News

WINE100 reviewer Nick Stock says he has been inundated with outstanding premium wines as part of his 'Stocking the PM's Cellar' initiative launched in The Week That Was last week.

Nick was swamped with emails as soon as TWTW came out with the story last week.

“It’s gone gangbusters,” says Nick. “Everyone wants to help and the emails are still coming in.”

Nick decided to take the matter into his own hands when it became public over the past few months that Rudd's cellar is in poor shape.

Nick says Vanya Cullen has pledged six bottles of 2007 Kevin John Chardonnay. “So now we’ve got our very own KEVIN07,” says Nick.

The latest pledge has come from Brad Wehr of Wine By Brad. "Hey Nick, happy to donate a case each of the WBB’s with the caveat that it be set aside for the welcome dinner for the first official visit of Kim Jong Il. That bloke could do with a smile.

"Also happy to donate a mixed dozen of our Mantra wines to the PM. Big Kev seems to have a ‘mantra’ for every occasion, but fair suck of the programmatic specificity—he doesn’t have any of ours yet."

To help restock Rudd’s cellar flick Nick an email at nickstock@bigpond.com

Meanwhile thanks everyone for your support. And don’t be surprised if this event gets some serious coverage in the wider media.

Bruce Tyrell is upbeat about the fruit being picked in McLaren Vale, saying some of the ferments point to fantastic quality.

"With vintage well and truly finished in the Hunter, it is now time to turn our minds south of the border," Tyrrell writes in a vintage update for WBM.

'In McLaren Vale we have pretty much had two weeks of ideal weather and have picked Pinot Noir (which actually has Pinot Noir character) and three quarters of the Shiraz.

"Paul Mathews has been kept more than busy juggling harvesters and trucks to get both our fruit and a good amount of contract crushing through our little winery, and on Sunday night the chiller unit decided to die and I think Paul might have gone from blonde to grey. 

"Iain Hayes at Glenbawn winery reckons the McLaren Vale Shiraz ferments are the best he has seen for a long time. They are all going to be about 14% alcohol."

However Tyrrell's reports a few issues with its Heathcote vintage.

"Heathcote started finally last night where we were due to pick the Hamilton Pinot Noir on Saturday evening but received a rare thunderstorm and some hail, so picking had to be delayed for 24 hours," Tyrrell writes.

"Adam Currie’s assessment yesterday morning is that ours and the Hamilton’s vineyard may have lost 5-10% of this year’s crop. The Pinot Noir at Heathcote picked spot on of budget, which is up 20% on last year and in McLaren Vale our own red is picking well ahead of budget and our number one grower has almost returned to normal levels.
 
"If the grape gods are kind to us for the next three weeks, Heathcote and McLaren Vale will give us a cellar full of very good red."

UK wine critic Matthew Jukes has named his Top 20 wine producers for a special supplement on SA wines in Decanter magazine.

They are:

Ashton Hills
Bremerton
Chapel Hil
Grosset
Glaetzer
Jim Barry
Kay Brothers Amery
Knappstein
Majella
Petaluma
Parker
Penfolds
Peter Lehmann
Shaw + Smith
Skillogalee
St Hallett
Tim Adams
The Lane
Wirra Wirra
Yalumba

The Decanter supplement has been partly funded by the South Australian Government. It is due to be distributed in Australia over the next week.

Highly regarded Australian wine industry identity Peter Dawson has been appointed chair of the Australian Wine Research Institute.

“We are delighted that the Board has appointed Peter as its chair,” said managing director Sakkie Pretorius.

“Peter has over 30 years of experience in winemaking and operations at senior levels, and has twice received the title of International Red Winemaker of the Year at the International Wine Challenge in London.

"Notwithstanding his credentials as a winemaker, Peter brings to the  Board as chair a stable and visionary stewardship. He has played a pivotal role in the development of one of Australia’s largest wine companies and the industry as a whole, serving on many industry advisory committees, including the Board of the AWRI for the past 10 years.

Dawson takes over the role as chair of the AWRI’s board at an interesting time in history of the industry.

“Many grape and wine producers are doing it tough right now,” said Dawson. “Organisations that service the industry have an obligation to ensure they deliver tangible benefits. Now, more than ever, investment in research is critical. Researchers need to get into the trenches with the producers to work out real solutions. I look forward to working with the AWRI Board to facilitate outcomes which are beneficial, penetrating and long-lasting.”

Dawson's CV—BSc, BAppSc(Wine Science), formerly senior vice president Group Operations and Technical, Constellation Wines; Adjunct Professor, Faculty of Science and Technology, Deakin University; National Wine Show judge; inspector, Australian Wine and Brandy Corporation Export Approval Panel. Over 30 years' technical and winemaking experience in the Australian wine industry.

The Australian Wine & Brandy Corporation has sacked senior executives Lawrie Stanford and Jock Osborne in a major shake-up which has seen the Adelaide office trimmed from 45 to 38 staff.

Stanford was the AWBC's status guru while Osborne was the acting chief executive for more than a year when Sam Tolley resigned.

The retrenchments were announced by AWBC chief executive Andrew Cheesman, who released this statement today:

"The AWBC, together with the other wine industry national organisations, recently called on the industry to take radical steps to tackle its challenges and get back on a path to sustainable growth.

"As part of this process, the AWBC is undertaking significant structural change, so that a greater proportion of industry levies can be directed towards increasing demand for Australian wine and improving our image in both domestic and international markets. It is imperative that at this time, we reignite global interest and trust in Australian wine, promote our natural advantages, our regions, diversity and dedicated wine community. With a backdrop of structural adjustment, our focus will be an all out promotion of our fine wine community and credentials.

"Over recent months we have made seven roles within our Adelaide office redundant (45 to 38), and reduced expenditure on variable and discretionary items. The process has been fully consistent with the strategy Directions to 2025 and the recently released WRAA statement, and responds to the industry’s most relevant and urgent priorities. The contribution the people that are leaving our organisation have made, both to AWBC and to the Australian wine industry is acknowledged. In particular we recognise Lawrie Stanford and Jock Osborne whose contributions have been significant. The changes we have made do not reflect performance in any way. Neither are these changes about making short term cost savings. Where savings are captured, they will be applied to boost funding behind our strategic priorities. It’s all about putting resources behind those activities that will make the biggest difference to improving industry fortunes. Specifically, we are boosting our investment in market development activities, particularly in key emerging market and channel opportunities in Asia, Australia and the US.

"It is also our intention that business support functions be pooled and shared between the four national organisations (AWBC, GWRDC, WFA, WGGA). This is consistent with the intent behind the NOS review, and delivers a number of benefits without the complexity of more extensive reform. The due diligence for this shared service entity is being conducted at present. We will continue to explore all further opportunities for cooperation and integration at a national, state and regional level to capture efficiencies and boost impact.

"Our new structure reflects our determination to build a commercially aware and customer focused culture at the AWBC, where industry needs are at the very centre of our business. It also signals that as an organisation, we are open to change and will continue to evolve over time to stay in step with industry needs.

"This is a difficult time, as we farewell our respected colleagues who have served the Corporation with dedication over many years. We will also be challenged to bed down the new structure and working arrangements quickly and seamlessly. It is however critical that the AWBC plays our part to support the industry’s rebuilding process: not only through words but through action. All our people are energised by the opportunity to be part of a successful and exciting turnaround story as we strive to make a real difference for the benefit of the industry, the Corporation and all of our stakeholders."

• Let us know what you think of this story? Email info@awbm.com.au

Bird in Hand Winery in the Adelaide Hills have taken the unusual step of issuing the following Open Letter to the Australian Wine Community:

"The following is intended as constructive direction for grape growers, wineries and the Australian wine industry. It is personal opinion and positive towards every winery and industry group.

"We are facing some present time challenges that require clear direction to keep our industry moving forward.

"I would like to see our governing bodies set a clear goal for Australia to become the Greatest Wine Producing Country in the world in terms of quality and volume. We already have abundant resources, the volume, a rich history and talent pool on which to draw.

"However, we currently seem to be floundering without a message.
We need to reinvent the Australian Wine Brand to deliver a story that is exciting, lofty and consistent.

"This job lies with all involved in the wine industry and must occur in communications at every level – to the general public, media, buyers and investors.

"I do not believe the answers lie with in-depth analysis and dissection of the past. It is not complicated.

"Yes, we acknowledge some supply issues exist. Our wines are currently less fashionable in the global marketplace. To an extent we should not be surprised by the changing trend, having experienced such strong demand and fast growth previously.

"But the negativity surrounding these issues is self fulfilling. A downward spiral of reduced tonnage intakes, decreasing revenues, vineyard unviability, loss of talented staff and loss of confidence amongst bankers and investors. The communication we are collectively putting out becomes the reality.

"We have achieved an enormous amount over the past 20 years and more. This is simply a point in time and part of the growing pains needed to achieve lofty goals.

"The Wine Australia Brand should set the standard at all major international events. Aesthetically pleasing stands, knowledgeable and friendly staff communicating a positive message about our goals and why Australian wine is exciting.

"Wineries must fight tooth and nail to open new markets and increase revenues. New market penetration, particularly in China and India, begins with having an exciting story to tell.

"The time for brands to grow and generational change to occur has never been better. There has never been more high quality fruit available and a better platform of market presence from which our industry can launch. This ‘crisis’ must not be wasted.

"Communication, good and bad, vibrates through all levels of the industry. We must reverse the negative spiral with growth and deliver a clear and exciting message to the world about what the Australian wine industry is doing and why it will succeed."

—Andrew Nugent, Bird in Hand Winery, Woodside, South Australia.

Winemakers have again cautioned the Federal Government that unnecessary tax changes could devastate their industry.

In its formal Pre-Budget Submission lodged today, the Winemakers’ Federation of Australia calls on the Treasurer to retain the Wine Equalisation Tax (WET) as “the most appropriate system for taxing wine”.

“Suggestions that all alcohol should be taxed in the same way ignore the reality that wine is different from other forms of alcohol in the way it is produced, marketed and consumed,” WFA’s chief executive, Stephen Strachan, said.

“An ad valorem tax is the fairest way to tax wine and the WET was developed and introduced to reflect the realities of the wine industry. That situation has not changed.

“What has changed, however, is that the wine sector is dealing with its toughest conditions in more than two decades. Imposition of tax change at this time would be a double whammy as it would amplify the slow and painful restructuring the sector is undertaking.”

Mr Strachan said Australia had among the highest wine taxes in the world and under the WET scheme the sector had contributed a net $707 million in alcohol-specific tax in 2008-09.

WFA had argued strongly to the Henry Tax Review that any gain in additional tax revenue from moving to a volumetric tax would be far less than the negative impact on wineries—particularly on smaller wineries that helped support regional economies.

“Our modelling shows that a volumetric tax at the same rate as applies to packaged beer would see 95% of wine increase in prices, sales volumes fall by 34%, 29,000 hectares of vineyard become redundant and more than12,000 jobs lost,” Mr Strachan said. “We have also argued strongly that increasing tax on wine would provide negligible health benefits because wine is not the problem in public health issues, particularly youth binge drinking.”

WFA’s submission calls for the WET Rebate to be retained but seeks the introduction, as a priority, of legislative changes in relation to the definitions of wine “producer” and “manufacturing” to address some market distortions created by the current system. “The ATO has highlighted these anomalies and we strongly support action being taken,” Mr Strachan said.

The submission also seeks Government support for industry-driven activities around the Wine Restructuring Action Agenda and the roll out of the EntWine Australia environmental certification scheme, as well as an ongoing commitment to initiatives related to trade, R&D and social responsibility.

The full submission can be downloaded at www.wfa.org.au

Cockatoo Ridge Wines in the Barossa Valley has called in voluntary administrators saying it was heading for insolvency.

The board has appointed George Divitkos and Russell Henry Heywood-Smith of BDO Kendalls as joint administrators.

Cockatoo Ridge said the company and its subsidiaries—Australian Commercial Wines Pty Ltd, Cockatoo Ridge Sales Pty Ltd, Cockatoo Ridge Pty Ltd and Playford Wine Holdings Pty Ltd—were "likely to become insolvent in the third quarter".

The winery has struggled to stay afloat for some time.

Meanwhile Vickery Wines released the following statement today: "Following the announcement that Cockatoo Ridge Pty Ltd has filed for voluntary administration, we have noted that some press releases link the Griffith Park brand to Cockatoo Ridge Pty Ltd.
 
"We would like to clarify that this is not the case. The association with Cockatoo Ridge Pty Ltd concluded in 2007. Full ownership of the brand Griffith Park belongs to Islay Kennedy, owner of Vickery Wines Ltd. We have no further links with Cockatoo Ridge Pty Ltd and are not affected by yesterday's announcement.
 
"Griffith Park is a very successful growing Australian sparkling wine brand which is sold by a number of major retailers in the UK, and which has been awarded a number of top accolades in International wine competitions, including recently a Which? Best Buy Award for sparkling white wine selling in the UK.
 
"We would appreciate it if you could immediately correct any news stories (including web reports) linking the Griffith Park brand to Cockatoo Ridge Pty Ltd’s voluntary administration, and correct any stories you may be set to publish."
 
• See our interview with former Cockatoo Ridge CEO Peter Perrin in the December-January WBM. Mr Perrin has joined Bleasdale Wines as managing director. To subscribe click here.

Angove Family Winemakers has taken the radical step of decommissioning 200 hectares (500 acres) of its famous Nanya Vineyard in Paringa as the oversupply worsens.

“The wine and grape industries have finally realised that serious rationalisation needs to be made for the longer term sustainability of the wine industry in Australia,” managing director John Angove said.
  
“We have taken a small step in doing this ourselves with the decommissioning of nearly 200 hectares of our Nanya Vineyard. Critical shortage of water for irrigation has also been a driving force for the reduction in size of the vineyard. This was a very costly and painful decision to make but on the upside allows our vineyard team to focus on growing superior fruit for our winemakers.

"With better water supply during the growing season and good conditions leading up to harvest, despite a few heat spikes, we are looking forward to a good quality, although smaller vintage in 2010.”

Angove is set to begin vintage for the 124th time with a strong and positive outlook for the future. On Monday the first load of Pinot Noir, destined for sparkling wine, will arrive for processing at the winery.
 
This year marks the 99th vintage at the family’s Renmark winery, which was the first to be built in the region back in December 1910 by Carl 'Skipper' Angove in time for the 1911 harvest.
 
The total grape intake for Angove Family Winemakers for 2010 will be well down from will be similar to the 2009 intake but well down on the record breaking the 2008 vintage, in keeping with the need for the industry to cut back on production levels.
 
While the high Australian dollar and industry oversupply have put strain on the export side of the business, on the domestic front Angove continues to grow its branded wine business at around 10% per annum.

Leading wine marketer Larry Lockshin says perhaps Australia's regional promotion strategy is not the pathway to the greatest salience or positioning of our wines.

"I would not suggest that regionality is not important," Lockshin says in the December-January WBM.

"Many of our wineries are positioning themselves as coming from a specific place, and regionality is important among consumers when selecting wines at higher prices. But, regionality is hardly a distinctive positioning by itself."

• See the full article in the December-January WBM. To subscribe click here.

Hazel Murphy emailed the following itinerary to WBM for Wine Flight 2010:

“Following a four week race around Australia I am absolutely thrilled with the way things are shaping up for the Wine Flight in February. I cannot thank the wineries enough for the way they have looked after me this trip and the plans they have in place to make the 42 visitors really wake up to what is happening over here. It is sadly not possible to see all the regions or visit wineries as we wanted for the first time to make sure Western Australia was part of the whole trip and not just an add-on. The participants wanted a two-week full-on trip so that at the end they could either get back to work or take a few days to recover!
 
“We land in Perth in the early hours of February 7 and will be greeted at the Parmelia Hilton with a few drinks and nibbles for those who are not ready for a good sleep. Sunday is free to acclimatise then a welcome dinner with food and wines from Lower Great Southern arranged by the WAWIA. First big tasting is the 8th for all regions of the West other than Margaret River where we head in the afternoon for tasting and dinner of nine wineries from the early trips at Cullen Wines. There will be Pierro, Voyager Estate, Xanadu, Evans & Tate, Leeuwin, Cape Mentelle, Cullen, Clairault and Vass Felix. Next morning they wake up to breakfast on the beach followed by a full MR tasting at Caves House.
 
“On we fly to Adelaide where Wine Australia have a tutored tasting planned that fits its early morning slot Pinot and Fizz I think is the theme Paul Henry talked about. Down to McLaren Vale with Shiraz tutored by Michael Fragos at Chapel Hill, visits to the old vine vineyards and an education on the sustainability practices of the region before the wineries meet up at Wirra Wirra for a Grenache and Blends tasting then to the beach for some sand, sea and sunset.
 
"It is in South Australia that one or two former flighters who ended up living in Oz will join us—Chris Reedman (nee Burton) will come to the Wine Australia tasting and McLaren Vale while Sally Marden will take time off from the cafe in New Zealand to come to Clare and the Barossa!
 
"Clare have a great tasting planned tutored on Riesling young and old with an opportunity for the wineries to come and show their Rieslings and red following that so a good opportunity for them to chat and make contacts. On to the Barossa for a relaxed tasting in the vineyard and drinks early evening plus we will reweigh the group on the weighbridge at Peter Lehmann just to see how much they have added in pounds over the 18 years since the first group came out! Dining on the best of the Barossa with wines tasted and to drink the Barossa hospitality they remember so well!

"Up early next morning we exit the valley from the other end and take breakfast on the way as we head to the Adelaide Hills and first stop Balhannah where Michael Hill Smith will tutor a tasting of the wines that do so well in the Hills—after that the Lane where winemakers from participating wineries will have an opportunity to show their wines to the visitors before lunch and off to the Airport again—Melbourne next stop and a night off!
 
"Saturday it may be but we will be in Parliament House where we the first 110 wine flighters assembled in Melbourne for the Victorian Tasting learning about the various regions that were lesser known in 1992 and those we loved but cannot get to. Yarra Valley next with a tutored tasting in the cool of the barrel hall of Yering Station. We are all very aware of the timing of the visit and scars that terrible day left on the lives of so many but we want to show our support for the spirit of those gone and those who are continuing the life of the region. Drinks in the sunset and on to De Bortoli for dinner before heading back to Melbourne for some well deserved sleep and guess what they do get a day off on the Sunday to look at this amazing city that like me I am sure many will not recognise from all those years ago. There they will no doubt hit the restaurant scene and just ‘chill’ away from the crowd.
 
"Next day we head up to Tahbilk and enjoy being a part of the celebrations of the winery that is 150 years old while enjoying a tasting of Marsanne, Rousanne, Riesling, Shiraz both old and youthful! Plunkett Fowles, Mitchelton, David Traeger, McPherson, and ch Tahbilk will show what Central Victoria does so well. After lunch and a boat trip on the wetlands a quick stop at Mitchelton to view the Strathbogies and the area from the tower and do some unusual tasting to test the visitors. Then we are off to Sydney overnight and up to the Hunter next morning with wine and oysters in McWilliams Old Paddock Vineyard before a split of the group for vintage lunch at various wineries then a tutored tasting of Semillon and some beer tasting I believe will follow to judge the best one brewed for vintage. Dinner at the Rock accompanied by wines from the Heritage Vineyards of the Hunter which many of the group may not have tasted before. Sleep then back to Sydney for the finale tasting showing wines from Orange, Hilltops and Tumbarumba, Mudgee, Canberra and Cowra as well as the MIA. Then it is fun all the way with the harbour and a farewell dinner that will see us overlooking the Opera House and Harbour what a way to end a trip.
 
"Who are the visitors you may well ask? They are the retailers, restaurants and others who have been the best ambassadors for Australia from Ireland as well as the UK. There are importers looking for the next evolution of Australian wines, there are those who sell to airlines and duty free to see what is available and there are those who deal with the public every day who can help and educate them in what Australia is doing and where the regions are focusing. Restaurants who want to have the best on their list and who I want to look further into Australia. Some are first timers keen to see Australia firsthand others have been before but not on the first flight. We have one Belgian visitor Dirk who so wanted to come he is a wine educator and also consults to two major chains in Belgium. There are three journalists Patricia Caroll from Ireland who writes freelance and is also a wine educator not to mention Oz and Robert known I think to everyone—all are keen to come and see what has changed what is the same and where Australia sees their future too.
 
"I have a waiting list for people wanting to come and I have another list of those who could not come in 2010 but have asked will there be another one so the interest in Australia is still there and from what I hear from the public and I am back doing tastings again they have never tired of the best of Australia they just need to know more!
 
"Watch out, here we come again and with the activities that Wine Australia are doing under their programs all over the world and Australia’s First Families of Wine change will happen and we all want to be a part of it—just does not happen overnight!”

• Let us know what you think of Wine Flight 2010. Email info@awbm.com.au

Boutique McLaren Vale producer Sabella Vineyards has won the 2009 George Mackey Trophy for Australia's best export wine.

The winning wine is the Sabella Vineyards 2005 Cabernet Sauvignon.

McLaren Vale has now won the coveted trophy five times—more than any other wine region.

AWBC compliance inspectors tasted their way through 16,717 wines during the year. Of these, 131 were nominated for the trophy, 50 met the eligibility criteria and a final 34 wines were submitted to the independent judging panel including Steve Webber, Tony Love and Leigh Francis.

Wirra Wirra Vineyards senior winemaker Samantha Connew is moving on after 10 years.

“It is with many mixed emotions that I today tendered my resignation," she says. “The past 10 years have been quite a trip and I certainly didn’t think that I would be here for that length of time when I rocked up in my 1973 Renault 12 Station Wagon all those years ago! In that period I have been incredibly fortunate to work for some extraordinary individuals—Trott of course will always be a yardstick for me in terms of what the ideal boss should be like and I constantly find myself referencing what RGT would do in any given situation … normally the answer is take off so no one can find you! 

“Tim James (who becomes more and more like Trott as the years go by) has been a huge mentor, friend and support.  I count myself extremely lucky to have had the opportunity to work and learn from him.

“Most recently, I am extremely proud of numerous things that I have been able to achieve at Wirra Wirra, and particularly the winemakers that I have worked with: Paul Carpenter and Alexia Roberts have moved on to produce lovely wines elsewhere and I know I leave the winemaking at Wirra in the very capable hands of Paul Smith and James Rouse.

“To those of you who worked vintage or in the cellars at Wirra Wirra, I am thrilled that you allowed us to play a small part in your winemaking experience and wish you continued success wherever the wine world takes you.

“Many of these people and indeed the larger wine community played a huge role in supporting myself and Wirra Wirra through the difficult times following the winery collapse in March 2008 and in the subsequent rebuild. Keeping everything ticking over through basically two vintages with no winery to crush fruit in was certainly the largest professional challenge I have had to face, and I couldn’t have done it without a whole raft of support. At this point, I have few plans other than to continue my Masters Degree and hopefully run (and finish) the New York Marathon in November next year.  In the meantime, Trott always said ‘You must be serious about quality, dedicated to your task in life, especially winemaking, but this should all be fun’, so I intend to follow his advice and allow myself to rediscover the many fun opportunities that exist in the world of wine.”

The following is a statement to the wine industry by the Winemakers’ Federation of Australia, Wine Grape Growers’ Australia, the Australian Wine and Brandy Corporation and the Grape and Wine Research and Development Corporation.

It is widely acknowledged that the Australian wine industry is enduring its toughest period in two decades. All in the industry must recognise that this is our problem and we need to fix it.

Structural surpluses of grapes and wine are now so large that they are causing long-term damage to our industry by devaluing the Australian brand, entrenching discounting, undermining profitability, and hampering our ability to pursue the vision and activities set out in the Directions to 2025 industry strategy.

Coupled with inefficient and/or inappropriate vineyard and wine operations, oversupply is amplifying and exacerbating fundamental problems in the industry, notably our decreasing cost competitiveness. As such it is compromising our ability to adopt new pricing structures and market solutions and adapt to changing market conditions.

Comprehensive analysis and consultation suggests at least 20% of bearing vines in Australia are surplus to requirements, with few long-term prospects. On cost of production alone, at least 17% of vineyard capacity is uneconomic.

The problems are national—although some regions are more adversely affected—and are not restricted to specific varieties or price points.

The industry must restructure both to reduce capacity and to change its product mix to focus on sales that earn viable margins.Bailouts are not an option and neither governments nor industry bodies should be expected to provide the answers; tough, informed decisions must be made by individual growers and wineries, from as early as the 2010 vintage.

Australia is producing 20-40 million cases a year more than it is selling—roughly equivalent to total sales to our second largest export market, the UK. Our surplus already exceeds 100 million cases and at current rates of production and demand this will more than double in two years.

Drought, water shortages and climate change will continue to affect production but the impact is indiscriminate and largely insignificant given the scale of the problem. Estimates are that these factors combined can provide no more than 10% of the necessary reduction in supply.

Australia’s wine exports have fallen by 8 million cases and 21% in value since their peak in October 2007. The decline has been greatest for higher value exports, and where there has been growth at lower price points it frequently has been unprofitable and thus unsustainable. Over the same period domestic sales of Australian wine have fallen, while sales of imported wine have increased.

The global financial crisis has not helped, but it is far from the only factor; a strong dollar and our industry’s cost competitiveness have been more significant. Better economic conditions will not automatically restore previous demand, and even if they do this would be insufficient to deal with our fundamental problem. Even an ambitious growth target of 4 million cases a year – equivalent to 6% annual value growth for the entire Australian category – would only eliminate 20% of oversupply.

New market opportunities do exist, but they will take time and significant, sustained investment to unlock.

Oversupply is unpicking our price structure, distorting perceptions about our product and exacerbating competitive pressures.

Globally we have been forced to trade in the low-value / low-margin market to sell excess wine, yet our costs are too high for us to be viable in that market in the long term—we cannot match the cost structures of some competitors (including a subsidised Europe) at very low price points. Just as damaging is the image being created that Australia is only a low-cost producer, making it difficult for our premium wines to gain recognition and market traction.

Domestically, excess supplies have allowed supermarkets to move from customers to competitors by launching their own low-price products, without the need to invest in capital infrastructure or the long- term health of the industry. This clutters the market place and eats into margins.

A range of factors suggests our long-term terms of trade will continue to weaken, putting the commodity market further out of reach. These include:

• real increases in the price of water
• the likelihood of exchange rates remaining unfavourable
• increasing labour costs, linked to award modernisation
• lack of international uniformity on carbon emissions trading, with the likelihood that Australia’s costs will rise relative to some commodity wine competitors
• a reduction in winery throughputs—leading to increased fixed unit costs—as the industry rationalises to eliminate over capacity
• • increased costs of accessing and servicing capital.

Research and innovation are essential but cannot provide the answer given the necessary timeframe and the scale of the problem. We need to restructure our industry to ensure we can compete as a premium wine producer.

Australia has significant problems in terms of vineyard and winery viability. In particular, too many regions produce uneconomic fruit because of high-grade cost structures. High-grade cost structures have only one option and that is to produce high-grade fruit. This is highlighted in two studies of wine regions completed this year. Both have been independently corroborated by industry consultants.

One study graded fruit from A to E then assessed viability in terms of whether vineyards exceed cost benchmarks for the relevant quality level. Its findings suggest that:

• in more than 20 regions 50% or more of the production for C and D grade fruit (premium and popular premium) is uneconomic
• in total, 36% of C grade fruit is uneconomic
• three of our highest profile and most productive regions for A and B grade fruit (specialty and super premium) struggle to produce C and D fruit at a competitive cost, with 50-60% of that fruit considered uneconomic
• 10 regions have 70% or more of production considered uneconomic – most are small, but three have total production of around 20,000 tonnes or more.

The second study provides a regional breakdown which shows that significant quantities of grapes bring a realised price that is below the cost of production.

Viability is a complex issue, given the patterns and history of vineyard and winery development, but it needs to be addressed decisively and immediately. Where costs of production are high, vineyards must be achieving A and B quality grapes. Some regions do this reasonably well, some poorly.

The primary focus must be on helping businesses and regions to strategically and honestly assess their current and likely future position then make appropriate decisions. In particular we need to address the options for vineyards and wineries that are underperforming. Some may need to leave the industry; others may need to change what they produce and how they do it.

The Wine Restructuring Action Agenda include the following initiatives as an immediate response.

• From 23 November 2009, detailed and confidential supply data summaries will be provided to regional associations. These will examine each region in isolation and in relation to the national picture, with a focus on levels and patterns of viability.
• From 30 January 2010, a package of tools will be available to help individual vineyard operators assess their performance and viability. This will include: a checklist; an upgraded Deloitte Ready Reckoner to assess winery profitability by market, channel and price point; and an upgraded Vinebiz program to assess vineyard profitability.
• From early next year, briefings will be held in 14 regional centres (covering all States) to discuss regional data and issues and offer business stress testing to assist with decision making. The Federal Government has been approached to help facilitate this initiative, and State input is being sought.
• WFA and WGGA will hold discussions with the Federal Government about improved exit packages for growers and small wineries seeking to leave the industry along the lines of drought and small block irrigator exit packages. Discussions also will be held with State Government agencies with regard to alternative land use options in wine regions.

Alongside these specific initiatives:

• The peak industry bodies will:
  • Work with the Federal Government to address aspects of the WET rebate that artificially allow uneconomic businesses to stay in business and thus contribute to overproduction.
  • Seek changes to regulations covering MIS schemes to ensure potential investors receive a fair picture of the wine industry’s current position and cannot offset losses. The aim is to deter unwanted and unviable further vineyard expansion.
  • Work with regional associations on complementary issues related to demand and environmental sustainability.

• R&D priorities have been refocused to support the restructuring agenda, with an additional $750,000 committed so far by the GWRDC to support a range of initiatives, including:
  • Substantial funding for research to support the Wine Australia market development strategy
  • China market competitor analysis
  • Further analysis reconciling supply and demand
  • The upgraded Deloitte Ready Reckoner and Vinebiz program.

In addition, we will address our market development investment to:

• Refocus on the emerging markets of Asia, where growing affluence and a shift in preference towards wine provide promising opportunities (eg North and South-East Asia, where Australia has a competitive advantage through geographic proximity and strong existing trade ties).
• Provide additional support for educational, promotional and relationship activities in core growth channel opportunities, including China, the US (on and off-trade, >$10 a bottle), Quebec, Japan, UK (independent/specialist retail) and the Australian domestic market.

Oversupply is having a debilitating impact on Australian wine businesses and restructuring the supply base is both essential and inevitable.

Our objectives in releasing this statement and formulating an action agenda are to advance the adjustment process, to bring about more sustainable operating conditions as soon as possible, and to dispel any notion that the industry can trade its way out of its current problem or rely on the government to step in.

Australian wine export volumes increased by 8% to 758 million litres valued at A$2.4 billion in the year ended September 2009. The big worry was value, dropping by 8.5%

Looking at the highlights:

• China was up $50 million to $115 million;
• Germany was up $10 million to $56 million;
• Hong Kong was up $9 million to $44 million;
• The US was up $7 million to $727 million;
• Japan was up $4 million to $51 million; and
• Sweden was up $2 million to $40 million.

The US ($727 million) maintained its position as the number one export destination by value ahead of the second-placed UK ($673 million).

Australian exports continue their strong growth to China with the market moving up two places to now be ranked the fourth biggest market for Australian exports by both volume and value. Just five years ago China was not placed in Australia’s top 10 markets. The North East Asia region now has a higher average price for total Australian shipments than North America and Europe. Hong Kong’s increasing status as a high value secondary wine market is also evident in the high average value obtained by Australian bottled wine exports at $7.49 per litre, compared with the total Australian export average of $4.33 per litre.

"Overall volume has been steadily increasing since the year ended October 2008, with the single exception of a minor decline in the MAT for the year ended July 2009," the Australian Wine & Brandy Corporation's Wine Export Approval Report says.

"Australia’s export dynamics have changed significantly. A number of factors have had a substantial impact on the Australian export profile, including: the global economic downturn, with resultant trading down in the marketplace; excess supply; the strong Australian dollar; growth in global competition; and shipping of branded wine in bulk form for offshore packaging.

"In the past year, the share of bulk wine as a percentage of total wine exported increased by 14 percentage points to 37%. This comes after falling to 21% in the year ended May 2008, following the low 2007 harvest. The effect of the increase in the share of bulk wine shipments on the overall average value per litre of Australian exports is significant. In the current year, 80% of the decline in the average value of wine exported per litre was due to the change in the bottled/bulk profile. The remaining 20% of the change was the result of a decline in the average value per litre of bottled and bulk wine exports. The decline in the average value per litre of bottled products was $0.11 per litre or 3%."

The report says products from Australia are being packaged offshore for a combination of reasons, including economic, environmental and scale rationale together with meeting the requirements of some
customers.

The following example can be used to understand how change such as bottling Australian-branded wine overseas could impact on the overall value of Australian exports. If 200 million litres of wine
exported in bulk was exported as branded wine packaged in Australia assuming an attributed value of A$10 (FOB) per case for packaging, then the recorded export value would increase by A$222 million
to A$2.6 billion on a comparative basis.

"The bulk shipments also reflect the adjustment taking place in the Australian industry towards positioning for a sustainable future," the report says. "The industry is adjusting to the excess supply position, with an estimated decline of 7% in tonnage intake from Vintage 2009 compared with 2008, evidence of continued supply adjustments ahead of Vintage 2010 and the clearance of excess bulk wine
inventory. This is most evident in the decline in value per litre of bulk white wine shipments.

"Australia’s operating conditions are not isolated and the growing share of bulk shipments is in line with the bulk wine profiles of many other wine exporting countries. Figures for the July to September quarter indicate that the rate of growth in bulk shipments has slowed
compared to earlier in the year. In addition, the decline in volume of bottled shipments has moderated on the back of growth in bottled shipments to China, Germany and Hong Kong."
 

Touch Wine, one of the biggest wine industry charity events of the year, will kick off again in Adelaide's parklands on Sunday 15 November.

The event has raised more than $360,000 In four years by incorporating three of SA's great passions: sport, wine and food.

The brainchild of UK wine wrlter Matthew Jukes, Touch Wine is now the major fundraising event of the Hutt Street Centre for the homeless.

Games will begin at 10am with teams representing all of SA's wine regions. There will be entertainment throughout the day including a live band and celebrity game. A wine bar including 60 new release wines and a range of gourmet and festival favourite food stalls will also be available. The kids will be entertained too, with a jumping castle, clowns, face painting and Come'n'Try touch. So get the family together and enjoy a day out, all while supporting a great cause.

There are still some spots available for new teams.

For more information visit www.touchwine.com.au

At the prestigious 2009 International Wine Challenge Awards held in London on Wednesday Peter Lehmann was honoured to accept a Lifetime Achievement Award for his great contribution to the wine industry over the past 62 years.

It is now part of Barossa legend that Peter established the winery in the late 1970s, to protect the livelihood of growers who were facing financial ruin.

Inspired by Damon Runyon's great gambler of Guys & Dolls fame, Sky Masterson, and in recognition of the gamble he was taking, Peter called his company Masterson. The first vintage was processed in
1980 and in 1982 the winery was formally named Peter Lehmann Wines.

Each of the succeeding decades provided its own challenge and was characterized by Peter's stubborn defence of the integrity of PLW against unwelcome and, in his view, hostile advances on PLW from
outside parties. These would have destroyed the 'soul' of the Company, founded as it was on mateship, and an unwavering belief in the Barossa. Fortunately, 'PL' prevailed and to this day
over 160 growers, some fifth and sixth generation, continue the partnership founded on a series of handshake agreements, illustrating Peter's unshakable belief that his word is his bond.

The constant throughout has been the corporate logo, the Queen of Clubs, recognising that great gamble, which of course has paid off in spades, if you'll pardon the pun! Barossa artist and long
time family friend Rod Schubert, provided the inspiration behind the original Queen of Clubs.

Winemaking is part science and part art. Peter has proven a master of both, but the art of Peter Lehmann is not exclusive to winemaking.  He and wife Margaret are also true friends of the artist. It was for their love of art that the Lehmann's commissioned young Australian artists to design their wine labels, with a brief to interpret the Queen of Clubs to reflect characters of each of the company's wines.

The Lehmann's have always opened their home and their hearts to visitors to the Barossa, and their support and hospitality knows no bounds.

This prestigious award is proof that the 'team' effort has been recognized and it is a source of satisfaction to Peter that his eldest son, Doug is managing director and youngest son, Philip has
joined PLW as a winemaker working with long time multi award winning chief winemaker Andrew Wigan, thus ensuring the family tradition continues.

Work is soon to begin on a new winery for Schild Estate. The project represents a $4 million investment by the Barossa wine label, with completion of the facilities expected in December.
 
“We could have put this project on hold until the global economy improves and the wine market has stabilised a bit, but we firmly believe that the best way to ensure sales and the reputation of our brand is to realise the full quality potential of our product, and that means having total control of process in the best facilities possible,” said Schild Estate general manager John Retsas.
 
“The truth is that the worst thing you can do in an economic downturn is not plan for the future of your company or invest in your brand. By going ahead with this $4 million project we’re investing in Schild Estate, investing in the Barossa, and investing in the wine industry as a whole.”
 
Schild Estate’s recently appointed winemaker Scott Hazeldine is driving the functional design of the new winery. He commented, “It’s such a rare opportunity to be involved in the design and fit-out of a new winery from the ground up, this is a really exciting project and we’re all looking forward to getting stuck into vintage 2010.”
 
The new winery, designed by Jamie Gladigau of JBG Architects, will be situated on Barossa Valley Way, Lyndoch, close to Schild’s existing cellar door facilities and among the estate vineyards.
 

All wine industry efforts must be directed toward generating acceptable returns throughout the supply chain, including the producer and grower communities, says Andrew Cheesman, the new CEO of the Australian Wine and Brandy Corporation.

He replaces Sam Tolley who left 18 months ago. Cheesman was appointed by the AWBC Board months ago but the appointment has only just been rubber stamped by the Federal Government.

Cheesman gave an exclusive interview with The Week That Was today and the following is the full interview:

Why did you want this role so much?

I love the industry. When I entered the accounting profession I worked with clients in many industries, which other than wine included the motor vehicle, investment, hospitality, manufacturing and banking and finance industries. I was drawn to the wine industry on many fronts, the complexity of the business, the professional challenge, the people, the changes in the vineyards throughout the season, the anticipation that engulfs a winery each vintage and the optimism and excitement that accompanies the release of each wine. 
 
In recent years for a myriad of reasons, the industry conditions and operating environment has come under increasing pressure. In my view for the industry to achieve prosperity its peak bodies must be effective. You can sit back and be critical and complain, or you can try and be part of the solution. It was my view that this role with the AWBC was an opportunity to make a positive contribution to the industry. I wanted to provide leadership in the development of an innovative and financially, environmentally and socially sustainable wine industry.
 
The Corporation had appointed a relatively new Board with quality individuals and I felt confident that together we could make a difference.
 
What makes a great CEO?

I read once that there is no pre-training to be a CEO, that past history and successes don’t matter and you have to earn your respect all over again. That’s very much how I feel today.
 
I think great CEOs generate cultures that foster achievement, typified by a lack of bureaucracy, empowered teams, open and transparent communication, they set and strive for stretching and meaningful goals and targets, meet a commitment to developing their people and they are totally customer focused. In my view great CEOs need unwavering integrity, an infectious personal energy and enthusiasm, decisive decision making, passion for their business and they must surround themselves with great people. 

What is your priority?

Work collaboratively with the other peak bodies and associations to develop an aligned strategy with agreed priorities and appropriate allocation of resources. In addition, as the custodians of industry funds, we need to ensure we operate efficiently, effectively and maximise the benefits generated from the investment/utilisation of industry funds.
 
Priorities?
 
• Work with the peak bodies to ensure transparency of the production fundamentals of the industry and assist in the development of remedial (both supply and demand) programs and activities;

• Work with our stakeholders towards sustainable industry metrics; 

• Achieve greater balance between the fine wine and mainstream wine image of Australia.
Evolve the strategies introduced this year with brand segment, market and channel specific market development programs and activities;

• Commit to a systematic, long term program to promote our fine wine story and credentials.
Develop our strategies and targets for new and developing markets, particularly China and SE Asia;

• Answer the industry’s call to implement activities in the domestic market;

• Execute collaborative strategies with appropriate, complementary industry bodies; and

• Evolve appropriate foundation data sets that meet industry requirements.
 
I genuinely believe that if we can address the industry’s production fundamentals and implement these activities that a credible and sustainable platform will emerge. All efforts must be directed toward generating acceptable returns throughout the supply chain, including the producer and grower communities.

What changes will you make?

Given it is Day Two in the role it would be premature to comment. However as you would expect we will review every component of the business with a view to providing greater value in the services provided to our stakeholders.

What took them so long to rubber-stamp your appointment?

I am the outcome from the process and focused on what happens now that I have been appointed. 

Anything stand out as needing particularly urgent attention?

Elements from the priorities listed above.
 
From what I have witnessed, the Corporation comprises dedicated and industry passionate individuals that have actually made a real contribution through a very difficult period. I have great anticipation of what can be achieved with this team as we develop the culture and environment.

What do you think of the Landmark Australia/Regional Heroes programs?

The strategies emanating from Directions 2025 acknowledged that the path to sustainability in our industry (financial, environmental and social sustainability), is largely dependent on our ability to achieve a credible premium for our wines. The brand segment, market and channel specific strategies that Paul Henry and his new team are developing are very exciting. The first Landmark Australia tutorial and Regional Heroes programs have attracted a very positive response and I have no doubt they will continue to improve and evolve over time. This commitment to trading up is a long term strategy, it is critically important and I strongly believe that as an industry body, it is important we take this long term perspective and deliver a consistent and credible strategy.
 
That being said the industry still needs to adopt parallel marketing strategies that will differ in terms of brand segment application, dependent upon the maturity of the target market. It is important that this combined approach achieves the appropriate balance between the mainstream and fine wine image of Australia and delivers target growth in new and emerging markets.
   
What inspires you about the Australian wine industry?

The people that I have met along the way, their passion, resilience and determination to be successful.

What wouldn’t we know about Andrew Cheesman?

Quite a bit I hope. I am married to Donna, we have two sons Tom and Oliver. I am president of our local junior football club, am a member of a cycling group (‘The Wheelmen’) although I think I have the worst attendance record of the group. I have coached junior football and cricket, I follow the Adelaide Crows (despite barracking for Essendon through my youth in the VFL days), I am always reading and I love nothing more than sharing great food and wine with family and friends. 

How much do you love wine?

I am not someone who can rattle off vintages and brands and labels from all over the world— that isn’t my thing. However, whether it is trying a new brand or variety or blend, a new vintage of a favourite wine or opening an old and favourite vintage of a wine from the cellar, it can bring so much enjoyment and as I said above, when you match this with great food and the company of people you love and whose company you enjoy—there’s not much better than that. 

Interests/hobbies?

Time with family, food and wine, all sports, music, reading.

Favourite drop?

Whatever I say I will upset someone. Clare and Eden Valley Riesling, Margaret River Cabernet, Mornington Peninsula Pinot Noir, Rutherglen Fortified, Yarra Valley Chardonnay, Adelaide Hills Sauvignon Blanc, Barossa and McLaren Vale Shiraz, Tassie bubbles, Hunter Semillon—how am I going? Andrew Hardy told me (and everyone else) so many times that the 2000 Enterprise Cabernet was the best red wine in the world that I started to believe him!

• Andrew practised as a Chartered Accountant before joining South Australian listed wine company Petaluma Limited as group accountant in 1998. Following the company’s takeover by Lion Nathan Limited in 2001, he was appointed general manager of Petaluma Wines. He was appointed winery operations director for the Lion Nathan Wine Group in 2004 and then served as strategy manager from 2006.