Wine industry commentator Paul Clancy responds to a letter to the editor by winemaker Andrew Margan in The Week That Was.
Andrew Margan’s critique of Wine Australia (TWTW 21/9) and his contention that its structure is what he calls the “elephant in the room” of the wine industry’s current troubles, was interesting.
However, his proposition was based on a twisted logic which dismisses the commercial wine sector: “We have two sectors within the industry. One is a beverage supply business model and the other is the real wine industry.”
With respect that is laughable.
Presuming Andrew is referring to the three major inland regions as the “beverage supply” sector and everywhere else is the “real wine industry” some facts should be noted:
1. The combined crush of Australia’s three inland regions, Riverland, Sunraysia and Riverina, was 70 percent of the total national crush this year, slightly down on the 10 year average of 72 percent.
2. Because industry levies – the funds that pay for Wine Australia and almost everything else which keeps the industry’s organisational structure functioning – are contributed on a volumetric basis (per tonne and per litre) the share of total levies contributed by the “beverage” sector is around 70 percent of the total. In other words the commercial winemakers and growers contribute three quarters of the funds while the “real” wine industry only provides 25 percent.
That’s not a bad deal.
Margan’s real wine industry sponges off the commercial sector to the tune of more than three quarters of the industry’s running costs – including Wine Australia’s marketing task.
If there is an elephant in the room it is the one that has been there a very long time – the disregard of the commercial sector by the “real wine industry”.
This disregard is emblematic of a prevailing attitude particularly among an influential patriarchal claque within the industry.
The significant – no critical – role the commercial wine sector plays in the Australian wine industry is too easily dismissed or deliberately ignored.
Commercial wine makes up about 80 percent of Australia’s exports and its success in international markets provides pathways for premium producers to draw attention to their wines.
The success of brands like Jacob’s Creek, Lindemann’s Bin 65, Yellow Tail and Oxford Landing in the 1990s, was the catalyst for the rise and rise of Australian wine internationally – Margan’s “beverage” wines built beachheads into the UK and USA markets for our other wines. Ironically, one of the “beverage” brands, Jacob’s Creek, recently announced its sponsorship of the Australian Open Tennis – an internationally significant marketing coup for the entire Australian wine sector.
3. And yet, this lack of recognition endures – the Australian Commercial Wine Producers have had no success at being accepted as a “declared winemakers’ organisation” for the purposes of the Wine Australia Act 2013.
4. The Minister for Agriculture, Forestry and Fisheries (DAFF) appoints the Wine Australia Board after consultation with the declared organisation. Perhaps those who represent the “real industry” ought to take that up with their organisation, Australian Grape & Wine if they believe the model is “flawed”.
The not so subtly veiled criticism of the CEO of Wine Australia and the claim that “he doesn’t understand the intricate issues we face” was disingenuous.
Finally, if the real industry is so uncomfortable about having to share wine industry space with the beverage makers, perhaps they should lobby to change the levy funding to an ad valorem method to pay its way more equitably.
And then maybe divorce itself from the dastardly commercial sector and go it alone.
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