22 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
The big guns are still the hottest shots in townGRAPEGROWER & Winemaker's review
of Australia’s Top 20 wineries shows the
big guns are still getting bigger and are
providing the sharp end of Australia’s
vital export industry.
On the back of which our legions of
boutique wineries producing some of the
world’s most outstanding product are
doing their best to enjoy the ride.
Business journalist Ed Merrison has
spoken to 19 of the Top 20. Unfortunately
one on that list declined to take part.
Merrison has provided some insightful
interviews as to what makes the big boys
tick and what they have in place for the
next era of the Australian wine industry.
In New Zealand high-profile wine
identity Bob Campbell MW has given a
cross section of the industry. As well as
naming the Top 5 Campbell has provided
interviews with a small, bigger and one of
the biggest operations there.
What this feature does show is that
Australia’s wine industry remains high
on the global agenda, not just in key
markets such as North America, the
UK and Asia, but also in more targeted
markets such as the Netherlands and
Scandinavia.
And more importantly, that the
decision makers of the Top 20 are
determined to ride out the current
downturn and make sure they stay there.
The statistical tables used in this
feature have been generated from the
2014 edition of The Australian & New
Zealand Wine Industry Directory, which
is now available for purchase.
Details can be found at www.winebiz.
com.au.
In next month’s issue we will take a
look at the nation’s boutique industry to
complete this profile of our marvellous
wine industry.
International wine writer Ed Merrison
this month presents his second Top
20 wine feature for Grapegrower &
Winemaker after speaking to each of the
industry’s major players.
# Top producers by revenue ($)
1 Treasury Wine Estates
2 Pernod Ricard Winemakers
3 Accolade Wines
4 Casella Wines
5 Australian Vintage
6 De Bortoli Wines
7 McWilliam's Wines Group
8 Warburn Estate
9 The Yalumba Wine Company
10 Brown Brothers Milawa Vineyard
11 Tahbilk Group
12 Kingston Estate Wines
13 Grant Burge Wines
14 Angove Family Winemakers
15 Qualia Wine Services
16 Peter Lehmann Wines
17 Littore Family Wines
18 Zilzie Wines
19 Berton Vineyards
20 Tyrrell's Vineyards
21 Garacama (Andrew Peace Wines)
22 Wingara Wine Group
23 Beelgara Estate Pty Ltd
24 Cumulus Wines Pty Ltd
25 Nugan Estate Pty Ltd
# Top producers by volume (litres)
1 Accolade
2 Treasury Wine Estates
3 Casella Wines Pty Ltd
4 Premium Wine Brands
5 Australian Vintage
6 Kingston Estate Wines Pty Ltd
7 De Bortoli Wines Pty Ltd
8 McWilliams Wines Group
9 Warburn Estate Pty Ltd
10 Qualia Wine Services
11 Zilzie Wines Pty Ltd
12 Garacama Pty Ltd
13 The Yalumba Wine Company
14 Littore Family Wines
15 Angove Family Winemakers
16 Wingara Wine Group Pty Ltd
17 Salena Estate Wines Pty Ltd
18 Brown Brothers Milawa Vineyard Pty Ltd
19 Berton Vineyards
20 Tahbilk Group
21 Grant Burge Wines Pty Ltd
22 Peter Lehmann Wines Ltd
23 Taylors Wines Pty Ltd
24 Beelgara Estate Pty Ltd
25 Nugan Estate Pty Ltd
Contents
Wine Australia .........................................6
Wine Grape Growers of Australia ..........23
Winemakers Federation of Australia ...... 24
Top 20 by revenue:
Treasury Wine Estates .......................... 25
Pernod Ricard .......................................26
Accolade Wines .................................... 27
Casella Wines .......................................29
Australian Vintage .................................30
De Bortoli Wines ................................... 31
McWilliam’s Wine Group .......................32
Warburn Estate .....................................33
The Yalumba Wine Company ................33
Brown Brothers .....................................34
The Tahbilk Group.................................35
Kingston Estate Wines ..........................35
Grant Burge Wines ...............................36
Angove Family Winemakers .................. 37
Qualia Wines Services ..........................38
Peter Lehmann Wines ...........................39
Littore Family Wines ..............................40
Zilzie Wines ...........................................40
Berton Vineyards ..................................42
Tyrell’s Vineyards ...................................43
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 25
Treasury Wine EstatesIN 2013 this feature kicked off with
bullish words from then Treasury Wine
Estates chief executive David Dearie.
He said the global wine market was
the most positive it had been for 30 years
– and explained why TWE was primed
to cash in.
Fast forward one year and Dearie’s
gone, stepping down in September after
announcing what many would take to be
the defining moment of his management:
a $160m write down on its US inventory.
But company chief supply officer
Stuart McNab sees it differently.
Stuart McNab
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26 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Those unhappy headlines don’t
disprove Dearie’s assertion the world’s
thirst for premium and luxury wine is
growing.
And the TWE team is “really looking
forward” to life under Michael Clarke,
the former Premier Foods boss who’s
stepped into Dearie’s shoes.
TWE reported a 38 per cent drop
in earnings before interest, tax and
adjustments for the value of vineyards
(EBITS) for the first half of 2013/14.
This came in at $45.8m from $73.4m
in the same period last year, with the
company blaming “increased investment
in marketing and distribution,
challenging conditions in Asia and a
number of factors in Australia”.
It sold 15.3 million cases worldwide,
down 7.5 per cent but translating to net
sales revenue of $812m, roughly in line
with the previous year.
McNab’s confidence for the year ahead
is based on the strength and breadth
of TWE’s brands and its inventory of
sought-after wines.
He points to the success of Penfolds,
whose 2008 Grange scored 100 points in
both Wine Spectator and Wine Advocate.
But perhaps more telling was the
performance of Rosemount, which
garnered 310 regional, national and
international awards over the year.
Product launches spanned the
portfolio. Penfolds added a 2012 Bin 9
Cabernet Sauvignon at $30 and a super-
premium 50-Year-Old Rare Tawny, while
Wolfgang Blass’s 50 years in the Barossa
were commemorated with a 2011 single-
vineyard Cabernet Sauvignon from
Greenock.
On the innovation side, TWE teamed
up with jewellery designer Samantha
Wills for the Yellowglen Peacock Lane
sparkling, while Pepperjack introduced
two new Barossa Shirazes to go with
specific cuts of steak.
The company, which has expanded
capacity of its Matua Marlborough winery
from 15,000 to 25,000 tonnes since buying
it outright in late 2012, has extended
an important long-term lease on the
predominantly Sauvignon Blanc-planted
Northbank vineyard in the region.
It’s also purchased two sites with a
combined 53 planted hectares in the
Upper Yarra for its Coldstream Hills
brand. Then got its “first toehold in
Tasmania” with the acquisition of the
White Hills vineyard in the Tamar
Valley. Those 83 hectares are planted to
Sauvignon Blanc and the key varieties of
Burgundy and Alsace.
McNab’s also excited about the
imminent launch of a new domestic
and export warehousing and logistics
network located in Adelaide.
Set up by TWE and fourth-party
logistics company Trebuchet, it’s close to
road, rail and shipping links, as well as
TWE’s production and storage facilities.
McNab sees it as a convenient, cost-
effective successor to the former Foster’s-
managed network and says it will benefit
others in the industry who’d like to get
involved.
On the subject of costs, McNab is
thankful the dollar has started to “head
in the right direction” but adds: “We
really have to see it down at 80c to 85c for
a while to see benefits in export markets.”
The UK and Ireland are still big
markets for TWE’s Australasian
offering, while Matua Sauvignon Blanc
is achieving 50 per cent year-on-year
growth in the States. Even so, the US is a
region where McNab wants to see “much
more promotion to highlight Australia’s
high quality and value for money” wines.
Canada is TWE’s next biggest market,
followed by Asia, where EBITS plunged
64 per cent in the first half, largely put
down to austerity measures in China.
McNab says Savour Australia was
effective in showcasing the quality and
range of Australia’s offering, though
perhaps hampered by a short gestation
time.
“I think it’s important to develop a
long-term, three- to five-year program for
invigorating the perception of Australian
wines in the international market and
driving up demand for our wines from
entry level right up the luxury chain,”
he says.
Pernod Ricard WinemakersLIKE the creek snaking through the
new logo of Australia’s biggest seller of
branded bottled wine, Pernod Ricard
Winemakers simply doesn’t stand still.
And this is what Australian managing
director Brett McKinnon loves most
about his company.
McKinnon counts Jacob’s Creek’s new
brand identity unveiled in January as the
defining moment of his year.
“It’s more contemporary and premium
and the biggest evolution we’ve had in 30
years,” he says.
It’s not just the logo that’s changed
for this company that sold 6.6 million
nine-litre cases worldwide in 2013. The
past 12 months have also seen the launch
of three wines to match Asian foods:
red Lamoon for Thai dishes, white Wah
for sushi and most recently red Wah,
designed with a chef who specialises in
Japanese red-meat dishes.
The low-alcohol Cool Harvest range
has expanded to take in Pinot Grigio,
while Fiano and Sangiovese have been
slotted into the Classic range. There’s
also been work on creating a new tier for
the separate St Hugo brand.
“Certainly we have it in the pipeline
to launch a couple of wines above the
current range,” he says. “If all goes well
we’ll bring those out later this year.”
McKinnon sees more scope for Jacob’s
Creek Twin Pickings, the light, fresh
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 27
whites with a sweet twist of Moscato
that hit shelves in August. They’ve been
“well received” in Australia and there’s a
chance they’ll soon be seen in the UK, US
and New Zealand.
The Kiwis were also the first to
experience pop-up project Blend by
Jacob’s Creek™. This invites members
of the public to chat to a winemaker and
create their own blend, taking home a
bottle or two when it’s done.
“With the technology, it’s as good as
anything you’d walk away with from a
bottling line,” says McKinnon.
People will also get the chance to vote
online for the best red and white blend,
with the winning wares available for
purchase from major retailers.
McKinnon says this and Twin Pickings
are examples of the company’s move to
more targeted promotions and products.
“If you look at where growth in wine is
globally, a lot of it comes from innovation.
We’re obviously trying to bring people
into the brand but we also have a big
existing customer base, so we want to
keep that balance.”
Jacob’s Creek has stuck to its guns
on pricing at the potential expense
of volume. “There’s almost no market
globally where we haven’t pushed up
prices in the past 12 to 18 months,” says
McKinnon.
The brand had a tough time of it in the
important UK market in the first half of
2013/14, while the US has also slipped
very slightly in the past year.
Canada and China have gone well in
recent times, while emerging markets
have given great encouragement.
“India, Russia and Poland are going
very strongly for us and that looks set to
continue,” he says.
McKinnon thinks Australia is showing
greater diversity and quality than ever, as
demonstrated by Savour Australia.
And he’d like to see another such
event – with a clear theme and purpose –
in 12 to 24 months’ time.
He’s also happy about the shape his
portfolio’s in.
“I keep being pleasantly surprised at
how strong our brand is and how well
received some of the things we do are by
consumers, the trade and the media.
“That gives us a lot more confidence to
deliver more innovation going forwards.”
Accolade WinesLIKE Mitch Johnson, Accolade had a
successful Ashes campaign.
But unlike Mitch and his Mo, the
company gained popularity in the UK,
where Hardys is currently the number
one wine brand.
“It was a great summer for us as we
commenced our sponsorship of Cricket
Australia with Hardys,” says Michael
East, general manager for Asia Pacific.
That deal coincided with the 160-
year anniversary of Hardys, a milestone
commemorated with special dinners in
Australia and the UK.
It was also accompanied by a
portfolio-wide refresh complete with
new, premium packaging for the brand
and the Australian launch of the William
Hardy range.
But East is keen to point out Accolade
isn’t putting all its energy into old names.
It’s in the process of releasing two new
premium brands.
The first is Eddystone Point from
Tasmania. Produced by the Bay of Fires
team and drawing fruit from the Derwent
Valley, East Coast and Coal River Valley,
Brett McKinnon
28 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
this range will comprise Pinot Noir, Pinot
Gris and Riesling.
It’s also reincarnating Starve Dog
Lane, with two lines under the label
coming out in 2014: the South Australian
Collection and the Regional Collection,
this latter sourced from Adelaide Hills
and Clare Valley. These will be followed
further down the track by a third, higher-
end tier including the fondly remembered
Shiraz Viognier.
East sees these as evidence of
Accolade’s “much stronger innovation
program” compared to last year. He’s also
confident the company can reinvigorate
the cask-format table wine market.
“It’s a tired area of the category that
requires innovation to make it more
relevant to consumers,” he says. “Pack
size and superior quality wine can
deliver this.”
The softening in the Australian dollar
also gives grounds for hope at Accolade,
which exports to 80 countries.
“Naturally we hope there will be
improvements in the exchange rate that
would support our export capability, but
we’re not relying on it,” says East.
As well as lifting Accolade’s earnings
profile, it could also even the playing
field with Australia’s key competitors.
“Chile’s agility in establishing free
trade agreements has given it additional
advantages in addition to its low cost of
labour,” he notes.
East says the UK market has performed
extremely well for Accolade Wines in the
past year, while continental Europe, New
Zealand, Asia and North America will
continue to be the next most important
regions in the coming 12 months.
Winning over the key retailer groups
in this last region represents the biggest
challenge for Australia, according to East.
“At present it’s extremely difficult to
gain new listings and distribution in
the States, limiting the opportunity to
promote to consumers. Brand Australia
doesn’t have the positive feeling it
enjoyed in the 1990s and 2000s. We have
to persevere and I’m sure the quality,
diversity and value Australian wine
offers to the consumer will ultimately
win through. “
On this point, East says Savour
Australia was a great success in getting
key influencers from the US, Asia and
Europe to look at Australia with fresh
eyes.
“The only way to follow it up is
by being persistent and continuing to
develop markets. We look forward to the
next Savour in the next 18 months as we
can’t afford to rest on our laurels.”
On balance, he feels more optimistic
now than he was 12 months ago.
“Our access to, and sales of, premium
wine have increased in the past year and
I believe this growth will be sustained
again this year.
“The coming year won’t be easy – the
marketplace growth will be modest but
that growth will come from wines at
more than $15, so margin and profit mix
will be improved.”
Michael East
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April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 29
Casella WinesA BILLION. That’s the key number for
John Casella. Not $11.9m, the extent of
the company’s second loss in two years,
following a $30m shortfall for 2011/12. A
billion – the number of bottles of Yellow
Tail that have been sold around the world
since the product hit the shelves 13 years
ago.
“I think it says a lot about our capability
to produce a strong, consistent product
and keep it flowing, and it says a lot about
our relationship with our customers and
partners around the world.”
The past year was the biggest ever for
Yellow Tail sales, with more than 12.5
million cases sold worldwide, 8.5 million
of which went to the US.
That nudged up revenue from $334.5m
to $344.5m.
But Casella has also been busy
diversifying his offering this past 12
months.
Most conventional are the icon wines
launched under the Casella 1919 label at
an RRP of $100. The first releases were a
varietal Cabernet Sauvignon and Shiraz
from 2006.
The plan is to make these wines with
the best grapes at Casella’s disposal, so
the make-up may change from year to
year.
The Yellow Tail line has been extended
to take in a 5 per cent-alcohol sangria
that’s doing “exceptionally well” in the
US and Australia.
Along similar lines is Bondi Rd, a
Sauvignon Blanc spritzer at the same
alcoholic strength that comes in a pack of
four 275mL bottles, available in Original,
Elderflower and Mint and Ginger and
Green Tea flavours.
“It isn’t a category that’s well
understood, but this gives people the
opportunity to enjoy a high-quality
John Casella
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30 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
grape-based product rather than a spirit-
based one,” says Casella.
The company’s held its nerve on
pricing and has no immediate plans to
change things, though the lower dollar
has given a welcome confidence boost for
customers and backers.
After the US, the UK, Canada,
Australia and Japan are Casella’s biggest
markets. He makes about three full trips
a year taking in the US, Europe and
Asia, and stresses a great amount of the
company’s success is down to excellent
relationships with distributors, notably
W.J. Deutsch & Sons (US), Diageo (UK)
and Vins Philippe Dandurand (Canada).
Casella maintains Yellow Tail is as
relevant now as ever and serves as a
prime example to other producers who
want to get a good return.
“We need to be proudly Australian.
Forget about the high cost base. We’ve
got to look at how we make our wines
more interesting, more tasty and better
looking. The market hasn’t changed.
“No matter what the price point is,
people want boldness and a point of
difference.”
The company has enough retained
profits and support from financiers to
cope with two annual losses on the trot.
But Casella hopes to end this year in
the black.
“The intent is always to be profitable
and to be in a position to reinvest. Once you
fade, you often don’t come back,” he says.
Profitably is the number one challenge for
everyone in the wine industry, he adds.
But he’s more optimistic now than he
was a year ago, and reflecting on the road
from nowhere to a billion bottles drives
that faith.
“I’m at a place I’d never thought I’d be.
I never thought I could bring the family
company to the size it is or have a brand
as big as this,” he says.
“We need to be clear, firm and resolute
in building new products and line
extensions and building relationships
that are the foundation of a good business.
I’m confident we can do that.”
Australian VintageTHE DOLLAR’S easing has also eased Neil McGuigan’s mind.
Wait a few months and he’s sure the benefit will show.
When UK supermarkets start purchasing next year’s bulk-
wine supply, Australia will have a rosier look about it.
“They can make the margin they require in the £5 area that’s
the sweet spot in the UK,” says the chief executive of Australian
Vintage.
“The dollar will provide great opportunities all over the
world in some of our traditional markets and places like the US
where we’ve been unable to hit the sweet spot in terms of price.”
AV in February announced a first-half net profit of $4m, up
from $3.3m for the same period the previous year.
Australian bottled sales rose 15 per cent, boosted by a 29 per
cent jump for the Black Label range.
Canada, the company’s third largest market, was also strong,
while revenues crept up in Europe and the UK, this latter being
AV’s number one export customer.
The exchange-rate shift gives McGuigan heart that full-year
profit will be “significantly higher than last year and in line
with market expectations” – putting it between $11m and $12m.
AV’s cost base is “relevant and under control” but the quest
for efficiency goes on. It’s determined to find ways to make
its yield and sales forecasts more accurate and is working
“aggressively” to get fruit to the right point of ripeness and
quality at the same time in order to streamline processing.
Attention to the bottom line doesn’t mean product lines are
neglected. The company impressed again in competitions, with
the 2005 McGuigan Bin 9000 Semillon winning champion
white at the International Wine Challenge, where McGuigan
was again crowned best white winemaker.
“These awards give our salespeople, retailers and consumers
confidence in our brands, which means more distributions and
Neil McGuigan
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 31
more people tasting our wines,” he says.
“We’ve been working for a long time
on overdelivering at every price point
and that’s starting to come to fruition.”
This, indeed, is McGuigan’s mantra
and this month sees the launch of The
Philosophy, a $150 Clare Cabernet Shiraz,
to honour it.
Also new this year are McGuigan
ranges Expressions ($14) and Founders
($20), including a first Yarra Valley Pinot
Gris and McLaren Vale Cabernet Shiraz.
Tempus Two has added a Prosecco and
Tempranillo (both $25) and Nepenthe an
Altitude Shiraz and Altitude Tempranillo,
marking the CEO’s conviction
Tempranillo, like Chardonnay and Shiraz,
could be fantastic for Australia because it
works in warm and cool climates.
McGuigan Black Label is about to
adopt a new Semillon Blanc in the
old White Burgundy mould, while the
Short List range will sport a Barossa
Montepulciano.
McGuigan is “sick and tired of people
treating wine like a commodity”.
In an attempt to help them better
appreciate it; he’s teamed up with
Australia’s Lyndey Milan and UK
Masterchef presenter John Torode to
promote food and wine pairing.
He and Torode have co-created
recipes, a food-friendly Semillon and a
competition where UK-based consumers
win a trip to Australia to dine in the
vineyard with McGuigan wines and food
cooked by Torode.
McGuigan found Savour Australia
“very positive and effective” and would
like to see a structured follow-up in two
to three years.
In the meantime a drip-feed
promotional campaign is essential.
This would have 35- to 50-person
teams from key export markets – first
the US, say, then UK, then Japan and
so on – coming out every four months
for a 10-day immersion in Australian
wine, taking in a slightly different set
of regions every tour. “That way there
would always be some influential wine
people, somewhere in the world, talking
about Australia,” he says.
De Bortoli Wines“EVER so slightly cautiously optimistic.”
That’s how Leanne De Bortoli sums up
the family’s mood.
It might be a few notches down from
gung ho, but at least it’s an improvement
on last year.
After a couple of years of belt-
tightening and a reported full-year loss
of $24.7m for 2011/12, the weakening of
the dollar has offered a welcome chink
of light.
Behind the scenes De Bortoli has
continued to improve infrastructure
at its Griffith facility, including a new
bottling line to boost quality control and
give greater scope for packaging.
But the major strides have taken place
in the product sphere.
The company has added an off-dry
Riesling and Syrah/Gamay blend to
its La Bohème range, put out a rapid
sellout Pinot Blanc under its Vinoque
label, launched Villages Pinot Noir and
Chardonnay from the Yarra Valley at
$20 each, unveiled varietal Pinot Grigio
and Sangiovese BellaRiva wines and
refreshed the packaging for its estate-
grown wines.
“When our grandfather first started
the business, he had the mentality of
providing wines people wanted to drink.
If there was a market, he’d make it,” says
Leanne of the restless innovation.
“The beauty of our company, with the
mother ship in NSW and our holdings in
King Valley and here in the Yarra, is that
we can keep doing that.”
Making wine is one thing; making
money is another. And De Bortoli is
finding the latter just as tough as anyone.
“It’s almost like you have to work
harder for those same dollars. It’s not a
case of ‘if you build it, they will come’.
I think you’ve just got to be proactive
and that means getting out there to
consumer tastings and putting wine into
people’s mouths, engaging with trade and
sommeliers.”
With its finger on the pulse of changing
tastes, De Bortoli remains “dynamic” in
the digital space, mindful of the popularity
of shopping online and also the need to
communicate with consumers.
“We’re very active in social media.
That’s been holding us in good stead. For
not much outlay, you can get really good
exposure.”
Leanne’s brother Victor is the man
charged with building exposure in
overseas markets.
As De Bortoli export director, he
thinks the US will recover to reclaim
number two spot behind the UK.
At the moment, it’s not even in
De Bortoli’s top five, which instead
Leanne De Bortoli
32 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
McWilliam’s Wine Group“THE WINE industry is without doubt
the toughest industry I’ve worked in,”
says McWilliam’s chief executive and
former Ticketek boss Robert Blackwell.
“There are opportunities but you have
to work extra hard to capitalise on them.”
And work hard he has. In his three
years at the helm the team he has
“brought the key brands home”: Mount
Pleasant firmly planted back in the
Hunter, McWilliam’s in NSW, Brand’s
Laira in Coonawarra and Evans & Tate in
Margaret River.
That’s created a rock-solid platform
on which to promote regionality and
simplified the narrative for customers
across the world.
The company has also pulled right
back from buyer’s own brand wines and
“quick-moving bulk wine” sub-$10.
Instead its focus has shifted to $15-$30
wines and exclusives for consumers and
gatekeepers.
Thus Evans & Tate and Coles have come
up with E&T and Strange Bedfellows,
while Brand’s Laira Barrelman has been
developed for independents.
Staunchly traditional Mount Pleasant
boasts a white field blend and off-dry
Semillon under its cellar-door-only B
Side label.
“To have a strong relationship with
customers now it really has to be on
an innovation platform,” says Blackwell.
“Quite frankly I think this is the way the
strong get stronger.”
All four brands have had a facelift, in
packaging and online. “Wordy” labels
are out; pictures are in – though sacred
flagships such as Lovedale and O’Shea
have been left alone.
“The heritage of the family business is
wonderful and we keep it inside all we
do, but you’ve got to make changes to be
relevant and contemporary.”
The digital makeover landed
McWilliam’s the Wine Communicators
of Australia award for best website. The
four up-to-date, user-friendly sites include
video, interviews and social media add-
ons.
“It’s a very deliberate strategy to put
people resources and dollars into this
area. We want to attract people so they
come on a life journey with us while
also keeping in touch with existing
customers,” says Blackwell.
He’s also keen to bring new blood into
the business “to ask questions of us all”.
Bryan Currie, who was at McWilliam’s
in the ’90s, has been drafted to Hanwood
and Mount Pleasant has welcomed Jim
Chatto – and his dreams of Pinot Noir. The
company’s also brought in some “FMCG-
type” people as it continues to finetune
its supply chain. Blackwell says dollar
volatility has created uncertainty in export
markets, which won’t get a real boost until
we see the Australian dollar at 83c to 85c.
McWilliam’s is doing “OK volumes in
China” and Canada has overtaken the US
as number-one customer.
China’s been earmarked as the second-
largest export opportunity but right now
Blackwell, who used to run his own
business in the States, is bullish on the
US and is ramping up efforts there.
“They know us; Australian wine has a
very good reputation. When they decide
to spend, it’s the most dynamic economy
in the world.”
While Australia gave a good account
of itself at Savour Australia, Blackwell
thinks it would be more effective to
invite delegates who can tell Australia
what the world wants.
“I’d like to hear experts on innovation,
people who can share data, who
understand consumer needs, even people
who’ve lived it and failed. If I got two
days of that, I’d be in paradise.”
Still, Blackwell is happy with progress
at McWilliam’s.
“Putting out new products always
entails risk. We’ve had an exceptionally
high success rate, which enables us to
do more. Plus I’m really optimistic about
export opportunities.”
features Sweden, Japan, China and the
Netherlands. Victor also believes China
will continue to grow despite austerity
measures there.
The change in the dollar has had an
immediate impact on margins, bringing the
company “closer to a sustainable position”.
“We would be reluctant to adjust prices
at this point as we try to consolidate from
a tough period of holding shelf position at
challenging margins,” Victor adds.
Leanne says of their current position:
“I don’t think we can ever be complacent
but we feel we’re trying to hit the mark
with what people want.”
Setting aside the issue of oversupply
and the resulting squeeze on grape prices
and potential margin, Victor would say
the same about Australia’s current form.
“I actually think we’re regrouping
nicely,” he says. “I thought Savour was
great. For me it showed everyone at
Australia is very much alive, enthusiastic
and ready to do business. I believe
Australian wine is in a great position.
The wines are world class and have never
been better.”
Robert Blackwell
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 33
Warburn EstateWE regret to report that despite several
weeks of requests and discussions –
by phone and email – Warburn Estate
declined to be interviewed for this
feature.The Yalumba Wine CompanyIF ROBERT Hill-Smith could see past
Groundhog Day, he might well glimpse a
bright future.
“I’m no more or less optimistic than
I was 12 months ago. The dates have
changed but the outlook hasn’t,” he said.
“The industry’s dealing with more
variables, margin compression is
everywhere and consumers and the trade
are faced with ever more complexity
around choice. I don’t see a lot changing.”
Hill-Smith says the industry needs
the likes of Treasury Wine Estates and
Pernod Ricard Winemakers on top form.
That way they’re more likely to invest
and show leadership.
He’s also concerned the peak national
bodies lack the resources they need, due
in part to the impact of low tonnages in a
statutory levy system. This in turn affects
investment in compliance, thought
leadership and marketing.
“Regional bodies are far better
equipped to deal with regional issues
than national bodies are to deal with
national and internal issues, and that’s
a real problem. The dynamics of the
industry are still out of whack,” he says.
Another manifestation of this
imbalance is oversupply.
Hill-Smith thinks a number of
unprofitable players have stayed in the
game because it’s not their primary
investment, distorting market conditions
for full-time investors. “I hate seeing
growers getting low prices and going out
of business but wine companies can’t
act in a way that penalises them in the
marketplace.”
He’s also worried about the prospect
of wine destined for China either staying
in Australia or being returned to be
relabelled and sold here.
From a product perspective, Hill-
Smith thinks fresh aromatic varieties
will continue to do well and hasn’t given
up hope that Riesling will take off.
He also foresees growing demand for
quality sparkling wine such as Prosecco
and believes Pinot Noir and “serious
Chardonnay” will continue to grow in
stature, while Shiraz and Cabernet will
also stay strong.
“Quality wines with a story, which
express class and regionality, will
continue to find a mark,” he says.
To this point, Hill-Smith heaped
praise on Savour Australia but warned
a worthy sequel must come soon to take
full advantage.
“It galvanised the industry and
Robert Hill-Smith
AUSTRALIAN
34 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Brown BrothersIF YOU can’t treat yourself to a facelift on
your 125th birthday, when can you?
That’s what Brown Brothers chose to
do with its 1889 wines, the range of classic
dry wines renamed to commemorate its
founding year.
“The previous label had been used
for 15 years,” explains chief executive
Roland Wahlquist.
“The new one is a big departure for
Brown Brothers. It’s much more relaxed
and inviting than it was in the past and
we’ve had very good consumer feedback.”
There’s also a youthful look to its new
product launches. The introduction of
Prosecco in piccolo format aims to attract
newcomers to a wine that “has a lot of
growth to come”.
Wahlquist also sees mileage in
bridging the gap between sweet and dry
wines, and has been pleasantly surprised
by the success of the new Moscato/
Sauvignon Blanc blend.
The company came into the year with
a spring in its step following a strong 2013
vintage. At the time, Brown Brothers was
growing 40 different varieties on eight
vineyards across two states.
Wahlquist says they all performed
well. “I can’t remember the last time that
happened. It gave us real confidence.”
But the changes wrought since then
have gone further than mere window
dressing. A renewed focus on its best
wines has seen that vineyard tally cut
from eight to six, with one site in the King
Valley and another in Tasmania sold off.
More recently Brown Brothers
established a joint venture with Clare
Valley-based Taylors to distribute the
wines of both companies in New Zealand.
The company, Taylor Brown, went live
in February.
“We’re very excited about it,” says
Wahlquist. “We’ve got a similar culture
and this gives us economies of scale that
we really couldn’t achieve on our own.
New Zealand is our number one export
market and this will help us grow there.”
This emphasis on its most valuable
markets has also led Brown Brothers
to scale back activities in Europe. The
dollar certainly hasn’t fallen enough to
persuade Wahlquist to redouble efforts in
those markets or to delve into new ones.
Although the likes of China and
Singapore, its fourth and fifth largest
export customers, continue to offer
grounds for optimism.
“We do see the Asian markets are where
our best prospects are and where we expect
to get the most growth over the next five
years. We have a wide range of wine styles
and have something to suit most palates.
Those markets want consistency and we’ve
been there for some time.”
Wahlquist sees “massive and
modernised” European producers as
being the main threat to Australia’s share
in most key export markets.
Even so, he thinks Savour Australia did
a good job of reminding the world what a
fantastic wine producer Australia is.
“Now it’s really up to producers to
build on that momentum and reclaim
some of the higher-price points in markets
around the world,” says Wahlquist.
“We haven’t spent enough time talking
about top-quality wines.”
And then there’s another area where
Wahlquist thinks more work is needed.
“The biggest challenge for the wine
industry is one we still haven’t really
dealt with. The oversupply is not going to
correct itself,” he says.
“The unviable producers really
need to exit the market. They’re just
making it more difficult for those with
fundamentally sound businesses.”
Overall, the changes the company
has made have left Wahlquist quietly
optimistic. “The business is in better
shape. For the first six months trading in
the domestic market has been good and
we’re very confident about where we’re
heading.”
energised all sectors. The mood is there
and most of the gatekeepers who attended
are ready to do something to stand up
and support us in their own markets.
“However without a budget to follow
it up and continue that momentum, we
might fall back to where we were.”
Meanwhile Yalumba is working on
reinforcing its own story and product
mix.
Last year it debuted Eden Valley
Roussanne, a variety connected to the
original family vineyard. We’ll also see
a “very exciting” new single-vineyard
Shiraz from 2010 and a first-time release
of a northern Barossa Shiraz called
Paradox, made from 100-year-old bush
vines.
Late-release, $150 Cabernet/Shiraz
blend Yalumba The Reserve will be given
more prominence and there will be some
museum releases of other top wines.
Yalumba’s also been experimenting
with clones across a number of varieties
and will this year be replanting the best
material on a commercial scale.
Yalumba celebrates its 165th year in
2014 and Hill-Smith takes strength in the
mere fact of survival.
The “loyal, smart and success-
oriented” people around him also
promise good things to come.
“I think we’re on the cusp of a new
story and a new beginning because of
the investment we’ve been making in the
vineyards and in our winemaking, as
well as having more confidence in who
we are and what we can do,” he says.
“We now have a determination to take
ourselves to market in a way that we’re
entitled to, as a leader rather than as a
member of the pack.”
Roland Wahlquist
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 35
The Tahbilk Group“FOR THE past four or five years there’s
been nothing but financial black sky
and serious headwinds,” says Alister
Purbrick.
“But during the past 12 months we’ve
seen a little blue sky and over the next
year expect more blue sky and maybe a
little ray of sunshine might creep through
occasionally.”
Tahbilk’s chief executive doesn’t have
to think hard when asked whether his
optimism’s grown.
It finally feels like the tough cost-
cutting decisions made some years ago
are paying off.
“The really big issue for the Tahbilk
Group over the past three to four years
has been getting our demand and supply
projections balanced. We turned a corner
in this respect after the 2013 vintage
and stocks are now below our sales
projections. In the current environment,
that’s a very healthy position to be in.”
Over the past year, the Group has
engineered minor price rises and
increased sales at home and abroad. And
it’s beefed up the IT system behind the
Tahbilk Wine Club, resulting in “better
database segmentation and more succinct
offers” going out to members.
Purbrick’s also excited about the
recent launch of Tahbilk’s new carbon
neutral-branded wine, The Tower.
Sweden’s the first overseas customer
to receive the range, which comprises a
Shiraz and a Chardonnay Viognier blend.
The Tower wines have “taken off like
a rocket” and are available domestically
as a Dan Murphy’s exclusive, marking
an effort to work more strategically and
successfully with the chains.
Also on the home front, the group
welcomed some key brands to its
distribution arm, The Wine Company.
Tyrrell’s signed up for Victoria in
February, while the portfolio has also
taken in the likes of Pirramimma, Paulett
and New Zealand’s Yealands Estate.
“This should increase sales by 45-50,000
dozen overall, which will be a significant
internal profit driver,” says Purbrick.
The Tahbilk Group, whose top five
export markets are the UK, Sweden,
Canada, US and China, was in an export
holding pattern this time last year. The
weakening Australian dollar has caused
a rethink.
“We’re getting on the front foot again,”
says Purbrick. “We’re focusing on all of
our best markets bar the UK, which is
problematic for us at the moment, though
still important.”
He’s also set to push a little harder in
China and Asia more generally.
“We’re certainly selling at the top end,
but where we’re looking to grow market
share is at the mid-range regional wine
level. Our Tahbilk, McPherson and Four
Sisters brands are all active in that area.”
France is having a big impact in some
of Australia’s emerging markets, such as
China, and Purbrick thinks Australia
needs to be wary of the Old World giant.
“It’s got the same dominant varieties and
a similar wine offering to us and, what’s
really scary, is starting to get its mojo back.”
So what about Australia’s mojo?
Purbrick can’t see the industry as a whole
making a concerted recovery until it rids
itself of the oversupply problem.
He thinks it’ll take a few more years
for this situation to resolve itself, when
a sustained period of low returns for
grapegrowers forces a mass exodus from
the industry.
On the other hand, Purbrick feels
Australia has sharpened its competitive
edge, thanks in no small part to Savour
Australia. He’d like to see a follow-up in
2015.
“There’s no doubt in my mind that
it’s been a great morale booster. We’re
feeling better about our place in the
world of wine. Now it’s really up to us
as individuals to get out and about and
capitalise on the momentum that Wine
Australia has created for us.”
Kingston Estate WinesASK BILL Moularadellis what defined
the last year and the response is
immediate: his winery crushed more
than 100,000 tonnes in 2013. But it’s not
about the number. “The real achievement
is the significant sales footprint we’ve
been able to create internationally. We’ve
really come to terms with the changing
international environment and instead of
resisting the change, embraced it. Retail
consolidation is a reality and must be
seen as an opportunity, not a threat.”
The growth has been made possible
by a long-term, stable team with genuine
expertise in its field.
It’s also entailed increasing capacity
along every part of the chain. On the
product front, Kingston continues to rely
heavily on Shiraz and Chardonnay. It’s
also shown a commitment to Petit Verdot,
and has acquired a large vineyard in
Coonawarra to add premium regional
Cabernet and Shiraz to its offering.
Moularadellis, who exports 95 per cent
of his production and counts the EU, UK,
North America and Asia as his biggest
customers, says the “rise and plateau” of
China has been a big disappointment for
the industry.
He describes the lack of a free trade
agreement, such as that enjoyed by rival
Alister Purbick
36 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Chile, is a “significant disadvantage”.
And points to the success of such
arrangements with Korea and Japan and
says FTAs with China and the EU are
essential.
Moularadellis also urges policy
change on WET, to restrict rebates to
packaged wine from bona fide producers
to retailers with a turnover of less than
$10m.
He blames the current system for
encouraging some 1000 new producers
into the industry during one of its most
challenging periods, and says it’s led to
further industry fragmentation instead
of the consolidation one might have
expected in the face of the changing
retail landscape.
“The majority of these new producers
and many longstanding ones have turned
their backs on international sales to
focus on the domestic market, motivated
principally by the WET rebate,” he says.
“It’s the addiction preventing our
industry from fully developing its
international sales opportunity. We must
wean ourselves off it.”
Growing the export opportunity is
Australia’s priority, and it must happen at
both the commercial and premium level.
Moularadellis points to the fact that
only around 10 per cent of Australian
exports by volume are priced above $45
a case.
“You can’t expect someone on the
other side of the world to buy a premium
wine unless there’s a story and someone
selling it. You need the origin, the place,
the terroir but you also need more people
to project their personality and passion.”
Moularadellis views Savour Australia,
and especially the tie-in between Wine
Australia and Tourism Australia, as a
useful starting point.
However, he says it needs to be
vigorously followed up by Wine Australia
and individuals in all segments of the
industry.
Moularadellis is given heart by the
crop of emerging winemakers who show
pride in their wines and sites – and who
are keen to share their passion with the
world.
“The young guns are really answering
that call and I see great strides being
taken by some fresh young people who
head out on aeroplanes and pound the
streets like the old guard did 20 years
ago.
“They might be small producers
but they have great energy, vision and
vitality. They’re the future of Australia.”
Kingston is also well placed to
take advantage of new openings, says
Moularadellis. But clearly there will be
hiccups on the way and standards will
have to keep on rising. “You always
need to provide a higher level of energy
and activity to maintain your relative
position.”
Grant Burge WinesAN OPTIMIST by nature, Grant Burge is in
conservative mode. This time last year he
was confident when many were cautious.
But three financially-challenging
vintages have taken their toll on the fifth-
generation winemaker, who grows up to
55 per cent of his production.
“Our vineyards have let us down
in a yield sense, which has cost us a
fortune and lifted the bottom-line cost of
our product dramatically. Our margins
have dropped and it’s had an impact on
profitability.”
The company increased sales by 9 per
cent in 2012/13, buoyed by a domestic
sales hike of 19 per cent.
Which was then offset by a 10 per
cent decline in exports, much of which
was caused by a failed brand-building
partnership in China.
Burge has moved on from that
letdown, and is encouraged by steady
growth in Canada and good results in
Europe. Particularly Britain.
“We’ve stuck with the UK, making
very little margin on 30,000 cases sold
to restaurants and regional retailers. But
we’re in it for the long haul.”
Burge sees New Zealand as the fiercest
adversary in export markets and a shining
example of what Australia needs to do.
“They’re kicking butt. They’ve made a
huge name for themselves with a cohesive,
coherent message and have managed to
keep their cool, clean, green image while
holding onto higher price points.”
Meanwhile, Australia’s been suffering
from a lack of profitability and a resulting
tendency to look inwards.
“People haven’t been focused on
thinking forward but instead of how to
save their companies. We need everyone
to be cohesive, making money and
pouring it into marketing ourselves as a
word-class brand.”
He thinks the image projected by Savour
Australia is the right one, and would love
to see another such initiative in 2015.
Even in conservative mode, there’s
plenty going on. The company’s followed
up its refresh of the Fifth Generation
range with a new, more premium look
for its $19 to $25 Vineyard range built
around various Barossa blocks. Burge is
also keen to keep pushing Tempranillo.
He sees it as a good variety for the
Barossa and even wants to create his
own Rioja.
“We’re doing a lot of research. It’s not
some fad thing. We want to do it well and
make sure it’s sustainable in a market
sense.”
Another big move was February’s
merger between his distribution
arm, Vignerons of the World, and its
counterpart at the Rathbone Wine Group,
Four Seasons Fine Wine. “Irrespective of
how good the wine and brand are, you
have to have incredibly efficient ways
of making grapes into wine and getting
on the retail shelf. Burge & Rathbone
Fine Wine Merchants is an incredibly
Bill Moularadellis
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 37
compatible fit as a sales organisation,”
says Burge.
The changes don’t end there. Burge
has now completed a four-year replanting
program, switching many whites to
reds. Now the attention shifts to the
winery, which he promises to “massively
transform” over the next three years with
new technology. He’s got permission to
redevelop the red fermentation facility
in Tanunda, and sparkling wine is also
in focus.
Sales in this area have grown at around
20 per cent a year for the past 10 years.
But working with such large quantities
of mostly whole bunch-pressed fruit
presents challenges, especially with
cooling.
“We’re trying to revolutionise the
whole process, which we’ve done in
theory,” says Burge. “This will be a world
first. We’ve hit on something that’s going
to be very exciting.”
However, conservative for Burge
certainly doesn’t mean going into his shell.
“Despite my pessimism, I’m still
carrying on with experiments and
innovation in the winery. I’ve been in
the industry 45 years and I still love it.
It’s my life.”
Angove Family WinemakersJOHN Angove sounds at one with
McLaren Vale. The cellar door, opened in
2011, is something of a symbol of home
and hope.
“It’s continued to be a very successful
front door for us here, giving us some real
geographic identity in the mind of the
consumer. That was certainly a defining
activity.”
The company has developed a
microwinery, built to handle small
parcels of specially earmarked fruit.
It’s been tweaked this year to better
enable it to handle four- to six-tonne
batches and will continue to be developed
over the next couple of years.
In homage to home, the team is
also working on more single-vineyard
Grant Burge
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38 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Qualia Wine Services
YOU GET the impression nothing
is wasted at Qualia Wine Services.
Efficiency is a buzzword for executive
director and winemaker John Pezzaniti.
A tripling of the crush from 17,000
tonnes four years ago to 52,000 in 2013
shows just how fast the business is
growing.
Investment in the winery has played
its part, with additional cross-flow
filtration and a move to up the front-end
crusher from 50 to 100 tonnes per hour.
But more than anything, Qualia’s
made it big by staying small. Pezzaniti
says its dynamism is down to a personal
and professional approach.
A year ago, Mildura-based Qualia’s
sales were split evenly between domestic
and exports. Now exports are back up to
70 per cent, with more than two thirds of
that shipped in bulk.
Europe has seen the biggest jump over
the past year. The company’s reeled in
new customers in the shape of Belgium,
Sweden and Russia, while the UK is
also showing growth again following “a
couple of slow years”.
Pezzaniti is “pretty happy” with the
customer base and distribution in China,
which is principally showing a thirst for
Shiraz and Cabernet.
He’s had to source more region-specific
fruit from places like Clare Valley and
McLaren Vale for his Asian customers,
whose interest lies at the premium end
of the spectrum. The UK in particular
is showing a growing taste for his Fiano.
Qualia views South Africa as its most
formidable rival in Britain, while Chile
vies with the Rainbow Nation as number
one competitor in the rest of Europe.
Pezzaniti reckons the Australian
dollar would have to fall to around 70
cents before it gave a lift to producers. But
that doesn’t bother him.
“The problem with a lot of things is
that people get too focused on price. Price
is the last thing you should be worried
about.”
Qualia’s got employees on the ground
in all key export markets but Pezzaniti
travels constantly throughout the year.
“We’re all about building a face-to-
face model, sitting down with customers
McLaren Vale wines. These are destined
to be cellar door exclusives to teach
visitors about subregions such as
Willunga and Blewitt Springs.
There are other things in the pipeline,
too. Noting strong growth in organic
wine, Angove has already got a Sauvignon
Blanc that’s “doing well” and a further
addition to this range will be unveiled
later this year.
The past year has also seen the
launch of Alternatus, a $25 range
exploring the “emerging variety and
style opportunities” of McLaren Vale’s
Mediterranean climate. It comprises
Tempranillo, Grenache, Fiano and
Vermentino and will be available through
cellar door and selected restaurants.
“Fiano and Vermentino are a long way
from being mainstream, but if we niggle
away we will see results,”says Angove.
He can’t hide his excitement at the
warm reception for the mid-priced Long
Row wines.
“We put them out there with some
trepidation about the quite unusual
packaging, but it works. The Riesling
clone we have dates back nearly 100
years to our Tea Tree Gully vineyards
and works very well in the Riverland.
Likewise Sauvignon Blanc works well in
our sandy soil, particularly when picked
early in the season. They’ve both had
amazing accolades.”
Notwithstanding his enthusiasm for
these products, Angove’s level of optimism
has barely shifted since last year.
Profitability is the biggest challenge
facing the industry and he doesn’t see a
smooth path to better returns.
The lower dollar has at least brought
a slight psychological boost at the
possibility that exports will turn around.
As things stand, the company’s opened
up a new opportunity in Russia.
“We hope in time it will be another
interesting market,” says Angove.
“Meanwhile in China we continue
our two-stream approach. One is the
corporate brand building, which is slow
and steady. We’re putting in the hard
work but I think we have a reasonably
good reputation. The other is buyer’s own
brand, which has been fast and furious
but has slowed down somewhat.”
Angove thought Savour Australia was
effective in giving the world a “better and
more sophisticated view” of the nation’s
wine.
But he’d like to see the industry do
more to get behind Wine Australia in
order to keep things going.
“We need to slot Savour Australia
in as a biennial event, so like ProWein
and other international wine events it
becomes a fixture on the calendar. This
is vital, because if you do something only
once, it just gets forgotten. You have to
keep it up.”
Angove booked his ticket to ProWein
early because “we need to be out there” if
exports are about to turn around.
But he also has a lot of irons in the fire,
and that’s some cause for comfort.
“Our products range from St Agnes
to Stone’s Ginger, Long Row to McLaren
Vale. Then there’s the distribution and
agency business.
“We’ve got a lot of fishing lines out
there trying to catch something. That
diversity is a fairly strong plus for us.”
John Angove
John Pezzaniti
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 39
Peter Lehmann Wines
IT’S OBVIOUS what defined the past
year: the death at age 82 of founding
father Peter Lehmann in late June.
“It was a truly sad day here for the
company, for Barossa and the Australian
wine industry. He contributed so much,”
says chief executive Jeff Bond.
“PL established a company with strong
values that it’s lived by since it started.
His legacy will be for those values to live
on after him.”
The company has continued to stick
to its guns, and Bond is more confident
about the future than he was a year ago.
“I’m pleased to say we’ve continued
with the momentum we’ve had. The
domestic market continues to be a good
story for us, with strong growth here
against a tough background.”
The decision to deal directly with the
chains is paying off and the company is
“unlocking good growth” on the direct-
to-consumer side.
It’s achieved its goal of boosting its
Futures club membership from 2500 to
10,000 and has welcomed more young
customers to the brand, with 25-to
39-year-olds increasing from 24 per cent
to 32 per cent of the total core consumer
group.
It’s also rebalanced the male/female
split; with aromatic varieties like Pinot
Grigio winning back some of those who
abandoned Barossa Semillon for New
Zealand Sauvignon Blanc.
The company is building on the wines
it has as it continues to implement its
long-term strategy.
It does have one new project on the go,
though. Called The Steward, it’s a premium
single-vineyard Bordeaux blend that will
be the company’s first carbon-neutral wine.
Bond says the company has its “shoulder
to the wheel in export markets” where
sales have declined slightly. This has been
the first year of selling icon and ultra-
premium tiers into the US and shipments
and depletion rates have gone according to
plan. “We’ve got to make that stick,” says
Bond. “We’ve also got a larger focus on
China. We’re building the business from
the ground up and don’t see that providing
an instant return. We’re looking to get the
benefits over five to 10 years.”
Bond praises the South Australian
Tourism Commission for its Barossa
campaign and likewise thought Savour
Australia created a great platform for
wine producers to work from.
But he says it’s up to individuals to get
out and follow up on the messages.
He sees New Zealand as both a key
competitor and a role model in how to get
a clear, simple message to cut through to
overseas markets.
Australia’s task is all the more difficult
because it fell out of favour at about the
same time the Kiwis moved in.
“The higher dollar may have done
more damage than we first thought in
terms of buyers’ awareness and shelf
space,” says Bond.
“It takes a long time to win back
the hearts and minds of consumers and
retailers.”
But the reality, says Bond, is that wine
is a high-cost industry with ongoing
structural issues.
“We’re not going to get an automatic
sales uplift. We’ve got to get our head
under the bonnet and try to figure
out how to make our operations more
productive.”
He feels his organisation understands
this reality and has taken tough decisions
to deal with it. Hence the optimism – and
the warning that ever-smarter thinking is
needed.
and seeing what they want,” he says.
“It’s not just low cost; it’s about products
and services and how flexible you are
as a supplier. It’s more about stronger
ties for longer-term relationships with
customers.
“If you can give them constant supply
at a reasonable price that won’t fluctuate
and at the quality they ordered, it takes
the pressure off their end.”
One of the challenges undermining
these efforts is oversupply and the lack
of sustainability among the Australian
grower base. “When overseas markets
read about that, it puts downward
pressure on prices,” says Pezzaniti.
On balance, though, he’s comfortable
with the situation at Qualia and says he’s
more optimistic than he was 12 months
ago.
“That’s based on the relationships
we’ve built over the past year and the
growth we’ve had with these customers,”
he says.
“A lot of that comes down to the
fact that although we’re a big producer
we’ve got a small team, and buyers are
dealing with a small number of people,
perhaps even just one person. That focus
is important.”
Jeff Bond
40 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Littore Family Wines
“VOLATILITY" would be Andrew Byers’
watchword for the past year. “For us, it’s
been much more a case of consolidation,”
says the commercial manager at Littore
Family Wines.
“The wine industry has changed
significantly at our price points over
the past 12 to 24 months. There’s been
a great deal of flux. The main issue in
the marketplace, especially with overseas
buyers, is with the volatility of the
Australian dollar and mixed messages
from the market. They don’t know what
the correct price of Australian wine is, so
it’s hard to get them to commit to long-term
agreements. Volatility is in their thinking.”
That explains why there have been no
“great leaps forward” for the Geelong-
based business.
Even so, it’s continued to grow in each
of its top five export markets.
One of the largest is Russia, where
Littore is the number one Australian
brand, accounting for 35 per cent of
Australian wine sales in this market.
“It’s been a 10-year slow build for us
but the Russians continue to love our
wine and there’s still room to grow,” says
Byers.
The company hasn’t been immune
to the slowdown in the Chinese market
though the impact has not been as severe
as for higher-end brands.
“It’s still been a reasonable year for us.
The growth rate has declined but we’re
still growing,” says Byers.
Here in Australia, the main focus
remains private- and exclusive-label
wines but there is a five- to 10-year
plan afoot to gradually build up regional
brands around the Littore Family Wines
name.
It’s been about eight years since the
company last concentrated on its own
premium labels.
“Since then we’ve been focusing on
large-volume, commercial entry-level
wines,” says Byers.
“But that’s not all we can do. We’re
just dipping our toe back in the water.
We’re not looking for big numbers or
anything like that; we’re just looking at
something different.”
From an industry perspective, Byers
thinks issues surrounding the use of the
WET rebate need to be dealt with.
“It’s the elephant in the room. The
rebate system needs to be tightened so it
serves its original purpose of increasing
diversity in the industry, promoting cellar
door sales and regional employment.
“It’s not there to allow companies
to sell at a loss and then use the rebate
to make a profit. That just drives down
prices across the industry and no one
ends up winning.”
Littore sources the vast majority
of its fruit from its vineyards in the
Murray Darling area. Shiraz is the top
seller, followed by the usual suspects
of Chardonnay, Sauvignon Blanc and
Cabernet Sauvignon.
Moscato has plateaued somewhat over
the past nine months after taking off
about a year and a half ago.
“We’ve also seen a big surge in sales
of Pinot Grigio over the past 12 months,
particularly in the UK and in the
domestic market,” says Byers.
The company doesn’t often dabble in
domestic bulk. “We go into the market
and work with buyers and retailers to
look for long-term deals, which we can
do because we have our own vineyards.
That way you can lock in the price for
fruit, tonnes per hectare and baumé, and
can do so for multiple vintages.”
If volatility was last year’s word, 2014
has a better one: optimism. “I think
there’s a fair bit of hope out there that
the declining value of the dollar and our
value proposition can allow us to get
more traction,” says Byers.
“An end to the volatility would allow
us to get our forward plans going. If we
can do that, we’ll get more punch in the
marketplace and it’ll be good for all of
us.”
Zilzie Wines
ANDREW Forbes and the team crushed
43,800 tonnes at their Mildura winery
in 2013. That was 5000 more than the
previous record vintage and a long way
from the 10,200-tonne crush with which
they started 15 years ago.
With 90 per cent of the production
presold, Forbes is proud to have played
a part in realising his family’s long-term
goal.
“We’ve managed large-scale capital
expansion and grown the business on a
balanced pathway and in a climate that’s
been quite difficult,” he says.
The business is split 50:50 between
domestic sales and exports. Some 15 per
cent of production goes out under Zilzie’s
own brand, all of which is bottled in
Australia. “What’s kept us relevant is
we continue to observe and adapt our
business and distribution models both at
home and in exports,” says Forbes.
“We’re open-minded about finding
new and innovative routes to market.”
This past year the company took part
in a Victorian government initiative
aimed at developing opportunities in
emerging markets such as India. Forbes
is somewhat sceptical of industry herd
mentality; while Brand Australia has
“huge relevance” to Zilzie, he doesn’t see
much future in large groups “trying to
hunt down the next big thing”.
“You’ve got to look at your own business
model and develop a strategy for applying
it to meet the needs of the market. People
who jump on a bandwagon without a
long-term strategy and business plan,
and with the wrong relationships and
wrong distributor, find that things go
wrong very quickly.”
Over the past 18 months Forbes has
brought a number of new key roles into
the fold including a winery operations
manager as he continues on his path to
maximise efficiency.
“You can have the best machinery in
the world, but unless you have the right
people, you can’t execute your strategy,”
he says.
As Zilzie continues negotiations
on current vintage wine, the currency
continues to be problematic.
Forbes is yet to see any real gains from
the overall softening of the dollar and is
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 41
cautious about future movements.
“Due to the nature of our business,
a lot of my pricing is set for a 12-month
period, so it’s very much about what’s
happening at the time.”
Meanwhile, the more favourable
currencies of South Africa and Chile –
allied to their trade agreements – make
them key competitors in Forbes’s eyes.
But there’s another enemy within:
Forbes thinks Australian producers and
commentators who speak in imprecise
and unhelpful terms about oversupply
and environmental factors place doubts
in buyers’ minds over pricing.
The UK, China, US and Canada are
Zilzie’s biggest export customers and
remain the focus of its attention.
Of these, China’s the one that’s moving
up as the company is rewarded for its
slow, steady efforts to build relationships.
Zilzie recently released a high-end
wine called Ferghana (“heavenly horse”)
with a label commissioned from a famous
Chinese artist, to commemorate the Year
of the Horse.
More generally, it’s finding this market
particularly receptive to its premium
Regional Collection, comprising classics
such as Barossa Shiraz, Coonawarra
Cabernet and Yarra Valley Chardonnay.
A Pinot Noir remains on the to-do list
for this particular range, while Zilzie has
enjoyed success elsewhere with Pinot
Grigio, Moscato and Sauvignon Blanc.
“I would say I’m more confident in the
future than I was 12 months ago,” Forbes
concludes.
“Relationships, quality of product,
operating procedures; you’ve got to tick
all these boxes. We certainly see a future
in what we’re doing.”
Andrew Forbes
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42 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603
Berton Vineyards
WHEN the Australian dollar finally
started to show some leniency, it provided
Bob Berton with his defining moment of
the past year.
“It created a light at the end of the
tunnel. Most of us are struggling with
exports, and when it came back we saw
some benefit to hanging in there.”
That respite hasn’t changed the way
Berton goes about his work, though.
He says there’s still too much volatility
and uncertainty over Australia’s place in
the wine world.
“It’s pretty much business as usual,”
says Berton. “What we’re doing now is
just changing some of our processes,
trying to automate some things so we can
move more quickly.
“The rest is about tidying up the
winery, keeping our costs under control
and being smart about what we’re doing.”
He’s pleased to have built up his Shiraz
stocks to strike a sought-after balance
between whites and reds. Overall, sales
are likely to remain equally spread
between domestic and exports, while the
split between own brands and Berton’s
labels continues to be about 60:40.
Roughly 95 per cent of what the company
makes goes to big chains in Australia and
agency importers abroad.
Over the past year, Berton Vineyards
has enjoyed reasonable growth in the UK
and China, seen “exciting” progress in
Sweden and scored small-scale success
among Pacific islands and New Zealand.
Italy has emerged as the key competitor
in the company’s main markets, though
France remains a formidable presence
and “sleeping giant” – and Spain can’t
be ignored.
At the same time, Berton Vineyards
is too busy ploughing its own furrow to
worry about these guys.
Similarly, while he applauds the
sentiment of Savour Australia, Berton
feels companies like his are somewhat
remote from the concept.
“We need prestige and personalities
in this industry but the warmer inland
areas which are producing the day-to-day
wines don’t have so much kudos.”
Now in its tenth year, Berton Vineyards
is not looking to push into unknown
markets nor force new products into
existing ones; what it’s after is “orderly,
natural growth”. “For us it’s always a
slowly, slowly approach,” says Berton.
“Our greatest asset is relationships
with people who, even in midst of certain
crises, have stuck by us and us by them.
“We’re probably not good marketers
in the classic sense but we’re prepared
to bide our time and let our products
make their way. If I look back at the great
brands, there’s not a lot of fuss about
them; they grew quietly. They weren’t
discounted; they stood quietly on the
shelf and earned respect over time. We
as an industry set ourselves targets that
are challenging and in setting them we
sometimes make poor decisions about
what the long-term brand is going to be.”
Looking at that long-term picture,
Berton can’t help but worry about the
way the odds seem to be stacking up
against primary producers and secondary
industries in Australia.
“Farmers have to put up with drought,
pestilence and floods but people think
they’re environmental vandals. It’s an
issue for industry generally. They should
be heralded, rewarded and admired rather
than constantly being scrutinised and
advised to improve by the self righteous.”
Even so, he’s feeling more confident
about the business than he was this time
last year. “The easing of the dollar has
given us hope and we’re getting a bit of
growth domestically. It’s a reasonable
outlook for where we’re going.”
Bob Berton
April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 43
Tyrrell’s Vineyards
BRUCE Tyrrell looked at the big picture and it told him to
downsize.
“We’ve spent three or four months looking at what we’re
doing and where the wine industry is going, both domestically
and internationally,” he says.
“Tyrrell’s will be a smaller company. That means removing
ourselves from the under $10 market and out of the house-wine
market for on-premise. We want to play in the top and middle,
which is where we do very well.
“It’ll reduce turnover by around 15 per cent – but with
significant improvements to the cost end and better margin.”
This move will entail casualties, such as the Mystery Hill
and 30-year-old Glenbawn brands. Meanwhile, the $18 Lost
Block range was relaunched with a new look back in October, an
opening gambit ahead of “a total refresh” across the entire $25 to
$40 price range. Tyrrell’s has also switched to a distributor-based
model for interstate sales, most recently enlisting Tahbilk’s The
Wine Company as its distributor in Victoria.
“We’ve always had our own sales force in NSW and we’ll
continue with that,” adds Tyrrell.
The company has enjoyed ongoing growth in direct-to-
consumer sales and expects this to continue, while it’s also been
working to build its presence among the retail chains.
“They’re not the ogres they’re made out to be,” says Tyrrell.
“You’ve got to work with them, and once you have a good
relationship they become cheap to service.”
Looking further afield, there have been a few developments
on the export front. Like most others, Tyrrell’s has seen China
soften a bit. But the company is doing a little more in the US and
markets such as Japan are beginning to come good. Tyrrell is also
encouraged by opportunities in Central Africa, a “blue-sky market”.
To this end, the company has started to do some business
with regional hub, Nigeria.
Tyrrell doesn’t expect a helping hand from the currency
unless it falls closer to 80 cents. In any case, it makes no sense
for a company like his to compete on price. “If you want to make
or grow anything in Australia, you have to do it very, very well
so you can get a premium for the product.”
This emphasis on quality is something Savour Australia –
and some of the nation’s leading producers – has got right.
“If you look at what Treasury Wine Estates has done, it’s
really led with high-end brands. The whole of their push and
presentation has been at the top end and it’s something we’ve
all got to do more of” says Tyrrell.
The 2014 vintage has left Tyrrell somewhat heartened. The
reds came in “spot on target for flavour and structure” and he’s
tipping Chardonnay to be the star after this and Semillon came
in with yields 30 per cent up on 2013.
But his overall business confidence is on a par with last year.
He remains concerned about the anti-alcohol “zealots” but
right now they’ve been replaced by the weak economy as his
number one concern.
“The world’s still a tough place. The western world is going
to have to take a step back in terms of quality of life and salary
expectations. It’s unsustainable,” he says. “But I think Tyrrell’s
is set up for the next 30 years. Hopefully we’ve made all the
right decisions.”
Bruce Tyrell
Vineyard Manufacture &
Maintenance specialists
02 6964 3888 [email protected]
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