Is Wine Australia committing suicide or is it being murdered by its board of directors?

Suicide or homicide?

Is Wine Australia (WA) committing suicide or is it being murdered by its board of directors?

It’s hard to decide, but something is seriously wrong surrounding the announcement of a $5.3 million grant to research Australian shiraz terroir.

Last week CEO Andreas Clark sent TKR a letter purporting to explain the questions put to him. The focus of those questions:

  • How will this research increase consumer awareness of Australian wine around the world?
  • How will it increase retail prices for all Australian wine around the world?

We also want to know if it was a full board decision or was it pushed through by deputy chairman Brian Croser while the rest of the board followed like sheep.

The email we got from Clark was what we should have expected from a former diplomat with the Department of Foreign Affairs and Trade. It was a well constructed letter that said very little and skirted around the concerns that TKR had and still holds. Full email

Clark: “As you know, we have set a very ambitious, cross-generational goal for Australia to be recognised as the world’s pre-eminent wine producing country.”

It appears WA’s ambition, or perhaps Croser’s ambition, is to place Australia in front of France in the mind of the consumer. The main TKR counterargument is that consumers are not that interested in terroir and this is an appeal to the few, not the many.

It’s cultural cringe. Surely Australia should have the confidence that it does not need to prove much when it comes to wine. Do the few deserve $5.3 million spent on them so they can brag and bore at wine tastings and dinner parties? Is snobbery overriding common sense?

A sound factual argument dispelling the French myth has been put forward by Damien Wilson, PhD, Hamel Family Chair, Wine Business Institute, Sonoma State University:

“An explanation of the interest in this [terroir] strategy could be attributed to the reputation of France. We all know that terroir underpins the reputation of French wine. A reputation to which most New World wine producers aspire. Yet, since French wine’s AOC codifications began in earnest in 1937, France’s area under vine has steadily fallen (plummeted) from just shy of 2 million hectares before the Great Depression, to 1.5 million in the ’60s, then 1 million in the ’80s, to around three-quarters of a million now. If prices were skyrocketing as a result, I’d say ‘great work on that premiumisation strategy’. 

“Yet Euromonitor shows that the real value of French wine in annual expense per capita for those of legal purchasing age fell from €625 to €520 between 2000 and 2015 (a fall of 22 per cent with this measure). Additionally, domestic consumption dropped from ~160L per capita/annum in the ’70s, to a bit over 50L today. Further, my French contacts estimate that the cost of making wine has effectively doubled since the 1980s.

“Not exactly a glowing endorsement for ‘follow our lead’.”

Clark:

We believe that these wines are the ones that will excite and delight the wine influencers in the media and trade, that they will help enhance the image of Australia wine and lift opinions about the wines we produce to where they should justifiably be. 

“To this end, as part of the research we are engaging the top international sommeliers who we will be hosting as part of the World’s 50 Best Restaurants to add their expert and international perspective on a subset of Australian shiraz. This provides an excellent opportunity to collect data for the project while continuing to reset the environment in which the world thinks about Australian wines.” 

This is pure cringe and has produced outrage from many Australians who think Australia should be secure enough to stand on its own expertise. As this country leads the world in the quality of its wine research it has enough experienced wine people to do any benchmarking required.

Richard Warland, former winemaker, marketing executive and current visiting expert on CRM (customer relationship management) at the Burgundy School of Business:

“Thanks for publishing Andreas’s reply. I must say that I am in more than two minds about this [above Clark quote]. I certainly support the engagement of sommeliers – but doesn’t it come under the heading of PR? Will top sommeliers whose egos rule be sufficiently objective to participate in academic research?

“Secondly won’t publishing ‘what levers can winegrowers pull’ benefit all winegrowers, worldwide? Once again, the Australian industry will be paying for research benefiting its competition.”

Others were less generous then Warland. Philip White, writing in InDaily on 7 February: 

“Another mob some Australian wine heavies kow-tow to are the so-called ‘sommeliers’, provided they come from abroad. This S-word comes from the old ‘sompter’ which was a dude with a donkey or horse cart whose job it was to stock the cellars and pantries of great houses. 

“Now they tend to use their employer’s money to compile enormous wine lists of obscure things like the recent flood of murky hippy wines the colour of Donald Trump’s hair and as biologically mucked-up and challenging as his brain. 

“They love a list that’s so confusing in language, price and obscurities that the punter must depend then on their advice, which gives them the perfect opportunity to flog whatever has the best mark-up so they can make the list longer.”

White also despairs at international guest judges at wine shows. Why are they required? Again, Australia has more than enough quality talent to judge its and any other countries’ wines in a show.

Brian Miller, who describes himself as wine marketer at large, offers the following:

With regard to recruiting wine waiters to evaluate comparative qualities of terroir, are sommeliers a bit too biased towards clouded, amber-tinged wines? Are they sufficiently in touch with wine styles preferred by mainstream consumers outside of the sommeliers’ immediate and captive spheres of influence? Are regional and vineyard characters subsumed by funk?”

Miller points to an article by Huon Hooke, in which Hooke writes:

“What do you call the new-wave wines so beloved of sommeliers and their wine bars and restaurants?… I found that about 30 per cent of the wines had nothing I could find to recommend them… You might find a similar ratio, just taking random Aussie wines off the shelves anywhere. The difference, it seems to me, is that with your randomly sampled wines from bottle shops, the 30 per cent would be simply bland and boring, with few faulty wines. With the ‘new wave’ wines, the 30 per cent would include some of the most objectionably faulty wines in creation …” Full article

Miller continues:

“The main reason restaurateurs stock non-mainstream wine is so diners can’t make comparisons with retail prices. The rest of the ‘This is something I recently discovered’ performance is deflection. 

“Several business associates have told me they don’t appreciate being belittled by wine waiters, who should be there to help, and then having unknown and unpalatable wines foisted upon them. 

Again Miller refers to an article, this time from NY Eater  

“A blow to consumer confidence in sommeliers has come from sommeliers themselves. It is now common – and not only common, but expected – that sommeliers will shill for their friends and their friends’ wines… sommeliers publicly go on record endorsing wines that have little going for them on their own merits in the market except for some sort of personal tie with the sommelier.”  Full article

Wilson also comments on sommeliers:

“Sommeliers are a fickle lot at the best of times. They pride themselves on their capacity to recommend ‘difference’ and ‘new’. I presented at the biggest sommelier event in the US (TEXSOM) last year and could not believe the number of ‘jokes’ made by presenters regarding grape varieties (pinot gris being the frequent victim here, or chardonnay…), styles (moscato, red blends), regions (number of non-California), or popular brands (mostly Silver Oak – four times – but Rombauer, The Prisoner and 19 Crimes were the others I recall off the top of my head). It seems that if a wine is popular, it is to be scorned by the sommelier community. And this lot want customers to trust their recommendations. Is it any wonder that wine apps are taking off! 

“In case my scepticism in relying on sommelier endorsement of a premiumised message on Australian terroir hasn’t quite filtered through as yet. Have any of you been overwhelmed by the flood of consumers buying Australian wines as a result of any of these other ‘endorsement strategy’ precedents?

  • 2015’s MW tour of Australia
  • Flying Rick Bakas out, or
  • The Gary Vaynerchuk flying circus

“Or has the local market recoiled in horror on the back of: 

  • Madeleine Stenwreth MW dismissing moscato as a wine style with no personality in October 2012.

“No? Maybe the team behind the ‘strategy sommeliers & terroir’ decision have an ‘alternative facts’ playbook from which their decision can be justified.”

Larry Lockshin, head of the School of Marketing at the University of South Australia Business School and Professor of Wine Marketing at the Ehrenberg-Bass Institute for Marketing Science:

“The further issue with sommeliers is whatever they find to be worth drinking and promoting will change soon (got to find the next thing). So the best case scenario is ‘discovering’ some unique (read unknown) Australian shiraz terroir and after a couple months move on.”

Before moving from sommeliers to terroir, the following was received from a hugely respected wine industry person now retired who prefers to remain anonymous:

“I am reminded, as a young Boy Scout in the 1940s, meeting Sir Willoughby Norrie, Governor of South Australia. I was impressed by ‘Sir’, and very impressed by ‘Willoughby’. He was no doubt an admirable Pom appointed by the King, and we all bowed as was the custom of cringing and loyal subjects as part of what we accepted as the British Empire. 

“I should therefore not be surprised that 60 years later we crave the opinions of international sommeliers. Do we still lack the confidence of our convictions? 

“Many, myself included, would argue that the advent of Australian wine on the international market, initially Great Britain, in the 1980-90s forced the greatest revamp of winemaking and wine marketing worldwide. 

“Something we should never forget and be very proud of. Internationally no one likes to accept it, but it’s true. Today the world drinks better wine thanks to Australia and Australian winemakers (add in our education system and our belief in science, not tradition). 

“Why, therefore, do we the need to grovel, and that’s what it seems like, to self-opinionated folk of very limited influence, except to give us a warm feeling? Am I unfair? Will any of this sell another bottle of Australian wine? I wonder.”

Despite WA’s reverence for the sommelier, it is TKR’s experience that little confidence is shown in them when sommeliers enter general wine trade/industry conversations. The international aspect also rankles. If, as WA implies, sommeliers are the global influencers, are not Australian sommeliers qualified enough?

According to Clark it will be these global influencers that shape the broad perception of Australian wines and “we [WA] facilitate market access to set the most optimal environment in which Australian wine brands can seek to sell their wines.”

It’s not a fact, it’s a fancy. Australian wine brands already seek to sell their wines in many markets. They also try and upscale their offerings but realistically understand the average consumer is very price conscious.

WA should also know that retailers would like to earn more on wine, but retailers know their customers and their price expectations. They also know wine/alcohol is a drawcard: entice the customer in with cheap wine and hope they pick up some cosmetics or any product that has a healthier margin.

There is no way WA is providing an optimal environment. WA can say it but not prove it.

Clark: “Our shiraz terroir project is one of the ways to build the case for our wines. It will help provide the new insights and understanding about the sensory impact of terroir on our most planted grape variety, and this in turn will underpin our assertions about the unique and wonderful wines we produce.”

Lockshin shares his opinion:

This is a hard one to judge.  I believe that awareness, knowledge and esteem for specific terroir-based wines happen without the science, and that is what draws higher prices (along with rarity, of course). Science may help find which levers to pull to add more terroir flavours to the wine, but first there has to be the flavours and the esteem for them. 

“Buyers of luxury and now premium (affordable luxury) buy for many reasons, but the extra dollars above what might be considered as ‘fulfilling the same need at a basic level’ is all about consumer perception.  These buyers won’t be reading any scientific reports or even tasting the ‘extra terroir’ in their wines.”  

Wilson says scepticism about the focus on technical research was one of the reasons he left Australia to teach wine business. His view:

“I understand the premise behind this research on terroir, but has WA even bothered to look at the evidence from taking such an approach?  

“Of course, the terroir message is what many small producers want to be known for. Why? Because much of the trade thinks it’s important. Obviously, there must be a surfeit of customers asking for wines with better expressions of terroir these days. Funny that in my 20 years of selling wine in both on and off-trade, I don’t remember a single incidence of a customer asking for a wine with an improved expression of terroir.”

Clark pointed out in his letter that although $5.3 million is a lot of money it’s only 4 per cent of the $130 million that WA has to spend on research and development over the next five years.

TKR believes it could have started research costing hundreds, not millions, with some basics rather than let Croser and the board dictate on how millions should be spent. We have been unable to find any WA consultation with industry or regional bodies about this research (though we accept we haven’t covered all Australia so could be wrong).

We did email four people in the industry asking if they or their regional body knew or had been consulted about this research before the announcement. Please note the fourth response hadn’t been received by the time of publication. It has not been withheld.

The first response came from a person highly placed and respected within the industry but didn’t wish to get involved in a scrap with WA. His points:

  • I hadn’t heard of it but that doesn’t surprise me. 
  • Our local association hadn’t heard anything either. 
  • Yes – it is a load of money, but Brian [Croser] is clearly a bit excited about the research. 
  • I don’t know any winemaker who isn’t observing what the best soils and sites are for shiraz in their particular area. This understanding of terroir is what makes each winemaker’s wine unique and special. 
  • I would have thought that we would need to be a bit more considered with winemaking practices before we try and identify terroir, g. machine harvesting and use of excessive oak. 
  • In pinot we find that machine harvesting tends to blur the detail in wine and hence it is not widely practised for our premium pinot 
  • On a recent excursion to the Barossa, I noted that there is still a lot of expensive shiraz (plus $4500/tonne) being machine harvested, which I would have thought would be counterintuitive to expressing and marketing terroir.

Michael Fragos, Chapel Hill, McLaren Vale, has some support for the research, but, as with all regions, the winemakers of the Vale know their region, their soils and sites. In short, terroir:

  • In McLaren Vale we have been working for quite a few years on building greater awareness and knowledge about vineyard site characteristics and how they influence wine style. Projects like The Districts of McLaren Vale and Scarce Earth Shiraz have been focused on celebrating the diversity of McLaren Vale. These are indeed long-term projects and any findings from the Wine Australia research project will hopefully augment the findings of our regional work. 
  • What has been elusive for McLaren Vale is the scientific research component to accompany the results of our tastings as we found it difficult to obtain funding for this type of research project.

Fragos turns to the aspect on which WA appears to base its rationale: that this terroir research will garner greater recognition and lift the price for all Australian wine on the planet:

  • I have discussed with trade and consumers for many years about site influence and what is very obvious is that this level of detail only appeals to a small section of the market. Realistically, most consumers are not that interested. For some it will hopefully happen over time as they become more confident with wine. 
  • There is also a section of the market who don’t really understand or care about the influence of site but just think “These guys know their stuff about their region” which has a positive influence on their perceptions. 
  • Maybe explaining how site influences wine style in a non-intimidating manner will help to arouse more trade and consumer interest. Hopefully the findings of this project will be very “user friendly” or they just risk preaching to the converted. 
  • Despite all of this, if you want to sell wines at higher price points (which is also this small chunk of the market) you need to get out there and continuously explain your authentic story and explain your site, as Australia has some of most interesting vineyard sites in the world.

Brian Lynn, along with his brother Anthony, is owner of Majella Wines in Coonawarra:

  • It seems a lot to spend on a subject many commentators disagree on. Was it JH [James Halliday] who said there is no such thing as terroir in Australia? 
  • I think Coonawarra comes close, but as all the pundits think we only grow and make cabernet sauvignon, we don’t count. 
  • That being said, I reckon Coonawarra makes fantastic shiraz, but the experts know better and reckon we’re only cabernet growers.  
  • Great way to spend a lot of money. Wish they’d give me some.
  • Am I a cynical old man?  Must be getting like a commentator I know from old. 

White: “Croser is back in contention in wine circles since announcing Wine Australia will spend $5.3 million to investigate the influence of terroir on shiraz and host a junket for international sommeliers in April. 

“The deputy chairman has form in this matter of terroir. In 2009, he was instrumental in bringing the British wine critic Andrew Jefford and his family to Australia for a year to write a book explaining our terroir to us. While the Jefford family’s tenure was expensive, extended, and getting close to a decade ago, there’s still no book as far as I’m aware.”

Nor is TKR aware of a book. There was an article, we think in Decanter, some time back, but little else.

Wilson asks: What next when this doesn’t work? Has the Australian wine sector got Parker’s phone number? Because, didn’t he do a great job for Oz… once upon a time!” 

Wilson ends with this sentiment, which TKR endorses: 

“So now, it’s onto the era of ‘Oz makes premium wines of terroir, and sommeliers are going to get the word out’… Good luck with that! 

“As an Aussie, I really want to be wrong on this one. Can any of you make a good case for why this should work? Enough people in positions of responsibility were convinced that it would work, so there must be a good set of arguments for it, right? You know, the kind of arguments based on evidence of this strategy working elsewhere, with clear justifications for how it’s going to work in this case. Just show me so that I can relax in the knowledge that this is all going to work out. 

“Just in case the evidence is difficult to put together, I won’t hold my breath waiting…”

3 thoughts on “Is Wine Australia committing suicide or is it being murdered by its board of directors?”

  1. Surely a few words from Brian Croser would be helpful at this point.
    Can someone approach him for a comment? Live or written?

  2. Surely more wine is sold in restaurants that don’t have sommeliers. Sommeliers are present in quite a small number of restaurants. Perhaps WA should be spending money educating wine buyers overseas if they wish to promote the sale of Australian wine.

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