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Creating value for wineries

By Tuesday 9 January 2024June 19th, 2024No Comments

On a recent visit to Taiwan, I spoke at a wine dinner for some high-end private clients of our importer.

One of the challenges for our importer in Taiwan is reassuring their customers that our wines – that sell for about $100 in Australia – are exciting despite being so “inexpensive.”

With a portfolio full of cult Californian wines that are mostly three to 10 times the price of ours, it takes some explaining.

One of the attendees was from the semiconductor business, and I expressed my admiration for what they’ve achieved in their industry.

His response stuck with me.

“We are benefitting,” he said, “from the foresight of some people who made some good decisions 40 years ago.”

It stuck with me because not all successful businesspeople acknowledge the work done by those before them (in fairness, a lot do, but it often doesn’t get much airtime).

It also resonated because in a business like wine, in which delayed gratification is usually the only gratification going, capital needs to be patient, but sometimes foresight seems in short supply.

Foresight is inversely proportional to the size of the bulk wine lake. Discuss.

It made me think about a theme that I often ponder: what can we do today to create lasting value for those that follow, and for ourselves.

And the clues to that, I usually think, are to be found in working out what people did 30 or 40 years ago that created value that we are benefitting from today.

What are today’s equivalents?

What do we need for today’s challenges that is different from then, and what do we need that is the same?

On a slight tangent, should the government be taking a leaf from the French book and be supporting the industry by paying for distillation of excess bulk wine?

No doubt every one of us in the business would answer these questions in a different way, but for what it’s worth, here are my answers to a few things we did, and what the modern equivalent could be.

Hazel Murphy – The Wine Flights

It was a pretty simple formula. Bring out scores of wine trade each year from the UK to experience the hospitality, the characters and the wines, that make our offerings so compelling. It couldn’t have worked better.

The opportunity now is to do it again, but updated for today.

The experience updated, the targeted countries and trade updated, the message about Australian wine updated to get a new generation of wine trade from key markets buying in.

When people ask me what Wine Australia should be doing, this is the first item on the list.

What they can’t do is fix the problem of unsustainable vineyards that grow fruit that doesn’t have a market at a sustainable price.

That problem, and all the difficulties that go with it, can only be addressed by the owners of those vineyards.  Could the government play a role, in particular with assistance to relieve over-supply and support vine removal? Quite possibly.

Given the pain associated with the China tarrifs, there’s a reasonable case to be made.

Support for distillation that is tied to a vine-pull could help.

The expression vine-pull for some people is associated with losing some precious old vines, and that was true in part.

It doesn’t mean that we should shy away from the need for another one now, as long we are pulling out the right ones!

Penfolds and the culture of winemaking

When I think about the value created by Penfolds and companies like Penfolds in the 1980s and 1990s, I think about the power that the winemakers held in those organisations.

We’ve benefitted from a strong winemaking culture that has its roots in our university winemaking courses, Adelaide University especially.

In the 80s and 90s the large companies like Penfolds Wine Group, Hardy’s, and the emergent Petaluma, to name a few, had teams of winemakers who wielded great influence, and established the culture of pursuing quality relentlessly, along with innovation in style and techniques.

Today’s equivalent opportunity is not to lose the great culture of winemaking expertise, but to raise up the profile, influence, and culture of grape growing.

Every ambition that we might have as producers, regions, industry bodies, and supporters of Australian wine is dependent on the quality of our vineyards.

Higher prices per litre, stronger brands and businesses, better appreciation overseas for our wines, wines that reflect our regions and sites – none of it can be achieved without investing in our vineyards and by extension the land they’re planted in.

The Story Tellers

The Halliday tomes on Australian wine from the 1980s and 1990s were a revelation. The history, the knowledge, the understanding of regions was a profound gift to the industry.

Today the new references are the Jane Lopes and Jonathon Ross MS production, How to Drink Australian, and the yet to be released The Australian Ark by Andrew Caillard MW.

(A disclosure, one of my workmates, Kavita Faiella, was a contributor to How To Drink Australian).

One key difference about HTDA is that the authors are American, and from the the restaurant trade, giving a different perspective, and a new audience.  It’s one thing for our own writers to tell the stories, but writers like Lopes and Ross champion our wines from a different viewpoint.

If you are looking for something to gift to an overseas distributor, retailer, sommelier, or writer, either or both of these are worth considering.

The Wine Show System

The wine show system has made a huge contribution to the wine community in Australia.

The improvement of the breed, the improvement of palates, evolution of style, building community, promoting our wines, are just some of the benefits.

But the system feels bloated, which undermines its impact.

There are so many shows, there is is a lot of duplication, and the Agricultural Societies that run them don’t always give back as much as they get.

Today, protecting and enhancing the show system is different challenge.

How can we make it more relevant, and retain the really great parts of it, while updating for a new era?

One thing that makes this hard is that while we call it the wine show ‘system’ it’s actually not a system.

Each show is separate, with different owners and little alignment.  Getting the shows aligned and working within a national plan – perhaps a voluntary set of principles and goals – could be a good start.

• David LeMire MW writes for WBM – Australia’s Wine Business Magazine. Subscribe to the print or digital version of the magazine here.

 

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