe over the past decade companies such as Diageo, Pernod Ricard and Constellation Brands building vast portfolios of brands only now to be shedding the parts that do not match their expectations.

Leave a Reply

Your email address will not be published. Required fields are marked *