WFA silence is deafening

Silence is deafening

The noise of the wine industry is rising and the silence from the Winemakers’ Federation of Australia (WFA) is deafening. As of 9am on Thursday, June 16, no announcement had been issued by the WFA, despite the federation holding a meeting last week to discuss responses received from wine companies and regional bodies. Its last release was at the beginning of May, when the WFA welcomed the Government’s injection of $50 million into industry and mildly said how disappointed it was that the Government was taking out $300 million by reducing wine equalisation tax (WET) rebates over the next three years.

If that were not enough of a worry for small/medium producers, this statement from Assistant Treasurer Kelly O’Dwyer and Assistant Ag Minister Anne Ruston is yet to be resolved:

“A wine producer must own a winery or have a long-term lease over a winery and sell packaged, branded wine.”

Mark Cohen from Malesco Wine Broker believes the WET rebate should be for exports only:

We would have a sustained and thriving export market, competing favourably against the subsidised markets of EU.”

John Ellis (Hanging Rock Winery) also believes WET has distorted the domestic market. Ellis was on the WFA board when the government introduced WET. He says:

“The objective was to boost margins, thus improving profitability of the wine sector – especially in regional areas. What we did not count on was the oversupply of grapes – which led to schemes to direct the rebate back to many grape growers.

“The wine industry surplus, coupled with the WET rebate, enabled the supermarkets who were (previously) reliable business partners to become the industry’s biggest competitors.”

The WFA should have seen the oversupply of grapes. The WET rebate was introduced in 2004 and it was clear then the industry was heading towards a brick wall, but the euphoria of industry and its various official bodies blinded them to what was happening.

Ellis continues:

“We did not foresee that the rebate could be applied to ‘traders’ with no skin in the game. We could not have predicted the rorting – which did happen.”

Whichever way the situation is sorted, there will be losers. Many make wine with the philosophy that if they make it surely consumers will buy it. Others invested in dodgy tax saving schemes, planting vast swathes of vineyard, itself a sign that the WFA should have noted as a portent of oversupply.

It’s been suggested the Government briefed the WFA ahead of the budget that it would be reducing the rebate from $500,000 to $290,000. If this is true it appears the WFA acquiesced despite being aware of the significant impact it would have on its members.

As McLaren Vale-based Dudley Brown (Inkwell Wines) says:

“The WET rebate changes – which reduce the amount of rebate from $500,000 to $290,000 over the next few years and limits access to the rebate to those who own or lease a winery – comparatively benefits WFA’s largest members, Treasury Wine Estates, Accolade, Casella, Australian Vintage Limited, Pernod Ricard, De Bortoli, Yalumba etc, by harming their smaller competitors. All wineries will each wear a $210,000 per year income hit (small beer to the large, large beer to everyone else) while their most innovative competitors, the small ‘virtual’ winemakers who are bringing the wine world’s interest back to Australian wine – will get shoved to the wall through new rules limiting their access to the rebate.”

The industry wants to know what is going on. Even if nothing is happening, rumours are spreading, and the WFA could help the industry by saying something.

Low price, poor health

A report in The West Australian on June 15 started:

The lower price for Aldi’s alcohol products was one of several reasons given by the Director of Liquor Licensing to reject the German supermarket giant’s application to sell liquor at its Harrisdale store.”

The Aldi application faced opposition from the McCusker Centre for Action on Alcohol and Youth, the Executive Director of Public Health and the Commissioner of Police.

According to the article, by Tayissa Sweetlove, Woolworths-owned BWS obtained a licence in the same shopping precinct two months ago. Sweetlove’s article quoted the Director of Liquor Licensing, who said BWS offered

“greater benefits to consumers in the locality” because of its bigger size, products at various price points and “purposively separated and delineated” store layout.

It’s a win for the health lobby and sets a precedent for future alcohol licences across the county. 

Showing improvement

Wine shows have undergone great changes in the past decade. In TKR’s view there has been a huge improvement in the quality of shows. There is still a way to go for some of them, but change has been in the right direction. The latest upgrade is for the Riverina Wine Show (RWS).

There will now be two parts to the RWS. One part will be limited to wines carrying the Riverina Geographical Indication (GI). This is good news. The Riverina should be proud of its GI and the wines it is capable of producing that stand on their own feet.

The other part of the show comprises the open classes, which receive wines nationwide, though why a Margaret River or Coonawarra wine producer would want to boast of winning a gold or trophy in the RWS we have little idea.

The show is also giving greater recognition to viticulture by creating an award for grower excellence, which will be linked to medal results in this show.

Another excellent idea is the launch of the Australian Italian Wine Awards. These will be part of the RWS’s open classes and should attract wines from all regions.

Accolades for Accolade

Some of the world’s greatest wines are fortified. Portuguese port and Spanish sherry are unique, as are the fortified muscats and topaque from Rutherglen.

The story of fortified decline is the same as that of chardonnay or liebfraumilch, and maybe down the track New Zealand sauvignon blanc’s popularity will create demand that pushes quality downwards, turning consumers away from the style.

Fortified production needn’t be confined to a region, though this can help with marketing. Accolade Wines has released four upmarket, highly priced and superbly packaged fortified wines for on-premise and cellar door. The really clever part is that Accolade has also released them in the travel retail market. This means they will be seen, if not bought, by thousands of travellers as they browse the duty free when travelling. The wines are in 500ml bottles:

  • Hardy’s Rare Show Sweet White (150 bottles produced), $250
  • Hardy’s Rare Liqueur Sauvignon Blanc (346 bottles), $99
  • Hardy’s Rare Tawny (864 bottles), $99
  • Hardy’s Rare Muscat (784 bottles), $99

Accolade has good reserves of aged fortified wines, and this move could help get the sector moving again. Travis Fuller, Accolade’s marketing manager ANZP, told TKR:

“We are definitely placing effort back into our fortified range albeit in a focused, committed way. These, as you have seen, are in the top end where there remains good support amongst enthusiasts to the style and quality. Paul [Lapsley, head winemaker] and the team continue to place huge importance on the heritage and unique quality that these wines bring to our enjoyment of wine as a whole.”

Did well

The Decanter World Wine Awards have been announced. Australia did rather well. Out of 16,000 entries, just 31 wines scooped platinum – best in show, and three were Australian:

  • Blaxland, Tanunda Hill Barossa Shiraz 2014
  • McGuigan ‘The Shortlist’ Hunter Valley Semillon 2007
  • Wolf Blass ‘Gold Label’ Adelaide Hills Chardonnay 2014

Out of 130 platinum winners, Australia picked up 13 gongs:

  • Pirie Brut Australia Tasmania NV
  • Stella Bella ‘Suckfizzle’ Margaret River Sauvignon Blanc-Semillon 2013
  • Penfolds ‘Bin 14A’ Adelaide Hills Chardonnay 2014
  • McGuigan ‘The Shortlist’ Eden Valley Riesling 208
  • De Bortoli ‘Tesco Finest’ Riverina Dessert Semillon 2011
  • Angove ‘Warboys Vineyard’ McLaren Vale Shiraz 2014
  • Wolf Blass ‘Grey Label’ South Australian Shiraz 2013
  • Bay of Fires Tasmania Pinot Noir 2014
  • Devil’s Lair Margaret River Cabernet Sauvignon 2013
  • Kilikanoon ‘Tregea Reserve’ Clare Valley Cabernet Sauvignon 2012
  • Lindeman’s ‘Pyrus’ Coonawarra Cabernet Sauvignon-Cabernet Franc-Malbec 2013
  • Morris Wines ‘Cellar One’ Rutherglen Classic Liqueur Topaque NV
  • Baileys of Glenrowan ‘Founder Series’ Classic Muscat NV

There were 378 golds awarded, with the Australian tally amounting to 29. Well done to all winners.

Beer habits

Roy Morgan has released its latest report on the nation’s beer drinking habits, in which it found that 38.1 per cent of Australian adults drink beer at least once in any given four-week period. Men dominate, making up 75 per cent of those beer drinkers. Women, the report says, prefer wine. Other findings:

  • In the year to March 2016, 5.3 million Australian men (58.8 per cent of the adult male population) drank some kind of beer – premium, imported and/or standard; low-alcohol and/or full-strength in an average four weeks.
  • In comparison during the same period 1.7 million women (18.2 per cent) drank beer.
  • Over 47 per cent of men consumed standard beer (i.e. not premium or imported).
  • Premium/imported beers were drunk by 37.1 per cent.
  • Full-strength beer (53.6 per cent) is far more popular than mid-strength (13.6 per cent) or low-alcohol (10.1 per cent).
  • More than a quarter of men consume both standard and premium/imported beers in an average four weeks.

Incidence and type of beer consumed: Australian men vs women

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Source: Roy Morgan Single Source (Australia), April 2015–March 2016 (n=15,135). Base: Australians 18+

The 10 most popular beers consist of many that TKR would put in the worst 10 beer list.

Ten most popular brands of beer among Australian men

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Source: Roy Morgan Single Source (Australia), April 2015–March 2016 (n=2,838).

The report says:

“In an average seven-day period, 11.1 per cent of beer-drinking men consume Carlton Draught, fractionally ahead of Mexico’s most famous cerveza, Corona (11.0 per cent) and Queensland’s mid-strength staple, XXXX Gold (11.0 per cent).

“Victoria Bitter satisfies the hard-earned thirst of 8.5 per cent of Australia’s beer-drinking men, while premium beer Coopers Pale Ale completes the top five at 8.0 per cent.”

The report points out beer is becoming a crowded market, with craft brews nibbling away at the big brands.

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