This year 2017 anno domini, the year of change

2017: the year of change?

Each year there is change, some for good, some not. We need change not just to prevent the world grinding to a halt but to remind us of our own individual circumstances. Change wakes us up to what is going on around us, and forces us to adapt and evolve.

The biggest game-changer from a global perspective at this stage appears to be Donald Trump becoming President of the United States. What will happen under his guidance is unknown, and in a way rather exciting, but it also carries a touch of fear.

It was interesting that last week Alibaba Group Holding Ltd chairman Jack Ma met President-elect Donald Trump. During this meeting Ma declared that Alibaba could create about 1 million jobs in the US. This could be seen as shrewd business, as Trump has threatened to impose high tariffs on Chinese imports into the US.

Ma is getting in early, hoping to pal up with Trump, for the ultimate and blatant reason of keeping his already bulging pockets full and stretching to accommodate more. A recent report said about 7000 US brands were sold via Alibaba’s websites, generating about US$15 billion ($20 billion). Along with Pacific Northwest cherries, Washington State apples, and Alaskan seafood, wine is also on the agenda.

The question arises: will Ma, via Alibaba, tone down Australian wine offerings in favour of American?

Australian former prime ministers hold differing views on President-elect Trump. Paul Keating is anti-Trump, saying Australia should cut ties with the US, especially on the issue of the South China Sea. John Howard is supportive of Mr Trump.

Last November Trump denounced the Trans-Pacific Partnership (TPP) trade deal. He’s not happy that other countries in the 12-nation pact (note: China is not involved) appear to be beneficiaries while the US is not. The countries are:

Australia Chile Mexico Singapore
Brunei Japan New Zealand United States
Canada Malaysia Peru Vietnam

New Zealand, Canada, Japan and the US are strong markets for Australian wine. If Trump pulls the US out of the TPP how will that affect Australian wine trade with the US?

Japan and Australia are strong supporters of the TPP. Last week Japanese Prime Minister Shinzo Abe was on a short visit to Australia. Media reports focused on the Japan-Australia Economic Partnership Agreement (JAEPA), which means from this year nearly all goods traded between the two countries will have a zero tariff.

Would the strength of the JAEPA outweigh any losses incurred if the US withdrew from the TPP?

This is also the week in which tariffs on wine to China are reduced as a result of the China-Australia Free Trade Agreement. Tariffs are now down to 5.6 per cent, and will be zero in 2019.

At this stage it’s conjecture as to what will happen when the UK’s withdrawal from Europe is completed. It’s likely to happen in 2017 but I have no doubt interesting twists will take place in the coming year.

From international events that may affect Australian trade (including wine) to domestic issues. A blunter statement then the following could not be found:

“The national advocacy body Australian Vignerons [AV] is in danger of winding up if support fails to increase in coming months. The organisation has written to stakeholders making it clear that unless support is forthcoming the board will have no alternative but to start the wind-up process.”

If the voice of AV is weak at the moment, consider it is at least a whisper. CEO Andrew Weeks is smart and given support will strengthen the voice. Unless grapegrowers want to totally become the compliant, bullied, cowed puppets of the large producers, TKR suggests you get thumbs out of bums, brains out of neutral and your act together.

AV is in league with the Winemakers’ Federation of Australia (WFA), and if AV folds that will weaken the WFA, which already doesn’t appear to be in a position of strength. If the WFA fails or weakens further, that could evolve into a situation in which control of the Australian wine industry, especially export, is firmly in the hands of 12-15 producers. Weeks says in his statement: “Australian Vignerons grapegrowers will still have to pay compulsory research levies, but they will no longer have a say in how those levies will be invested in projects that affect their businesses.”

This also looks to be the year Wine Australia (WA) is throwing good money away. A media release on Monday 16 January said WA was to invest “$5.3 million to understand and refine the expression of Australian shiraz terroir”.

This is covered in greater depth in the Australian News section, but in simple terms it is my view that this is a tremendous waste of money, driven by the overinflated ego of WA deputy chairman Brian Croser.

The above international and domestic events are conceivably damaging to the Australian wine industry. Yet the most chatter over the past couple of weeks has been Max Allen moving from The Australian to the Australian Financial Review. He takes over Tim White’s column and that of Philip Rich in the monthly magazine. The media release says he has a brief to cover everything from “wine and beer to spirits and other beverages, from both a consumer and business perspective”.

The business perspective will be of great interest to TKR. Will Allen be able to cover it as well as Simon Evans? Allen’s role at The Australian has been taken by Nick Ryan. Both are good writers but so are Philip Rich and Tim White. I hope all find the place they are seeking, which may or may not involve writing about wine.

It’s not yet Australia Day and 2017 is looking fascinating for Australian wine. What will CHAMP do with Accolade Wines: list it or flog it? Will Treasury Wine Estates keep up its incredible performance of 2016? How much more in cost savings will Pernod Ricard enforce on Jacob’s Creek? How much more money will Wine Australia waste? There will be winners and there will be tears.

Good karma

Tony

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