The Wine Rules according to Warren Randall

I had the great fortune to attend an event in McLaren Vale yesterday (16 May), which featured Warren Randall – The Titan of Tinlin’s (full disclosure – Warren also owns a pile he salvaged in the Barossa and Boar’s Rock in the Vale) – presented his “Five Year Outlook for the Australian Wine Industry”. The event was a sold out fundraising breakfast held at Serafino’s organized by Jock Harvey (assisted by John Harvey, Tom Harvey and the formidable Kate Harvey of the GWRDC) with one just email sent one week ago. It was a remarkable family’s effort.

Jock Harvey. Take three.

Warren is a bit of a legend because he not only built a stable of 1100 acres of prime McLaren Vale vineyards in the 1990’s and rode the currency and volume driven grape growing boom, he completely switched gears before the wheels fell off the Australian wine industry and re-tooled his vineyards to produce A and B grade fruit while most growers hunkered down waiting for the good days to return. In the process he built a dirty big shed and turned those vineyards into the largest supplier of high-end bulk wine in Australia. This in turn funded his barony in Barossa and his more recent purchase of Boar’s Rock in McLaren Vale. While Wazzer is as efficient and cheap as the best businessmen usually are, he has built a very loyal team and is generous with time and advice to those who ask for it. Just don’t waste his time.

Back in 2005 or 2006, Warren famously stood up at the Bocce Club in McLaren Vale and told 120 grape growers “grow A or B grades or get out. If you don’t, you will go broke.” Those that heeded his advice are still growing grapes and were in attendance yesterday. And, McLaren Vale quality has never been better, while export prices for McLaren Vale wine are nearly level with Barossa for tops in Australia. As I have noted before, this is the type of unambiguous advice the industry needs to hear and why.

Anyhow, Jock reckoned it was time for Warren to give us an update. Warren started with his usual litany of well researched data points about the industry, grape prices, export prices, competitor countries and the like before diving into what it all means for us. In short, The Wine Rules according to Warren Randall are paraphrased below. For fear of misquoting him, I ran this summary by him and he reckoned it “good.”

The Wine Rules according to Warren Randall

1) Don’t try to sell wine through distribution in Australia. The supermarket duopoly will control the market within five years and 50% of sales will be private / own label. Nothing will stop them. Traditional distributors will get killed.

2) Value-add or die. Growing and selling grapes alone is a “mugs’ game.” You have to make and sell bulk wine or grow and sell branded wine if you grow grapes.

3) Icon, A and B grade fruit is in short supply. C grade is in massive oversupply and can be grown anywhere. D and E grades are flooded by the oversupply of C grade.

4) In named / noted regions, grow Icon, A or B grade or get out. Don’t grow C grade unless you are in an undifferentiated region and can produce at profitable volumes.

5) Get to China (particularly) and figure it out. It is slow and will take a lot of work but the opportunity is huge and can take all of Australia’s output in 10-20 years.

6) Until we are selling everything we can make overseas at high prices, the domestic supermarket duopoly will have (and keep) us over a barrel. Once we are “sold out,” then we can talk terms with the duopoly.

7) Know your market(s) and brand. Be that and nothing else.

Bracing stuff to hear that you will soon be out of business if you try to sell to the Coles and Woolies duopoly or try to sell through traditional distributors like Negociants and Red and White. Then, when you have to “sell the farm”, Woolies will be trying to buy it from your bank as they tried with Barossa Valley Estate. Or, that grape growing is a “mugs’ game.” (This from a guy with more vineyards than nearly anyone). Or, that you are from one of a half-dozen “named” regions in Australia or you are “not” despite there being 60+ wine regions. Or, that if you don’t improve your vineyard radically, you are finished. He also made the point that in 19 out of 20 years, the best Australian Shiraz hails from McLaren Vale or Barossa or both. Add these inputs together in a Bayesian sorting algorithm and see how you come out viability-wise. I grow and make wine in McLaren Vale and find this sobering on a Friday afternoon.

This is all provocative stuff that will likely raise howls of dispute from all corners of the industry. Of course, it will not turn out to be uniformly true in terms of outcomes in Warren’s stated time-frame of five years. However, directionally, I believe that his themes are probabilistically beyond dispute. The crowd was not thrilled with this news but left nodding their heads.

Before you think too much of Warren,  I should mention that Warren did tell one inadmissible porkie pie – he said that he “doesn’t understand the sales end of the game, isn’t interested in it and isn’t good at it.” Br’er Rabbit would love this guy.

I am sharing Warren’s sporadic community service prognostication for two reasons.

The first is that the faster, broader and deeper these observations sink in, the better.

The second is that I cannot think of anyone from any wine industry body in Australia that could sell out a 150-seat breakfast at $50 per head in one day in a small town on the basis of one short email to prognosticate about the wine industry. In fact, I can’t think of anyone that could do it save David Dearie with a $4.99 all you can eat breakfast buffet.

This dearth of talent belies the crisis of leadership, courage and insight that are endemic in our industry bodies. To reflect that most of our industry appears to be living Marx’s dictum that “history repeats itself, first as tragedy, then as farce” may seem churlish. But, any analysis of the present is that no one is saying anything publicly while they make big changes behind the scenes and ensuring industry figures say as little as possible.  Without deifying him, at least Warren is saying what he sees happening. Who else of consequence is willing to do this much?

You may or may not like Warren or what he said. But, he is one of the only serious industry thought leaders of his generation with any sort of public courage and should be taken very seriously. We need more folks who make bold pronouncements and put large sums of their own money behind them. If this observation grates, please name a few who share these traits – they need recognition.

What do you think?

Talking about a Devolution

 

“Jane Crofut; The Crofut Farm, Grovers’ Corners; Sutton County; New Hampshire; The United States; Continent of North America; Western Hemisphere; The Earth; The Solar System; The Universe; The Mind of God.” – Thornton Wilder, “Our Town.”

A subject that I spend a lot of time thinking about is the notion of “place” in wine.

The one rule that seems to be true for almost all labeled wine is that it must say where the wine is “from.” At a minimum, what country it is from. Then there is the (usually) familiar hierarchical litany of state, province, department, zone, region, sub-region, town, village, etc.

There are examples of this that are particularly frustrating and confusing such as the place of origin named “Southeastern Australia.” I can’t say with certainty how many folks from abroad have asked me if Adelaide or McLaren Vale (where I live) is in South Eastern Australia, but it is a dispiritingly large number.

For those unaware, South Eastern Australia is a “place” enshrined by Wine Australia and international treaty that embraces  Victoria, New South Wales and Tasmania and most of the grape producing parts of Queensland and South Australia and is an acceptable “place” for wine to be from. It is also the single biggest “place” that Australian wine is from in numbers of bottles using it a descriptor of place. Given the similarity of actual  state names like New South Wales, South Australia and Western Australia, South Eastern Australia sounds like somewhere.

Eyeballing it on a map, it looks to be about half the size of Europe. That this non-place confuses people with little familiarity of Australia (eg most of the rest of the world) is unfortunate for Australia and New Zealand (“do you think it’s these little islands down below Australia honey?”) as a whole. How can wine be “from” a place that doesn’t actually exist on a common map?

Map of South Eastern Australia wine region

Has anyone ever bought a wine labeled Wine of USA thinking it would be good because it was from somewhere in the USA? Would the unarticulated possibility of some Missouri grown Norton mixed with some Virginian Merlot and New York Cabernet get you over the line?

But what of wine from known wine places like South Australia or California or Burgundy? They sound better. But still, absent any other information about their place of origin, would you buy them? Now, if they were from McLaren Vale, Napa Valley or Cote D’Or, would your confidence improve in what you were buying?

You get my drift. Regional brands inordinately matter at the margins of decision-making because the margins of our awareness are where all new experiences originate. As such, to get a consumer to do something different (like buy a product that is new to them), you have to create confidence for them at the margin with information that is somehow reassuring. With wine, familiar names and places provide this.

Napa Valley Welcome sign

Wine is either of one place or blended from many places. While Australia is at least an actual place, it’s a big one. Australia is about 4300km wide and has 60+ designated wine regions of immense diversity of which each is at least one or more smaller “place.”

Less than 150 kilometers away from McLaren Vale, Napa or Cote D’Or, you will find regions with much lesser reputations for wine quality but still in the same state or department. As a national wine industry we continue to think and speak as one Australia when viticulturally and oenologically, there are many Australia’s. McLaren Vale, Margaret River, Mornington Peninsula, Hunter Valley and Orange bear less resemblance to each other than they do to similar regions in other parts of the world.

When selling Australian wine overseas in the last eight years, the most common feedback is that “the Australian category / brand isn’t moving.” In response, Wine Australia developed the Regional Heroes program to talk about Australian wine regions a few years ago. Prior to this there was little talk of regions. The problem with building a sub-brand called “insert region’s name here” is that the brand Australia has effectively no value above about $7 per bottle retail overseas.

It seems obvious that a sub-set contains some attributes of a set but no different ones from the set. In this case, how a can a regional sub-brand be marketed or perceived as better or more valuable than a brand with little value? If you are Australian this observation may grate – particularly if you’ve devoted your life to make fine wine here – but I could make the same case, country by country worldwide for all wine-producing countries. In short, nations don’t matter very much to consumers as brands but regions matter a great deal.

What semi-knowledgeable consumer buys a wine designated as French, American, Italian or Spanish because it is so designated?  Does anyone talk about a French wine they had last night or rather a Bordeaux, Champagne, Rhone, Burgundy, Chablis, etc.? Consumers of better wine want to know more than “Australia” before they hand over more than $10. And, if they don’t want to hand over more than $10, we’re targeting the wrong new customer.

Wine stores in other countries are usually divided into regions and varieties – Cabs and cab blends from Napa in this corner, Bordeaux over there, Italy upfront, Burgundy on the wall. And, sometimes, there’s the often-dusty corner (when it gets its own place anyhow) called Australia. In very good large wine shops there might be 30 Australian offerings out of the sometimes 1000’s offered. It’s usually void of life and stocked with wines I have often never even heard of with various vintages and regions. It’s a strange experience as you gaze across at the well stocked and busy Tuscany, Rioja, and Burgundy sections.

Wine Australia is trying to change this, and, good for them. Unfortunately, they also have serious historical, structural and governance hurdles to jump in doing so.

Wine Australia cannot credibly tell knowledgeable critics and buyers worldwide that all Australian regions are above average (or better) with credibility. And, it can not let down its famous non-regional or South Eastern Australia brands. It also cannot credibly tell its levy payers that it does not “pick winners” in what stories it markets. Of course it does. It has to. Action of any sort would be impossible without doing so. It is permanently stuck in this quandary of half truths; another non-place. And, the problem grows worse each year because the industry is increasingly a different industry from the one it initially organized itself to support.

The story goes that it was the French who were merciless in their negotiations between the EU and Australia regarding rules called Geographic Indications (think Reggiano Parmesano or Bordeaux). For example, no longer could Hunter Burgundy be called Hunter (if the fruit came from McLaren Vale as it often did) or Burgundy. Worse if they wanted to call that wine something from somewhere it would have to be called McLaren Vale Shiraz to comply with the EU rules. Lucky for the EU, McLaren Vale was just a place in another state where people grew grapes and had just started calling its wine McLaren Vale (some called it Southern Vales and other things). It was a brilliant strategy to see off these mad Australians who had not followed Europe’s old rules but made pretty tidy wines.

Not just a Wine Region

In the wash up, Australia had to declare Geographic Indicators for its regions that conformed to the EU treaty. McLaren Vale suddenly needed boundaries and a name. Although it is the oldest wine region in South Australia and second in Australia, it had never had a proper regional name. Prior to this treaty, there might have been a dozen recognizable “wine regions” in Australia. I’m sure the story has been embellished over time but the facts are roughly correct.

25 years ago Wine Australia had these dozen or so regions and three Vitis varieties (Cabernet, Shiraz and Chardonnay) to talk about to maybe three or four principal overseas markets (but really just the UK and the USA). Now they have 60+ declared regions of vastly different characteristics and qualities with dozens of emerging Vitis varieties and styles expecting them to tell their stories in at least a dozen key countries worldwide. The former scenario had about 100 permutations or possible outcomes, the latter north of 10,000. It is a logarithmically different, and more difficult, challenge today.

By any measure bar “holding the line” and talk of “green shoots” (there are always green shoots in any market), Wine Australia is failing its mission in export markets. Not failing because they aren’t trying or capable but failing because it is a fool’s errand to expect one body to market 60+ different regional stories successfully or for 60+ different regional stories to fit into one silver bullet market strategy. It simply isn’t reasonable to expect success. If you accept that one definition of insanity is doing the same thing over and over expecting different results, we need to consider that Wine Australia may have to do things differently to get different results if we care about results.

One obvious problem with all of this is that the three largest producers – Treasury, Orlando and Casella – largely do not sell regionally branded products (of course there are exceptions). Jacobs Creek may meander through Barossa but it isn’t where they source most of their fruit.  All of the big wine companies have some regional products but the big bucks are in multi-regional (e.g. South Eastern Australia) blends.

To the extent that these businesses do not have to sell regional messages is a credit to them and their marketing investments. It is also a disincentive to care much for the Australia brand at the expense of their own. Penfolds Grange’s extraordinary success was the template for marketing multi-regional Australian blends at all price points worldwide. Casella’s Yellow Tail is basically the same product strategy at a (very) different price point. And, it worked as long as the perfect storm of a cheap Aussie dollar, nearly free water and favorable tax policies held sway.

One of the laws of business is that the strategy that successfully supported one stage of growth often needs to be inverted to support the next stage. This is why so many market-leading companies fall by the wayside so quickly – they miss the switch either through direction or timing. In this case, a lot of these wines got on the stage quickly but lost appeal at an equal pace because consumers of better wines don’t want the Coca Cola promise of an identical taste each time – they value wine as a continuous process of discovery. This has been much discussed and publicly understood since at least 2005.

While it seemed odd for CEO of Treasury Wine Estates David Dearie to publicly encourage small brands to “re-build” Australia’s image overseas, (exactly which companies screwed it up Dave?), he makes a crucial and valid point. It would be good for him and for Treasury for small brands to do that on Treasury’s behalf. Nobody has accused Dearie of not being clever.

Rather than rebuild the “Australia” brand that has connoted uninteresting sameness to consumers worldwide for nigh on 10 years and which largely benefits big companies (Dearie’s comments implicitly acknowledge the Australia brand is nearly worthless and at least undifferentiated in New World terms) with lots of multi-regional blends and lower price points, we need to continue to double down on our differences and educate the world about our regional brands of wine from Australia and recognize that Australia is, in fact, the sub-brand. This should not be a controversial proposition.

I recently read about an initiative by the California wine industry body to improve exports. They’ve found in the UK that if they can get an independent retailer to buy multiple “linked” products (5-6 different California Chardonnays at different price points instead of one Chardonnay, one Cabernet, one Merlot, etc.), that sales skyrocketed on a semi-permanent basis because the consumer could “explore” the differences of one segment of California wine. Once this succeeded, the retailer was then keen to repeat the exercise with California Cabernet thereby taking his customers on a permanent journey through Californian wine. This is the sort of insight and action we need more of, particularly in the fast growing “above $20” segments. And, it is an opportunity ideally suited to collective action.

As Dearie’s statement presupposes, brave and spirited competition amongst regions and smaller brands would create excitement for all Australian wine businesses by increasing interest in our category and hence demand. In my experience, the inevitable counter argument of “its too confusing, people don’t even know Australia makes wine, let alone where Yarra is” is generally put by beneficiaries of the status quo with safe jobs and self-motivation issues. (Can there be a better example of region trumping country than Marlborough? The rest of New Zealand has done a great job of recognizing the primacy of this asset as it builds other brand and varietal stories.)

The wine public we need to attract worldwide is perfectly aware that Australia makes wine; they just don’t like the offering they have experienced from Australia. They are, by and large, intelligent and discerning buyers who choose to purchase wines from many countries regularly with an eye to value at all price points below say, $75 per bottle, when brand attributes like prestige begin to eclipse all other purchasing decisions.

There is one very simple insight that we seem to miss – these very desirable consumers perceive that the Australia brand is not as good as others because we are competing on the wrong playing field. We market a national brand or category they don’t like or have no interest in to consumers who deeply understand and regularly buy regional stories such as Bordeaux, Maipo Valley, Barolo, Stellenbosch, Napa, Marlborough and Champagne.

The net is that we have a national marketing body that cannot credibly tell the regional stories that the market wishes to buy. This is not to blame anyone for this situation but simply to suggest we are using an out of date metaphor to organize our offering and the wrong structure to implement a solution for seemingly no other reason than it is the way we’ve always done it.

Hazel Murphy

The structure we have was built for a different world – the Hazel Murphy era of 1980’s to the early 2000’s. It was wildly successful (250x export growth anyone?) in that world but all of the key ingredients of standardized high volume quality and variety at a low price into a few key markets have changed for many reasons internal and external to Australia. The only blame being cast here is for “missing the switch” a la Nokia, Blackberry, etc. nearly 10 years ago.

Hazel Murphy and friends in McLaren Vale

The adaptations of Murphy’s brilliant and pioneering work used by Wine Australia today, including group road trips to many regions for foreign trade, sommeliers, journalists, etc., reflect the understanding of the need to show diversity. Private comments from participants are always on the whole positive but the negatives follow a few revealing lines.

One is the un-tailored approach where fine wine cognoscenti visit industrial wine-making facilities. Similarly, the “one day here, next day there” itinerary fails to immerse the guest in one of Australia’s greatest wine assets – its utterly uniquely casual vibe and culture. Another is the predictability of venues and featured wineries due to the conflicted nature of the Wine Australia’s premium “user pays” programs where members pay extra for visibility to certain markets and visitors.

The Internet exposes all of this to our guests – they’re not going to turn down an all expenses paid trip to drink their way across Australia without even taking a holiday from work. Nor are they going to appear ungrateful because it is a pretty cool deal in any case. But, they are usually as aware (or more) of smaller high quality regions and producers as anyone domestically and wonder why Wine Australia isn’t pushing these new and different stories with the same enthusiasm as the other stories. As such, the implicit tensions are unfortunately exposed at the margins of our most valuable guests’ consciousness of the brand Australia.

Just as Tourism Australia is constantly trying to find the new advertisement that will equal Paul Hogan’s landmark “put another shrimp on the barbie” TV ad, (think “Where the bloody hell are you? and Baz Luhrman’s “Australia” advertising fiascos) we are trapped in the myth that we can repeat our one great success that has long faded. That Wine Australia and Tourism Australia are now strategic partners is superficially a good idea. It may also be akin to two rocks lashing themselves together expecting to float this time. Being lucky isn’t a business plan.

Happier days

We’re all scratching our heads Lara

There is another analog that comes to mind in thinking about this subject – there is a vegan ice cream store in New York City that is so good that it doesn’t advertise or mention anywhere that it is vegan because they correctly reason that they don’t have to. Vegans will find the store through word of mouth and non-vegans aren’t intimidated. We could do the same – the Australian wine brand promise could be the nice surprise after the rewarding experience and not the un-discovered, un-tried and un-sold due to invalid or out of date consumer impressions that we are unable to change.

My modest proposal for Wine Australia is to recognize the brand “Australia” as a national sub-brand and to get behind individual regions or clusters of similar regions that are also willing to back themselves financially as the primary brands. It is a recipe for both cooperation and competition – small regions may find they can work together with other like regions while big ones may find they really need to differentiate their offering better once they’ve been shooed away from behind Wine Australia’s apron. From a governance point of view it is honest and transparent – help those prepared to help themselves. The “Australia as sub-brand” approach also supports multi-regional blends in a way that “South Eastern Australia” never will. Can’t these wines just be proud to be “Wine of Australia?” Or do our least expensive wines also find the brand Australia unmarketable and or cringe worthy?

Wine Australia could also act like a venture capitalist (not to be confused with investment bankers) fostering regional “start-up” brands by providing capital along with a regional partner. Provide initial seed funding to develop a good plan. More funding for travel to investigate / interrogate plans. Bigger funding for tangible results. Rinse. Repeat.

We need to encourage creative chaos and lots of different messages. The market will learn our real story from the ensuing dissonance – that the regions of Australia are among the most diverse in the world with outstanding producers in nearly every segment and variety. This is our story.

Wine Australia could then continue to act as a data gatherer, data disseminator and act as a consultative and investment partner to regions wishing to develop markets rather than continuing to exist as a monopoly provider of one size / one brand fits all. The beauty in this approach is that Wine Australia already does many of these things:

“As the Australian Government agency responsible for providing strategic support to the wine industry, Wine Australia offers a range of services and insights to help the wine industry make informed business decisions, protect the reputation of Australian wine, remove market access barriers and grow demand for Australian wine globally.”

Regions and groups of regions with shared interests have enormous opportunities to build new categories and open new spaces in markets worldwide by surprising and delighting customers and showing them new ways to understand, categorize and sell their wines.

“Alpine” might focus on certain overseas markets or segments where those styles are preferred while inland regions might team up to make new or emerging “warm” varieties fashionable at far better prices than they can obtain for less differentiated varieties and wines.

The magic in this formula is perhaps the least appreciated element – Australian ingenuity and a story telling culture. Who better to tell regional stories than the real regional heroes – the winemakers and growers who are pushing the boundaries of expectation and experience? A few corner offices might be lost in the short run but in the long run, we will need a lot more of them.

The lazy counter argument to this superficially chaotic and devolutionary proposal is that money would not be efficiently allocated or spent and / or that there would be needless duplication of overheads in doing so. Bottom up / competitive is always short-term inefficient and long-term efficient while top down / centralized approaches are the opposite and have along track record of failure. Witness the multi-billion dollar losses in the Australian wine industry of the last decade resulting from the top down myths of consolidation, centralization and long-term strategic planning in a dynamic worldwide environment.

We need to recognize that the odds of any top down worldwide marketing strategy with broad support from 60+ different wine regions and major wine companies actually working are effectively nil for the following reasons: any consensus marketing strategy is, by definition, out of date before it begins. Add in the fact that our peak bodies lack the moral authority and funding to do something truly radical. Most importantly, information technology, rapidly changing consumer preferences, emerging markets and horizontal fragmentation of the supply chain are so dynamic in practice that only bottom up solutions can possibly be responsive and resilient enough over time to work.

We need to invert the current model of national leadership if we wish to thrive once again rather than continue down a gradually declining road to serfdom. We need to appreciate our homegrown regional difference makers as well as the discerning and informed intelligence of the consumer we wish to target. We’ll stumble often enough on our new path but the costs will be small for the education acquired for the next effort.

A great place to start would be to do a “do over” on the upcoming Savour Australia  event .

This event, billed as the first global wine forum in Australia, starts with a keynote speech on “Power of Country and Branding”  followed by the syntactically and grammatically mangled “Premiumisation of branding and application to Australian wine and how it can impact your market” followed by “Myth Busters: Destroying the top 10 myths about Australian wine.” (All this before lunch on Monday). Really? That’s our best shot? Fighting the national stereotype after reinforcing the importance of national branding? How about “being the change” instead? It’s like they just can not see beyond the square to pay anything but lip service to the unique components of a unique national offering. Listen to the pitch video – does the word region ever arise? Fresh produce gets at least one mention. What are we selling? Bok Choy or Barossa? Oranges or Orange?

Oddly, Wine Australia expects the regions to fund a significant portion of the event.

How about something like Savour the Great Wine Regions of Australia? Make the entire event about all things regional – regionality (Alpine vs. Coastal vs. Inland distinctiveness), sacred (wine) sites, innovation, personality(s), food culture(s) and storytelling. The event is to be held in Adelaide; the guests will be able able to grasp the geographic and national subtext without the assistance of myth busters..

Positive change only occurs when the fear of not changing exceeds the fear of change. For me, that line got crossed a fair ways back.

What do you think?

Should brand Australia put regional brands first or brand Australia first?

BTW – my annual $700 invoice from Wine Australia for the right to export wine arrived today. Coincidence?

The Salt of the Earth

Lets drink to the hard working people
Lets drink to the lowly of birth
Raise your glass to the good and the evil
Lets drink to the salt of the earth

Say a prayer for the common foot soldier
Spare a thought for his back breaking work
Say a prayer for his wife and his children
Who burn the fires and who still till the earth

Jagger / Richards

After our truly bizarre detour down Croser Lane at The Wine Rules, over the past few days I’ve been repeatedly reminded of why I chose this place – McLaren Vale – and this industry to spend the second half of my life. We have Shiraz swinging at near perfect ripeness, a wine shed still under construction, equipment arriving and much to clean but on Sunday the 10th we’re kicking off Inkwell’s 10th(!) vintage with a social hand-pick and de-stem (no crushing these berries). We’ll have a BBQ and cold beer to follow for all who help out. Then, we head down the vintage rabbit hole for eight weeks of sleep deprivation, manual labor and fixing things that broke. We live all year for this.

In preparation for the pick, we hired a contractor to bring a gang through to drop un-ripe fruit and fruit from short shoots to push the overall quality up a notch. Its expensive, but as the goal is “great”, we do all we can. Anyhow, the gang foreman and I were chatting and he told me that a grower known to be a lower grade grower had just had him bunch thin for him. This is an unusual exercise for lower grades because of the expense not yielding much benefit.

He asked the grower if the winery had demanded it. The grower said “no, I just noticed that the fruit from these short shoots wasn’t as good as the others and I want to grow the best I can.” My friend was dumbfounded telling me the story. His point was that the amount of change we’ve experienced regarding practices and quality  has been phenomenal in recent years.

In 2005 we grew for Hardy’s. Unassuming Willunga boy Paul Carpenter was the new red winemaker at their Tintara winery in McLaren Vale. (Paul is now at Wirra Wirra). Following on from Dr. Erika Winter’s book Winegrape Berry Sensory Assessment in Australia (2004), Paul started a voluntary grower education program in berry sensory analysis in the lead up to vintage. Every week five or ten growers would come and taste different grades of Shiraz at the current level of maturity / ripeness. It was a revelation for all of us.

What Paul built was a bridge or common language for growers and winemakers to walk and talk on together in understanding fruit quality, ripeness and wine qualities. They repeated the exercise in 2006 and I participated again. It informs how I think about fruit and wine to this day. This is a great example of how to make a difference even in a behemoth company that was rapidly losing the plot. It didn’t cost much at all. Just some time and enough caring and perspective to figure out how to look at the world from the other guys shoes.

That was just eight years ago. Today, even the growers we thought would never change-up are changing quickly. The result is that demand hasn’t been this strong in nearly ten years, prices are climbing and there is a bit of hope and cheer for the first time in memory.

What makes this important? One – research is important and it takes a long time to trickle through. Two – the real heroes today are the folks who know how to embrace, extend and communicate advances across the grower and winemaker divide. They sit on both sides of the divide but Paul Carpenter is one of them.

I called Paul this morning to make sure he was blamed for the above directly by me personally. (No good deed should go unpunished.) He took it in slowly and said “bloody hell, that’s amazing” because he understands the implications of this change in mindset over the long-term. We were both very excited, talking about it because we both care deeply for the folks who keep this show on the road – growers. It is this willingness to listen, to change and to go forward again that is the essence of what planners call “regional resiliency” in planner speak. I call it sustainability and faith and hard work. I’m proud to be among these people.

There are so many wonderful and unsung folks in so many nooks and crannies of this industry that are constantly tinkering, learning and experimenting that it is impossible to list them. People that listen, offer alternatives, share experiences and just talk. It is such a cool community to be part of that it is a wonder that supply doesn’t exceed demand by ten fold rather than a mere 30%.

These values and people are precisely what Dad’s Army has lost sight of from their lofty perches. They are the solution to all that troubles this industry. Their lesson is that it isn’t easy but is definitely do-able and that change starts in the heart not the mind.

So, a toast to Vintage 2013 and to the folks that don’t get attention for doing so many things right and those who take chances when all seems dire and keep sharing, extending and talking.

Salud!

Btw – Inkwell will kick off Shiraz picking in McLaren Vale with a social hand-pick on Sunday (10 Feb) morning at 9am. Let us know if you want to stop by and help out, we only have so many snips and so much food and beer! Both inadequacies can be remedied until Saturday at 11 am when DJ’s Growers and Ellis the butcher close.

Brian Croser on Wine War and Meta(for)

 

The following response was received from Brian Croser to The Wine Rules latest post. My reply to Mr. Croser follows, etc.

The comment trail is at the bottom of the blog page. You’ll need to scroll all the way down. Its pretty interesting.

Submitted on 2013/01/18 at 5:53 pm

Dear Dudley,
I don’t know you and you obviously do not know me.
Just to break up the above rapidly developing self congratulatory tete a tete, I have never been Chairman of Wine Australia or its predecessor the AWBC. I have had no formal responsibility in the Australian wine community since 1998, beyond involvement in some fringe R&D and education committees.
I have consistently promoted a fine wine strategy for Australia and lamented its branded commodity focus and have many public presentations to support that position going back to 2002 when the tide began to turn against Australian branded commodity wine.
I have definitely been frozen out of industry strategic involvement since because of my well known fine wine stance.
I agree with many of the points you have made but they are diminished by your petty and personal attacks on the CEO of Wine Australia’s name and appearance and by your inaccuracies and innuendo, including the contradictory ” Lion Nathan, owners of Brian Croser’s Petaluma where both Andrew Cheesman and Paul Evans hail from”. It has not been Brian Croser’s Petaluma since 2001 and I have never met Paul Evans but your innuendo is obvious.
From a distance I really admire the work of Andrew Cheesman in achieving real change in the industry structures and policies against the major obstacles that the branded commodity producers have represented for the past decade.
I know I m going to regret replying to you but relevant criticism also requires disciplined enquiry, and that prerequisite is absent in your download. Just give me a call (0418818223) or come and have a cup of tea (Tiers Vineyard, Spring Gully Road Piccadilly) and talk before you place my photograph for little apparent reason in your ruminations. BJC.

Submitted on 2013/01/20 at 1:33 pm | In reply to Brian Croser.

Dear Brian,

Thank you for your comment on my blog. I like to respond before publishing comments as a matter of courtesy to those who took the time to write. I would like to apologize to you for my mis-statement that you were the former Chair at Wine Australia or AWBC. I meant to say President of the Winemakers Federation where you served in that role twice in the 1990’s. Thank you for bringing it to attention. Like you, I appreciate disciplined enquiry and quality research. That you state that my entire post lacks the prerequisite discipline is to draw a pretty long bow about an opinion piece where you can only find one factual error.

You and I have met. I’m sorry it wasn’t more memorable for you. It was at the debate regarding technology vs. terroir at the University of Adelaide. (Your side, terroir, lost as it always does. Not your fault.) But, we obviously do not know each other in any meaningful sense. To refresh your memory, I introduced myself to you and you agreed with my comment that research should be directed towards establishing a more scientific basis for understanding the nature of “terroir.” Your words were “too right.” Then you turned heel and walked away.

Regarding your statement that “ I have had no formal responsibility in the Australian wine community since 1998, beyond involvement in some fringe R&D and education committees,” does being Deputy Chancellor of the University of Adelaide from 1999 to 2007 where one of the world’s two great wine and viticulture faculties reside constitute “no formal responsibility?” Didn’t the Wine Innovation Cluster (where the AWRI, SARDI and CSIRO are housed) get built at the Waite Campus during your tenure? Either higher education or the key research bodies we fund through compulsory levies and taxes are not part of “the industry” in your mind or your statement is incorrect. Your call.

Regarding my “petty” “innuendo,” I was presenting factual and historical background for those perhaps not as familiar with the personalities and minutiae of the industry as you. I find it curious that you feel the need to defend Andrew Cheesman or his performance given the distance you state that exists. Given your paternal regard for His Hairness, it would have been fitting for you to tell him it looked ridiculous in 2007. Of course, you would have had to break the wine industry’s five-year embargo on delivering difficult news to do so.

For what its worth, I see Wine Australia as an out of touch and inefficient body that has dismantled the one great program it ran, Landmark, implemented a feudal “pay to play” model for regions and exporters despite its statutory obligation to represent the entire industry and that it has failed to execute a serious new marketing program to show the world the truly best producers who can re-build the Australian wine brand one bottle at a time. Unless, of course, these producers can “pay to play.” In it’s favor, Wine Australia ditched the anachronistic export tasting panel system. I am happy to recognize progress when it occurs.

I have no question that you have been a supporter of a fine wine strategy since the sale of Petaluma in 2001 and, more, that you have spent most of your professional life devoted to the pursuit of fine wine production and education. As the President of the WFA in the early and late 1990’s you were party to a number of momentous decisions that were decisive in the path followed by the entire industry since that time.

In the early 1990’s, you were decisive in convincing the federal government that wine should be taxed on an ad valorem basis and not on a volumetric basis (as beer and spirits are).

In 1993, while you were President of WFA, you were party to a compromise federal taxation solution with the Keating government and the Democrats that allowed for a higher sales tax on wine but allowed for accelerated depreciation on vineyard development.

You were closely involved in the origins of the Strategy 2025 document / strategy (principally written by WFA staffer Paul van der Lee I believe) and launched in 1996.

And, in 1998, you were intimately involved in the development of the Wine Equalisation Tax legislation passed 24 March 1999.

It is quite a legacy of accomplishment at the highest level of industry and government. I trust these milestones are all correct as they were obtained from published sources and / or acquaintances of yours.

Given that the combined impact of those four turning points in the Australian wine industry history was, by any standard, nearly catastrophic for the industry and completely catastrophic for many individuals and companies since the early 2000’s, I have some sense of why you think you “may regret” replying to me.

At your encouragement, I have undertaken “disciplined enquiry” into your contributions to the current industry conditions before you publicly endorsed a fine wine strategy in 2002 and after your sale of Petaluma.

When University of Adelaide researchers Kym Anderson and Robert Osmond published Wine Policy Brief No. 1 in August 1998(!) detailing the history of Australian vine booms and busts and the emerging risks the (then) vine planting boom, you either chose to not read it or ignore the clear warnings expressed.
If you have not read it, it can be read at this link: http://www.adelaide.edu.au/cies/papers/wpb1.pdf

When growers (including ones you knew well) and others questioned the wisdom of the massive plantings resulting from accelerated depreceation in the 1990’s, you privately and publicly denounced them. As Charles Gent published:

“Many industry figures considered the massive plantings a desirable and necessary corollary of the soaring offshore demand, and traditional grape-growers who expressed misgivings about the rate of expansion got short shrift. As president of the Winemakers’ Federation in 1999, Brian Croser described their concerns as a “Luddite viewpoint” and called the tax scheme plantings “a great resource.”
http://inside.org.au/the-writing-on-the-wall/

Private sources in the grower and wine community have confirmed this with me as well. Did you support the Howard government’s merciful termination of accelerated depreceation in the mid- 2000’s?

Despite these warnings, in 1999 you were still publicly bullish for the long-term opportunity for Australian wine saying in the New York Times “We are basically on the low board of the diving tower at the moment,” said Brian Croser, president of the Winemakers Federation of Australia. “In the next couple of decades, we will go to the high board.” And, “Our climate and technology give us long-term economic and competitive advantages over our international competitors,” he added. http://www.nytimes.com/1999/11/22/business/worldbusiness/22iht-auswine.2.t.html?pagewanted=all

As stated in my post (that you found lacking in the prerequisite of disciplined enquiry), every premise of the Strategy 2025 paper inverted within ten years; the dollar, the climate, cheap / free water, labor costs, international opinion, the tax regime, comparative technological prowess, management personnel, corporate structures, equity markets, the lot. Thirty-year plans require vision and courage. You should be commended for these. They also require hubris bordering on insanity.

I’m not sure if you are familiar with the benchmark long term planning process undertaken by Royal Dutch Shell in the 1980’s. In it, different scenarios and variables are imagined from different views, including exogenous ones, over different time horizons to guide the context for management thinking regarding their range of choice sets over time. Pierre Wack, one of the founders of Shell scenario planning, observed in the Harvard Business Review in 1985 that forecasts tend to be wrong because they don’t anticipate “major shifts in the business environment that make whole strategies obsolete.” http://www.hbr.org/1985/09/scenarios-uncharted-waters-ahead/ar/1

To alleviate this tendency, RDS’s long term planning process is continually reviewed and updated by the most knowledgeable staff and senior management in consultation with subject matter experts. This is how to execute thirty-year plans rather than just launch them and re-visit them eleven-years later in the Directions to 2025 document published in 2007.

I would argue that not one key variable of Strategy 2025 was “stress tested” and that the entire document was born of enthusiastic hubris meant to attract as much investment to the industry with the ultimate goals of taming prices for grapes and selling assets high as soon as possible. In short, it was a sales pitch or “vision” undertaken to financially benefit incumbents (winery owners) over the short term. Of course, I have the benefit of hindsight and not being involved. You have the benefit of having sold near the peak.

Others might call your behavior self-aggrandizing or hypocritical. I would only suggest that it that it only proves that where you stand depends on where you sit.

While I understand you were long “out of the game” in 2006 and 2007, and that you have publicly bashed big wine companies for most of the last decade, your enthusiastic support for the very strategy that created the situation that you now rail against remains to be atoned for as far as I can tell. A bit of the little disciplined enquiry that you extol on your watch(s) at the WFA during the 90’s might have led to very different outcomes our entire industry.

I noticed that The University of Adelaide’s website mentions that you are the current Co-Chair of their Wine 2030 Advisory Board. Is it fair to suggest caution this time? Or is that just piling on?
Finally, regarding the ad valorem and volumetric taxation schemes – do you still believe ad valorem to be the best way to tax wine and to be the tax that provides the best outcomes for society? Do you think that the wine industry is entitled to be the lowest cost seller of ethanol for consumption in Australia?

I hope the foregoing is of assistance in making my use of your freely available photo in my post more comprehensible to you in your ruminations.

I sincerely do not wish to offend you personally but to set the record straight so that people can become more engaged in demanding that the industry pursue a long term, sustainable, socially responsible fine wine strategy led by the generation(s) that will profit from it.

To that end, I would be delighted to meet with at your convenience. Please let me know when that might be.
Cheers,
Dudley

Wine, War and Mixed Meta(for)

“Don’t follow leaders, watch the parking meters” – Dylan

“I read the news today oh, boy” – Lennon / McCartney

Wine industry hit by high $A

JULIE-ANNE SPRAGUE, AFR 15 Jan, 2013 07:09 AM

THE federal government’s statutory wine agency has warned Australia is not close to reaching sustainable wine production and urged producers to focus on selling and marketing more expensive wines to help combat the impact of the high currency.

This article ((and the pronouncement by Andrew Cheesman (I don’t make these names up) of Wine Australia)) were prompted by news that Casella Wines, makers of $7 per bottle Yellow Tail, had reported a $30m loss and were in breach of bank covenants primarily due to the strength of the Australian dollar. Casella was the news lead but the real story is that most everyone in the Australian wine industry is in a struggle for survival.

Andrew Cheesman and some, ummm, “product”

What did not rate a headline was a meeting held for over 100 grape growers held in McLaren Vale in 2006 where Warren Randall, owner of (then) Tinlin’s Wines (but now owner of Tinlin’s, Seppeltsfield and Boar’s Rock) bluntly and emphatically told growers “grow A or B grade or get out.”

In 2006, the big buyers of fruit were pulling back on their purchases of all fruit, particularly A and B grade. C grade (for $10-$15 per bottle wine) was the rage because the “high” Aussie dollar (then around $.75 USD, now $1.05 USD) was making lower priced wines unprofitable and higher priced Australian wines were in a slump. The bottom was falling out of the grape market at almost every level and here was Warren Randall telling us we should be doing the opposite of what wineries were asking (and, more importantly, willing to pay) for.

What Randall knew then was that the oversupply and the Aussie dollar would lead to a long drawn out war in the industry. Regardless of what the market wanted, the high cost of doing business in McLaren Vale dictated that we had to differentiate and sell smaller crops at higher value.

Warren Randall of Tinlin’s and Seppeltsfield

Warren’s warning was the distilled essence of leadership akin to that given at Omaha Beach; “take that cliff and you might die. Stay on this beach and you will die.” It’s not what you want to hear but is something you need to act on. Was that the sort of thing Cheesman meant to say the other day? Or, not? It wasn’t clear or, in bureaucrat-ease, what they call “actionable”.

Seven years later, growers in the Vale find themselves in the most advantageous position in the wine grape industry (aside from TasMania). Shiraz fruit was pre-sold by November this year. Prices are well up for the third year in a row. Wine makers have followed suit with dozens of McLaren Vale wineries with $50+ offerings now. No one is in the clover, but not many are in deep shit with the bank anymore either. Regardless, the strong Australian dollar is hurting even diversified and successful wineries.

Since there is no “new news” in any of this, why does it rankle to read Cheesman’s comments seven years on?

War is so frequently used as a metaphor for business and business strategy it is odd to note that while they share so many features, notably purpose, they are the opposites in one significant respect – means.

In war, you fight and win knowing that both sides will suffer horribly. In business, if you cannot trade in a mutually profitable way, you lose.

For years, the large wine companies ran the industry like it was in a war. They engaged in an arms race buying and building refinery-sized wineries with capacity to buy, grow and make wine far beyond their collective talent for selling it. Unfortunately for the big wine companies, those were the good ol’ days. The first to suffer this awareness were the growers when their long-term contracts were up for renewal beginning in about 2004.

The wine companies then acted as though the growers were not long-term suppliers but the enemy who had misled them into their mess. They turned their might on growers cancelling tens of thousands of hectares under contract, restricting terms, reducing prices, etc.

Meanwhile the big public wine companies collectively wrote off over $7 billion dollars in losses and every public wine company but Treasury has since gone bust, sold up or been taken private. Interestingly, write-offs are usually and largely a function of the eventual recognition that management wildly overpaid for assets, not so much trading losses. (It seems write-offs also played a big role in Casella’s current loss as well.) Unfortunately for growers and shareholders of the big companies, they got the sting.

And, because these companies operated under the wrong metaphor, having never figured out how to trade in a mutually profitable way, most big winemakers finally admitted they lost that war and moved on. The ones that have changed their relationships with growers, notably Treasury, have seen their fortunes rise again recently. Conversely, those that haven’t didn’t. In any case, many growers refuse to sign contracts for more than one year now.

While the big boys stumbled through 2000’s, Casella swooped in like Mr. Wolf in Pulp Fiction and cleaned up the bloody mess created by the not so bright. They snapped up enormous amounts of low priced fruit and contracts and built an enviable, well-managed privately owned empire with one huge advantage / weakness – exposure to the US dollar.

Casella Winery and Vines

Casella made money where Treasury, Accolade, Pernod Ricard / Orlando, Lion Nathan (owners of Brian Croser’s Petaluma where both Cheesman and CEO of Winemakers Federation of Australia CEO Paul Evan’s hail from), Australian Vintage, etc. saw only problems. And, crucially, Casella kept hundreds of inland grape growers’ backs from the wall after the big guys had walked away from them. There is much to admire about Casella despite their wine. Unfortunately, as a tall poppy growing in Australia, they and their growers may be much more vulnerable than good experience should dictate.

Anyhow, here we are in 2013 being told by Wine Australia to “move up market.” Perhaps we should welcome their horribly belated recognition of what was so bleedingly obvious to the acquisitive Warren Randall that he had no problem sharing it with the world in 2006. Or, instead, we can look at some of the rest of what Cheesman said:

“Australian wine exports delivered a solid performance in some of our key markets last year and, as global supply is tightening, we believe there are signals for cautious optimism….”

But, this really isn’t the case. As detailed by Wine Hero, the latest export figures are frankly depressing. The only big export market where there is any significant good news is China while the US, UK and Canada are all “bad” by any profitable definition. As my older former business partner used to tell me, “any fool can sell dollars for 99 cents.”

In the U.S. Civil War, Lincoln fired seven generals over three years before he found one “who will fight;” the outsider Ulysses Grant. Almost no war ends with the same general in charge as at the beginning because while they are experienced enough to get the job, their experience is rooted in another era. In short, they always try to fight the last war.

Honest Abe

Leadership is the core problem for the Australian wine industry, not vines or currency. As history shows, most of the revered leaders that grew the wine industry in the    1990’s were not much smarter than a cheap Australian dollar and cheap equity underpinned by tax breaks. Most of the grape growers were not much smarter than cheap land, under-priced or nearly free water to irrigate with, tax breaks for planting and generous contracts written by the wine companies. I have no quarrel with every dog having his day in the sun but the lessons that these groups learned in the 1990’s haven’t applied in the real world since at least 2005 when all of these premises suddenly inverted.

In a cruel twist of fate, these folks have gone on to dominate almost every Board and position of leadership in every company and peak body at every level since that time. Those employees that didn’t hew to the belief that the good times would return for “cheap and cheerful” Aussie wine delivered by the traditional big companies have been systematically muffled or moved on by these same people. Meanwhile, the outsider, Casella was actually doing “cheap and cheerful” bigger and better than anyone ever before them and made money doing so. This situation reminds me that when the discouraged fox says in Aesop’s fable “those grapes were probably sour anyhow” we see how little has changed in 2500 years!

Those rare folks who actually tried to fight / change the paradigm and were moved on have then had insidious whisper campaigns about their skills and personal lives spread about them following their departure. Those who say nothing of this out of fear of similar treatment or being out of the “in crowd” thus become conspirators in this awfulness. It is too sad and pathetic to just say nothing of it. Professional lives get wrecked while the no longer fighting just paddle on to the next meeting or tasting.

Brian Croser

The ones who stay on are tradesmen like Cheesman – former Wine Australia Chairman Brian Croser’s former accountant or the nearly mute “Board Sitters” who seem to just collect fees for their attendance. There’s hardly a great winemaker, great wine grower, great marketer or great salesperson under 60 years of age in sight governing any of these bodies. Nearly everyone at this level is over 60 years old and had their glory days in the last war. It’s not that they’re not smart. It’s that they’re Dad’s Army.

The under 60’s who seem to rule the industry roosts today tend to be lawyers, HR folk, accountants, other back office box checkers, journos, PR hacks and people with no prior relevant industry experience. It’s like a Labor party candidate pre-selection convention. Despite these other skills, most are simply not equipped with the experience to lead in a worldwide struggle for Australian grape grower and winery survival. There are some that I would be reluctant to hire to be V.P. of No Smoking in the Lobby. (By contrast, Ulysses Grant had  personal experience of combat in the Mexican – American War. Some experience matters more than other in certain jobs.)

General Ulysses Grant

How many of these have successfully owned and operated a vineyard or a winery? How many have pruned, pumped over or fix leaks at 3am? (Before you go barking mad at my simplifications, there are always exceptions – a notable one being the formidable Kate Harvey at GWRDC). We need more like her but they don’t fall off trees.

Kate Harvey, GWRDC

Cheesman’s analysis and summation was soothingly written to not startle the horses probably because he believes the rest of the industry to have equine numeracy skills. The substance of the export data leads only to the conclusion that Cheesman is, at best, a soothsayer and, at worst, intellectually contemptuous of members / levy payers and / or bereft of analytical skills. As he is a CEO who always mentions his CPA (most try to just forget that part of their career), we can hope to rule out the latter.

Wine Australia’s (and all of the other industry bodies) levy payers and members deserve leadership comfortable communicating the unvarnished truth in plain language in real-time, not seven years after it was obvious to the merely sentient. Rather, we get weasel words from those more interested in their own survival than the levy payer’s with the vain hope folks don’t notice their thinly veiled contempt for everyone else’s intelligence.

Like Lincoln’s first seven generals, the rent seekers who hold these positions by creating and attending each others meetings while achieving startlingly little at great expense need to be quickly and continuously culled until this industry finds one(s) “who will fight” for the folks whose levies and fees pay their wages. But they won’t do it to each other. And the big companies who ensure these mild folk get these positions won’t do it. And, even if the positions were open most of the ones who would fight wouldn’t even apply to work for these people and these people would never even grant an interview to those who could save them from themselves. Its like some kind of  time warped self replicating reality distortion field for mediocrity where it’s always 1999. Something has to give.

What‘s it going to be?

The Wine Rules #2 – Alcohol

Alcohol levels in wine are one of the more bizarre applications of The Wine Rules.

To get some sense of “how they do,’” quickly look at stated alcohol percentages on three or four bottles of red wine. How many say 14.5% alc/vol? Now look at the same wine from a few different vintages – is the alcohol level the same each vintage? Coincidence?

Given the enormous variations between varieties, vineyards, regions and vintages, how have so many red wines harmonically converged at the same level of alcohol?

The Rules

Bottles of wine in Australia are required to offer two types of information about alcohol – the percentage of alcohol by volume in the wine and the “standard drinks” information. To arrive at the latter, a standard calculation is employed but, in short, a standard drink contains 10 grams of ethanol. When a winemaker bottles a wine, it would seem that they measure the alcohol level and have it printed on the label. The first step is a necessity, the second a source of confusion.

The rules state that the official tolerance for still and sparkling wine is 1.5% of stated alcohol. Thus, a bottle of red that is either 13% or 16% alcohol would be within the rules to say it is 14.5%. This isn’t a variation of “1.5%” as the rules say but a variation of 9% (more) and 11%(less) depending on whether 13% or 16% is the real alcohol level. For light or white wines, the effect is much greater – a wine labeled as 11% alc/vol can be between 9.5% and 12.5% alc/vol. The swing here is between 12% (more) and 15.7% (less) than the stated  alcohol level. Its a fair assumption that most label information is on the low side rather than the high. The net is that we often consume a lot more alcohol than we think we do.

Does this matter? If you’re driving and / or  assiduous about keeping track of your consumption, yes. A lot.

But, does it matter otherwise? I think so because the standard drinks calculation is based on the stated alcohol, not the actual percentage of alcohol by volume! For the reasons stated above, the standard drinks measure is consequently, and effectively, hopeless in assisting you to accurately gauge how much alcohol you’ve ingested. As the standard drinks requirement is there to provide consumers with information to protect themselves, shouldn’t it also be required to be accurate?

The Problems

Winemakers try to achieve a few things when stating alcohol:

- Be accurate within the rules (above)

- Offer the consumer assurance that there is an appropriate level of alcohol to meet their expectations

- Not offend the the anti-high alcohol members of the wine trade (buyers, wine critics, sommeliers, etc) who decry “high alcohol” wines

- Make it easy for large volume winemakers to stir up a new batch of the “same” wine without having to print different labels for each batch.

Some of The Results

As where you stand depends on where you sit, the results of this rule are varied:

For a winemaker who honestly labels a red wine as, say 15.2% alc/vol, they might well get caned by much of the the trade and a segment of consumers for all manner of vinous infractions. Meanwhile a wine labelled 14.5% alc/vol that is really 16% alc/vol gets reviewed, bought and praised for its “suppleness and restraint.” This outcome is particularly pernicious in determining the fortunes of wines and winemakers. Why? Because of the wine rules, not because the wine rules.

Another effect is to confuse us – the consumer – into thinking that a wine labelled 14.5% wine but containing much more alcohol, tastes like that. Having sat through trials of the same wine at different levels of alcohol, a few tenths of a percent of alcohol can have enormous sensory variations. Accurate labeling information is important to people who care about and want to learn about wine. How many of us spend time reading, shopping, tasting, thinking or even writing about grape juice?

The worst effect is upon the reputation of the industry – those who use the variation allowed liberally debase the reputation of those who label wine honestly while simultaneously enhancing their own reputation.

As a result of all these, the rules make for a very brave winemaker to state anything higher than 14.5% regardless of the actual alcohol level.

The new Wine Rules

What matters here is that both the trade and consumers rely on the stated alcohol on the label because its the only information they have available to them. Understanding that winemakers are producers and purveyors of addictive and potentially dangerous products, shouldn’t they be required to communicate alcohol content with integrity, authenticity and transparency within a much smaller variance, say .2% or .3%, of stated alcohol rather than 1.5%?

What do you think?

The Wine Rules – Introduction

The Wine Rules blog is about wine that respects the only person who really matters in the hedonic sweepstakes of fine wine: You!

As a winegrower of site expressive, estate grown wines in McLaren Vale South Australia, I am often struck by how little (even very informed) wine consumers and trade members know about what is actually in, or permitted, in a bottle of wine. The label rarely tells the story because of The Wine Rules. These rules vary from country to country but have broad similarities. Some are legislated, many just “how they do”. For anyone familiar with the novel, The Cider House Rules, by John Irving, you’ll know that, in life, there are the written rules and then there are the real rules. In Christopher Hitchens’ words, its about “keeping two sets of books.” Wine is no different.

As the producer of the Inkwell brand of wine, I have to know, and meet, the legislated rules. As someone who meets with keen wine drinkers pretty regularly to talk about wine, I am learning that while we all implicitly know that wine is fundamentally grape flavored ethanol and that what we don’t explicitly know about what we drink is what interests.

As a long time wine collector and consumer, I realize how little assurance the wines that I have drunk – and often loved – provide in terms of their integrity, authenticity and transparency. The degree of respect shown by wineries for the consumer is what I want to explore here. The goal of this blog is to create more interest in wine that respects both our intelligence and our palates. The assumption here is that the winemakers who are more transparent have less to hide and, often, make quality wine more worthy of our custom. For those who conceal more – well, as with anything in life and business, maybe they have more to hide.

As a rule of thumb, with wines costing less than $20 per bottle you cannot expect much in the respect department (though, of necessity, they will still be part of this conversation). For wines worth savoring, storing, aging, collecting, sharing with loved ones, special occasions etc., a higher standard of trust and respect should exist between the producer and consumer. While some producers “get it” and really care, the standard(s) that most seem to care about are the “standard” things – making, selling, getting paid, making more, etc.

The point here is not to “out” serial offenders of vinous integrity, authenticity and transparency (there are some who are far better equipped for that task) but to celebrate wine, winemakers and wineries that respect the consumer enough to create their art without the safety net of the legislated rules. Those who engage in a higher degree of transparency – who talk about what is really in the bottle and who stands behind the bottle; the winemakers, the grape growers, the vineyards, the lot.

This blog is the beginning of a conversation, not a sermon. Please join with me in it.

The Wine Rules will be a conversation about the conundrums I’ve thought and wondered about for years relating to how wine is grown and made. Largely, the rules relate to provenance – the rules for vintage, variety, regionality, additions, wine-making processes,  additions, personnel and location, sources of fruit, how it was picked (and when) etc. I will explain my understanding of the purpose of the existing legislated rules (many for numerous good, but insufficient, reasons) and, together, we will build our own Rules that represents our highest standards for winemakers to meet. Over time, the goal is for our rules to supersede the legislated rules for wine. As customers, we should ask for no less. To quote Christopher Hitchens again, “There is no such thing as a little heresy.”

The wine game is a bloody difficult business where the reality of the market always defines decision making. A place where, I believe, most have very good intentions. The core insight is that prices are a function of supply, quality and demand in the wine game. But how we are treated as consumers is a function of what the producers think and feel about us. The space on the back of a bottle is clearly inadequate for winemakers to explain much – let alone everything – particularly after meeting the legislated rules for what “must” be said there.

However, in the era of websites and social media, there is no reason why all can’t be explained somewhere for winemakers to precipitate a bond of knowing trust with knowledgeable consumers. To me, the value of a “brand” is the premium paid for trust.  The hope here is that by shining a bit of light on The Wine Rules, we will all become more knowledgeable, more demanding and a lot happier with what we drink. And more trusting. For those who make wine, it is an opportunity to build trust, and custom, with consumers of their art.

So, if any wine will do or you don’t really care about what you drink, this blog is not for you. If you think about wine, care about wine, love and savor wine, perchance dream about wine, read on. This will definitely interest you.

Phylloxera – Who Rules?

As The Wine Rules is a blog about the formal and informal rules of the wine industry, the rules regarding the containment of Phylloxera in South Australia should be of great interest to anyone who enjoys knowing what the natural flavors of wine grapes and wine really are. South Australia is the largest remaining un-infested wine region in the world. It is also the home of the oldest wine grape vines and the largest collection of own rooted wine grape vines on our planet because we have never permitted Phylloxera to cross our borders.

The peak body entrusted with ensuring that SA remains Phylloxera free is the Phylloxera and Grape Industry Board of South Australia (PGIBSA). The PGIBSA is currently advocating (very worrisome) relaxed standards regarding the management of this vine killer despite some very significant concerns put by grape growers, particularly in McLaren Vale.

As The Wine Rules has a long and abiding interest in the economic and political arcana of Phylloxera, this process appears to be as much about the intentions and economic motives of some parties (including my desire to see our personal vineyards remain uninfected) as it is about anything else and is worthy of understanding at some depth.

While it is an enormously complex regulatory, scientific and legal issue, this is the most important issue of our time in the wine industry in Australia.

While I have been cautioned against a “wall of words” approach to blogging by many more experienced bloggers and journalists, I can not find one attractive photograph relating to the subject of Phylloxera or the Phylloxera Board to use to break up the text.

Please bear with me on this one, it’s a long one. There is simply no short way through this.

And, if you agree with the import of this blog, please re-post, re-tweet, etc.

Most importantly, if you agree with the sentiment(s) expressed here, please email minister.gago@sa.gov.au with any sort of message suggesting that you do not want to see the risk of Phylloxera spread.

Finally, I am appending MW Drew Noon’s submission to Mr. Nankivell at the bottom of this post for those who wish to understand the intersection of science and law with regard to Phylloxera in Australia. It is compelling stuff.

Philip White at http://drinkster.blogspot.com/ has written a number of compelling articles on this subject.  Search, read and weep….but don’t do nothing.

Below is a copy of my submission regarding this process to the CEO of the Phylloxera Board:

14 October 2012

Dear Mr. Nankivell,

Thank you for the opportunity to comment on your presentation made at the Bocce Club in McLaren Vale the other night.

While I thought we were being asked to comment about the Phylloxera protection rules changes first implemented in 2011 and then reversed by Minister Gago of South Australia in 2012, you made it clear in the last-minute of your presentation that we were present to hear your presentation and to comment on your presentation and not the matter the audience thought was being discussed. What the audience thought you were in McLaren Vale to do was to conduct a public consultation session with wine growing levy payers of the PGIBSA regarding the rule changes of 2011 and the reversal of 2012.

After much deliberation and conversation with others who were present at the meeting, I think I now actually understand what was being presented and why.

In your presentation, you first asked for questions and indicated that you would answer them in your presentation. Some of these questions included “Who was consulted before the rules were changed in 2011?” and “Who benefits from the rule changes?” These questions were never addressed or answered by you in the following 2 1/2 hours. You concluded by telling us that it wasn’t a consultation.

In short, the presentation followed the following format:

You first described the history of the Phylloxera Board (“PGIBSA”) briefly and some rules about not creating trade barriers without scientific support.

You then went on to describe the process used by you and or the PGIBSA to analyze 262 different “risks” to South Australia of Phylloxera infestation. Of these 262, there were five that our community had specifically appealed to the Minister to consider worthy of reversing the rule changes of 2011. Then, at some length, you went on to describe these five as “low” risks.

You then described 10 “high” or “very high” risks that you consider to be of much greater importance than the five aforementioned risks.

You then by fielded questions again. At this point, you either evaded or did not answer numerous questions, engaged in selective amnesia in an exchange with Drew Noon (one of Australia’s first Masters of Wine), etc. Finally, when winegrower Jim Banman asked if there could be a show of hands from the 40-50 winegrowers present, you replied, “You can vote on anything you like, but what would you vote on?” I interjected and said ” Alan, Jim is asking as to whether the audience supports the measures you are consulting us on.” You replied that “this is not a consultation, this is a presentation.” That was when the penny dropped for me anyhow.

Your presentation was a tautology both in format and content. You started with questions and ended by saying why you were there. Your premise or “proposed actions” can only be undertaken if we accept the conclusion that the Minister is currently wrong in her policy stance. Oddly, you blamed BioSecurity SA for the first rule change (denied by Jeff Raven of BioSecurity SA at the meeting) implemented by the Minister and then took credit for the Minister reversing herself. Now you are in the position of suggesting she change her mind again. It was one of the most bizarre and incoherent meetings I have attended in my life.

Having endured two and one half hours of your fulminations and arm waving with the ISO 13000 handbook tightly clenched in your hand, I realized that you were finally speaking plainly. You were not here to consult with us at all. You were here to spend half that time explaining why our fears were unfounded and / or wrong and the other half with how smart and scientific you and the Board is. In a successful sales pitch, first telling the customer they are wrong and then telling them you are right is a sure-fire road to failure.

After the meeting, Robin Nettlebeck, the Chair of the PGIBSA was kind enough to introduce himself after not answering a number of my emails inquiring about the rule changes over the past months. After a bit of a build-up, Robin very awkwardly asked me if “there is something special we can do for McLaren Vale?” Fortunately I had two witnesses to what could only be inferred as an unseemly approach.  Later I discovered Mr. Nettlebeck had also asked one of our leading citizens and winegrowers, John Harvey, the same question. I replied “honestly, my concerns are not for McLaren Vale but for South Australia and Phylloxera Exclusion Zones in other states as we all wish for Phylloxera’s borders to be as far away from us as possible.”

In the following days, I ruminated on your presentation and Mr. Nettlebeck’s unsettling approach.

My conclusions are this:

1) Your risk analysis is fundamentally flawed. While following an ISO approach is a structured and valid approach to risk analysis, the risk of all 262 areas of inquiry is exactly the same – infestation of Phylloxera in the world’s largest germoplasm of un-grafted wine grape vines remaining in the world. A cigarette smoker can smoke three packs per day of cigarettes and never develop emphysema, cancer or have a heart attack. Others can smoke only passively and die of lung cancer. These are variegated risks. Phylloxera is not variegated – it will kill every vine it comes in contact with. Therefore, the only “risk” is infestation. Your analysis can only be properly understood as an assessment of probabilities of infestation and not a risk assessment.

2) As anyone aware of this ISO protocol can attest, the analysis you have conducted is just a starting point for further study and testing and is in no way “definitive” in the conclusions that have been arrived at. The identification of 262 “risks” is very valuable. The ISO method is a process of evaluating subjectively identified risks over time by objectively testing these subjective items with data collection, analysis and experience. Only then can the probability of each “risks” be quantified with any certainty.

However, in my subjective analysis, even then I would rate the certainty level “very low” because, in the absence of an infestation, you will always be trying to prove a negative.  In fact, the only way to really find out which of the risks is highest or lowest, is to do absolutely nothing to stop Phylloxera movement and then figure which of the “risks” actually caused infestation. Then you can be certain. Until then, you have to do the hard work of following the scientific method of data collection and analysis over very long periods of time.

What you chose to not share with us is the methods of data collection and analysis employed to test the various probabilities you graded from low to very high. When one grower requested this information, you replied that you could not share it because “it is open to misinterpretation.” Is it open to misinterpretation because it does not exist or because it might not support your argument? Or, are you the only person capable of understanding these risk factors and assessing them? Are there any other options for us to consider as to why you will not share this information?

3) The PGIBSA operates in a culture of secrecy and stand-over tactics. When I was the Chairman of the McLaren Vale Grape Wine and Tourism Association, from 2008-2010, we conducted the first Phylloxera Outbreak Planning Scenario workshop conducted in South Australia with the Phylloxera Board. This is the sort of extension work that really engages growers and is one of the reasons growers here are so engaged with this subject now.

Following on from this we asked the PGIBSA to assist us in developing a Phylloxera Outbreak Planning Manual with the community. At the time, you insisted that help would only be forthcoming if we agreed that, in advance, we would declare the entire McLaren Vale GI a Phylloxera Infested Zone (“PIZ”) in the event of any infestation in our region. I replied that I had no power to make such an agreement and that only the community could do so and further, that if we did accept your ultimatum, the conclusions of that document were fore ordained. That was my first experience of your tautological approach to things.

Subsequently, you forbade employees of the PGIBSA from assisting us in this endeavor. You also attempted to strong-arm an employee of MVGWTA and our Phylloxera Committee into making such an agreement. They also declined on the same grounds.

In our meeting, when pressed as to who had been consulted regarding the changes to the 2011 rule changes, you did not answer. Former PGIBSA Chair Dr. Richard Hamilton did indicate that you had consulted us over 10 years ago. When reminded that we disagreed at that point in time, he did not argue. When asked who would benefit from the rule changes, you again demurred.

4) After spending a number of years contemplating exactly who the beneficiaries of such changes could be, the likely ones fall into two camps. The first is (mostly) interstate vine nurserymen. After the planting boom ended in the early 2000’s, the nurseries have had a very tough run economically. They would clearly benefit from an infestation in South Australia by selling grafted vines to SA grape growers. The other camp is vineyard owners with substantial holdings in multiple states and Phylloxera zones. There are only a few of these and tend to be very large wineries who have substantial holdings of younger vines already on grafted rootstock. Of these, I am aware that the two largest wine companies in Australia are supportive of the changes made in 2011 and that they plan to write submissions in support of these changes.

The nurserymen first. The nurserymen who would benefit are primarily in New South Wales and Victoria. They are also under recently elected Liberal state governments who are justifiably eager to assist in reducing “red tape” for constituencies that have been perhaps under-served during their many years in opposition. These governments have in turn placed pressure on the South Australian state government, principally through BioSecurity SA it seems, to remove unwarranted trade barriers as governments are required to do where no scientific basis for the rules exist. This is very clever business.

Simply put, the Phylloxera Board was created to protect South Australian grape vines and wine growers from Phylloxera; if it can not mount an effective campaign to protect us on a scientific basis from the most lethal vine pest on the planet, it has no reason to exist or to continue to collect levies. This is your job – to make this case and protect us. It is not a non-partisan effort.

Now, the wine companies – why would they support rules to encourage the spread of the worst grapevine killer in the world?  The rules governing the movement of machinery – tractors, harvesters, etc from the various zones are currently quite restrictive. As these companies attempt to recover from the many billions of dollars of investors’ money they have written off over the past decade due to previous bad decision-making, they have a strong incentive to shrink their capital base to improve their shareholder returns.

As they have been largely unable to flog off the vineyards they have had up for sale the past few years, they would benefit from reducing the amount of expensive equipment they use to do the work required at far flung properties. The pre-2011 rules make this difficult.

Two different multinational companies with large wine portfolios operate the vineyard blocks across the road from our vineyard. This winter I watched in horror as one winery operator made up to five tractor passes in a completely waterlogged vineyard performing machine pruning, cutting off cordons, slashing and finally spreading mulch (!) to improve the soil / mud that they had just compacted to buggery. Then, in came the workers to do a hand-pruning pass in the mud.  These are the exactly perfect conditions required for lightning fast spread of Phylloxera.

Why didn’t this company wait until the vineyards were dry? The short answer is that they only have “x” acres, “y” work hours “z” tractors during winter to do the work and their accountants have the ultimate decision-making authority. To do it any other way would involve hiring un-budgeted contractors or paying penalty rates for overtime at additional expense.

These are the same companies where every employee wears high visibility work-wear everywhere on site, the cappuccino machines have step by step photographs of “dos and don’ts”, etc. because those rules are mandated by law. They are no natural respecters of our region’s voluntary codes of conduct for winegrowers; they spray agri-chemicals in high winds regularly every year because they can. Its legal! This is no rant. It’s my life as their neighbor.

Given that this work was planned, managed and conducted by thoroughly trained and knowledgeable viticulturists in violation of every known principle of good viticulture and soil management, why should we expect their behavior to improve with relaxed standards of behavior towards Phylloxera?

The vineyards these companies have been unable to off-load in the vineyard business slump are mostly grafted on Phylloxera resistant roots. If Phylloxera were to get into SA, most growers (including me) would be wiped out or forced to replant at enormous expense. My estimate for our vineyard is $40,000 – $50,000 per acre over a ten-year period in lost income and investment capital required.

The fruit we produce is highly valued, goes into Chapel Hill’s Vicar Shiraz every year and regularly obtains 94 to 97 point scores from critics. But, despite the relatively high prices we obtain, we cannot afford to recover from infestation. However, my corporate neighbor across the road would not only continue producing, their vineyard would increase in value while we went broke!

The nurserymen and large wine companies clearly have motive. They also have time and resources to patiently push these undesirable changes to the detriment of the small growers who produce the preponderance of the great wine grapes in Australia. While we wait for the ground to dry out and do the right thing by our vines, they speed through the mud, they employ lobbyists, they ensure their employees are on the “technical committees,” that they sit on industry Boards of every type and dominate them where they can. Finally, they insist on “caps” on levies paid to regional associations, which only apply to them! The sense of entitlement of the best-capitalised and largest companies in our industry is beyond the pale.

I have no quarrel with anyone acting in his or her own interest. In fact, I applaud it to the extent that it makes society wealthier. But when someone tries to manipulate the polity to enrich themselves at the expense of their neighbor, I see it as an obligation to make their hypocrisy public. This is my declared interest.

5) Engagement – the PGIBSA is required by its governing Act to maintain Phylloxera Committees in each wine-growing region in South Australia. A number of years ago, the PGIBSA decided that this was just too hard and that the committees were dying out of “lack of interest.” Having been involved in various ways with numerous industry bodies, my observation is that the Phylloxera Committees died out of lack of engagement with PGIBSA, not lack of interest.

Instead of doing the missionary work of building these committees up through education and engagement, you chose to begin communicating with a variety of bodies, local grape and wine associations and “technical committees”, etc. without ever asking for the Act to be changed to reflect the changing circumstances. As such, you have defied the law, the will of Parliament and your sacred duty to levy payers and the Minister. This casual disregard for the primacy of the law and the Minister’s authority is not a commendable trait in a body set up to establish and enforce standards and protocols.

The Act works (worked?) because the regional committees created a small base of a dozen or less very knowledgeable and respected people in each community on the topic of Phylloxera. A half-dozen or more well-connected growers is a very large number in an agricultural community. One of the points that have been repeatedly raised by various industry figures is that “McLaren Vale seems to be the only region concerned about these rules changes.” I submit that this is because we have never stopped having a Phylloxera Committee despite being stymied in almost every effort to interact with the body required by law to maintain us and engage with us.

While I was the Chair of MVGWTA, our Board nominated winegrower Rae Noon to the PGIBSA Board. It was through Rae that we discovered that the rules were changed in 2011 without you consulting levy payers or even our Phylloxera Committee. Rae’s husband Drew (an all around boy scout), has long experience with Phylloxera from his days working for the government of Victoria building up their wine industry. Drew has assiduously and politely campaigned to maintain the rules and even strengthen them to the frequent embarrassment of the PGIBSA.

Over the past few months, Rae has reportedly become aware that the PGIBSA has held “gatherings” (not “meetings”) to which Rae was not invited to discuss these matters. Reportedly, this culminated in the PGIBSA obtaining advice from the Crown Solicitor that Rae held a conflict of interest (because of Drew’s passionate, informed and effective campaigning) to the effect that the PGIBSA could exclude Rae from certain portions of official business. It does not seem to matter to the PGIBSA or the Crown Solicitor or the Minister (she has reportedly been made aware of this) that Rae was accurately representing the views of growers other than Drew in McLaren Vale to the PGIBSA and communicating (also known as “engaging”) with them. In short, she did her job while you did not.

The delicious irony in this is that, if we follow the PGIBSA and Crown Solicitor’s views on conflict of interest, Minister Gago herself will be conflicted as her husband Peter Gago is the head winemaker for the Penfolds brand at Treasury Wine Estates! Unless of course, “conflict of interest” only really means “disagrees with the PGIBSA.” Theoretically (in this scenario), Treasury’s self-interested tacit and / or overt support for rule changes of 2011 would not be a conflict in this instance as they don’t disagree with the PGIBSA! Perhaps the most materially conflicted party in this bowl of spaghetti is PGIBSA Chairman Robin Nettlebeck, head of the largest vine nursery in South Australia at Yalumba. Has the PGIBSA sought “conflict of interest” advice from the Crown Solicitor about him and his interests? If not, why not?

I will leave specific discussion of the five “low” risks and ten “high” risks to Drew Noon and others to capably address in their submissions.

However, suffice it to say that at least four of the ten “high or “very high” probabilities, if applied to the culture and management of PGIBSA, combine to make the PGIBSA itself the very epicenter of risk of Phylloxera infestation in South Australia on a probabilistic basis.

This current process is a perfect example of how a series of risks can combine into a contagion if they are overly centralized in an organization with a fundamentally conflicted Chair (in my humble opinion anyhow) and an executive with poor communication skills.

What is apparent here is everything required for a sensible person to arrive at the conclusion that this entire process is being stage-managed by those who stand to benefit from Phylloxera entering South Australia.

That the Minister seems to take advice from BioSecurity SA ahead of the Phylloxera Board is an indication of the low regard held by Government for the management of PGIBSA. This is a shameful state of affairs for a body with a 100+ year history of serving all grape growers in South Australia and not just those with the time and money to push their own agenda.

My advice is that the Minister should heed the precautionary principle by not lowering, relaxing or “harmonising” the rules for many years, order that PGIBSA re-establish the Regional Phylloxera Committees and for the PGIBSA engage with them in person on a regular basis, raise quarantine standards and engage in the long hard work of getting the rest of the Australian grape industry “harmonised” around a gold-plated standard rather than lowering our standards to appease those who would profit from doing so.

The first step is to reconstitute the Board with an independent Chair and the employment of a CEO capable of the missionary work of engaging with levy payers in an effective fashion.

Failing that, I fear we will be re-naming the PGIBSA the Phylloxera Grape Infestation Board of South Australia.

With Regards,

Dudley Brown

Inkwell

PGIBSA Vineyard # 02452

cc: Minister Gail Gago via email

To; The Phylloxera and Grape Industry Board of South Australia

15 October 2012
Attention: Alan Nankivell, CEO
46 Nelson St
Stepney SA 5069
admin@phylloxera.com.au

Submission from;
Drew Noon
Noon Winery
P.O. Box 88
Rifle Range Road,
McLaren Vale SA 5171
Ph/fax; 08 8323 8290
Dear Board Members,
Re: Submission to the Phylloxera Board regarding risk assessment and the Plant Quarantine Standard
Declaration of interest:
I am a small, independent grape grower and wine maker with old vines planted on their own roots, in McLaren Vale. My livelihood depends on the quality these old vines are able to produce. I do not have the need or desire to move grapes or machinery into or out of South Australia. I have no financial interest in any vine nurseries or the sale of plant material.
Introduction:
South Australia has something special to protect in having phylloxera free vineyards. The Phylloxera Board’s role is to keep South Australia phylloxera free to maintain this advantage. The path that the Board is taking to align South Australia’s Plant Quarantine Standard to the National Phylloxera Management Protocol (as currently written) places South Australia at increased risk of a phylloxera outbreak resulting from the freer movement of grapes, machinery and plant material into South Australia this allows, from regions we’ve never accepted them before. This includes, alarmingly, regions alongside known phylloxera infested zones.
I call on the Phylloxera Board to take a precautionary approach to relaxing the laws which have kept South Australia phylloxera free for so long. If we allow phylloxera in through lack of precautions, it’s very likely there’ll be no going back (eradication is rarely successful). One mistake is forever.
We don’t have to relax our standards. The National Protocol sets out guidelines for the management of phylloxera but recognises that states determine their own regulations. There is no compulsion for South Australia to adopt the National Protocol as our laws.
The Phylloxera Board is promoting “Farm Gate Security” to growers and we all need to practice this but I call on the Phylloxera Board to get on the front foot, at the border and maintain our first line of defence. We expect you to protect our state from phylloxera, we can protect our farm. The Board appears to be walking away from this responsibility, advising growers to provide their own defences when the pest arrives at their door. The battle is lost by then. This approach is not acceptable. This is not what levy payers expect from the Phylloxera Board.

Where is the risk in adopting the National Protocol?
The Phylloxera Board is negligent in its duty in accepting the National Phylloxera Protocol (as currently written) as the basis for our laws. It incurs a heightened and unacceptable level of risk to South Australia in doing so.
There are two principal new risks incurred to South Australia from adopting the National Protocol.

They are:
1. The risk posed by the upgrade survey.
The survey is critical because it is used to establish area freedom. If an area is considered free of phylloxera by the survey, then it can move risk vectors to other phylloxera free areas (such as South Australia) under the National Protocols (as currently written). The survey needs to be of a rolled gold standard. The problem is the current survey is not good enough. This has been demonstrated in practice in the Yarra Valley (see the Yarra Valley Case Study page 16 & 17 available on the Phylloxera Board website). Subsequent research by DPI Victoria Biosciences Research Division has found both a DNA probe and emergence traps more effective at early detection than the root survey. Even when repeated twice over a three year period as required by the Protocol, there is significant risk that the survey would miss a low level infestation.
The Phylloxera Board has considered the risk posed by the survey in its recent Risk Assessment September 2012 and rated it as LOW. Where is the science behind this rating? What are the confidence levels provided by the survey of detecting a low level infestation? This assessment is subjective and not based on fact. There is no information offered to support this rating.
The reality is we do not have any survey method that is good enough to establish phylloxera freedom and until such time as we have one available, we should not accept claims made by new areas on the basis of the current survey. This represents a big new risk to South Australia.
2. The risk posed by proximity to an infested area (a PIZ):
This is another risk of concern to growers which the Board has considered in its recent Risk Assessment September 2012 and rated as LOW. This defies common sense and invites doubt about the credibility of the Risk Assessment.
One only has to look at where all the outbreaks have occurred in the past 15 years to illustrate that regions closer to the infested areas are at greater risk. This is why the PIZ boundaries keep getting extended. To deny there is a significant proximity risk causes a loss of confidence in the Board and the risk assessment process. Where is the science to support the assessment that the risk relating to proximity is Low?
Other new risks flow from these two.

That is:

Because there is a significant risk the survey would miss a low level infestation, the risk posed by allowing grapes, machinery and plant material in from new regions declared phylloxera free on the basis of the survey is too high.
Because proximity to an infested area brings higher risk of an outbreak, we should not allow risk vectors into South Australia from areas alongside infested zones, which you have already sanctioned and is currently allowed.

What we want:
I call on the Phylloxera Board and the regulators to stop making changes to South Australia’s Plant Quarantine Standard to align with the National Phylloxera Protocol (as it is currently written). I support the Board’s proposal as stated in the “Risk Assessment September 2012” document that the Plant Quarantine Standards “remain as they are now proclaimed as at July 2012.”, provided that South Australia adopts a precautionary principle in relation to new PEZs declared since 2000, treating them as Phylloxera Risk Zones in light of the significant risks they pose as discussed above. I want the Phylloxera Board to promote this change to PIRSA and the regulators so that this upgrade to SA’s Plant Quarantine Standards will be made without delay.
I want the Board to get on the front line in protecting South Australian vineyards from phylloxera rather than bowing to pressure from other states interests including nurseries who want access to our market and some big wine companies who want to be able to move grapes into South Australia to centralised processing wineries for financial gain. The Board’s mission is to protect South Australian vineyards from phylloxera and I want you out there doing just that. Not promoting “farm gate security”. That is principally my responsibility. Yours is to make policies to prevent phylloxera getting into South Australia by protecting our borders. Leaving our Plant Quarantine Standards as they are and classifying new PEZs as PRZs would provide strong evidence you are doing that.
Growers I talk to are not silly. They have absolutely no appetite for increased risk from phylloxera and they expect the Phylloxera Board to ensure adequate protections are in place. In particular to protect them from the risk posed by Victoria and the movement of grapes and other risk vectors. If they knew that you were sanctioning a relaxation of the protections that have been in place, they would be furious.
At our McLaren Vale Phylloxera Board stakeholder meeting, one senior grower who sat in front of me during the presentation and didn’t say much, turned around at the end and asked incredulously “who’s paying these guys?”, another during the presentation called out “it sounds like you’re asking us to practice unsafe sex”. Growers (your stakeholders) are not happy with relaxing the standards. They see no benefit to them, only to the other states and big wine companies.
These changes are being made at a time when phylloxera is on the move in Victoria more than at any time since introduction of the pest in the late 1800s.
I suggest that 50 years from the last outbreak would be a good time to begin discussing relaxing the quarantine standards with South Australia’s grape growers and I’m not sure you’d get any sympathy then!
This is certainly NOT the time to be dropping our border protections. Rather, growers would like you to be strengthening them.
Comments on the Phylloxera Boards 10 risks and proposed actions:
I endorse the McLaren Vale Grape Wine and Tourism Associations comments in their submission in relation to these risks and proposed actions.
In terms of priority, these risks and actions should be dealt with after dealing with the treatment of all new PEZs as PRZs. This change in the definition of a PEZ in our Plant Quarantine Standard should be made urgently and completed before January 2013 and the next grape harvest.
Changes required to the National Phylloxera Management Protocol:
The Protocol needs changing to protect all members of the industry nationally.
The survey as defined in the Protocol can only establish a low risk area rather than a pest free area. We have no survey methodology at present rigorous or robust enough to establish pest freedom. The difficulty of early detection of phylloxera and the need for better methods is well recognised by research scientists. Hoffman and Herbert (2006) in their paper titled “Finalising and validating a diagnostic tool for the early detection of phylloxera” state that “There is an urgent need to develop a phylloxera-specific detection system…” so that phylloxera detection would not rely on “problems with visual detection…” Until we have such a proven system for early detection, we should not be relying on the root survey as outlined in the National Protocol. It isn’t proven or supported by science and the risks and costs of a mistake are too high.
Therefore, I call on the Phylloxera Board of South Australia to argue this case at the national level, through the National Vine Biosecurity Committee, for a change to the National Protocol to require treatments and precautions to apply to the movement of risk vectors from PEZs declared since 2000 to other PEZs, the same as are applied from PRZ to PEZ, until such time as we have a survey proven by science to be robust enough to establish pest freedom and an on-going survey programme in place to ensure this status is maintained.
History shows that phylloxera has avoided containment all around the world. Australia is in a unique position to maintain its old vine heritage and advantage over other wine producing countries. Our strict quarantine standards have defied the odds so far. Giving up this advantage by taking unnecessary and unquantified new risks would be a tragedy.
The Phylloxera Board and the State Government have a duty of care to apply a precautionary principle in relation to phylloxera risk. Please take this precautionary approach to the national forum to protect South Australia and all regions from a potentially tragic mistake and in the meantime please increase rather than decreasing our own level of protection in South Australia’s Plant Quarantine Standard.
With many thanks,
Drew Noon.

An Open Letter to the 10th Anniversary of the Len Evans Tutorial

I understand from a few of you that there is to be a conversation at your 10^th Anniversary of the Len Evans Tutorials about whether wine shows are “relevant or irrelevant.” It’s a good bit of fun to discuss but perhaps not the right question. Were the question “what is the purpose of wine shows and are Australian wine shows fit for that purpose?” the answers would be revealing.

As a blogger about the formal and informal rules of the wine industry, this topic is of great interest. Len Evans “was equally scathing about complacency and mediocrity, which he saw as the greatest danger to the Australian wine industry” according to your website. So should you be. Writer’s warning – if any of the following causes you instant agita, keep reading, it will get worse.

The standard answer for why wine shows exist is “to improve the breed.” It is a noble and worthy goal.

However, by this purpose, one would need to conclude that they are not fit for purpose for many reasons and, are potentially “the greatest danger to the Australian wine industry.” As a bottom up viewer of the world and not a wine show judge or organizer, a simple exercise in history leads us to the reasons they are not fit for purpose and even a great danger.

Agricultural fairs are a fact of life in many countries going back millennia. In the beginning it was about who had the best carrots or apples or spuds. Everyone chose their own produce, arguments ensued, beer flowed and revelry broke out in an important rite of community celebration.

Somewhere along the line someone finally decided that there needed to be some standards and / or categories and a bit of independence of judging.

In Australia, this took shape in the form of the Royal Agricultural Societies and their shows. These in turn took an interest in wine shows early on and today still put on the biggest shows. The word is that, on a combined basis, the capital city wine shows now generate about $1 million dollars per year in net income for these bodies.

Culturally, these bodies are relics with little connection to the grape and wine industry beyond their shows. As everyone knows, crud accumulates gradually and usually because we forget to ask the purpose of the thing accumulating it. Eventually, you have to choose between cleaning up or throwing out the cruddy thing. This choice seems closer to the question to be answered than that of relevance.

The following are a few observations that may spark some thought in this discussion. Some are a bit flip and some quite serious. But, most need answering if wine shows are to have leadership relevance.

1) Judging 18-month-old wine with 20-30 year ageing potential is like judging a kiddy beauty pageant to me. Just weird. And, a bit wrong. Many great wines are (at least) unapproachable at 18 months of age.

While the 18-month timeline is suited to getting most wines to market, how many great wines are looking their best at that age? Many less age-worthy wines would look much better. While there are truly great palates that can discern these prepubescent differences – the often maligned Robert Parker and Bordeaux come to mind – they are very few in number. Also, how many wines that can be considered truly great even enter wine shows?

As Peter Drucker famously observed, “businesses are not defined by their customers but their non-customers.” Wine shows need to ponder this. The depressing result is that wine shows are frequently assessing what I call the “cream of the middle” as their data set.

I remember a tasting in California of first and second growth 1995 Bordeaux when they were released. I’m pretty good on this subject but I didn’t much care for the wines. I bought them anyhow and I’m glad I did. But on release they simply were not approachable in any way. At the tasting, I also bought some Australian Cab / Shiraz for about $15 p/b that simply ran rings around these wines on that day. But, I trusted my merchant who had 17 years of en primeur experience.

The point is – do all judges really have this level of experience? Do I or should I trust their assessment the way I trusted my merchant? Would Lafitte or Cheval Blanc ever enter a show? And, can we ever be objective, descriptive or even honest about beauty? Can anyone confront real beauty or greatness without being changed by it? (if you answered no to all of these questions or have read either The Symposium or the Heisenberg Principle of Uncertainty, read on…)

2) Wine shows discourage risk taking both for winemaker / entrants and (worse), young judges (only speak when spoken to) due to the hierarchical and paternal nature of the judging system. For less experienced judges, wine shows are an exercise in conformity if they ever want to be invited to judge again. For winemaker entrants, getting good scores is important.

The prized “objectivity” of shows is illusory. Because shows must try to be objective and compare like for like, wines that are not alike must suffer exclusion from serious consideration. To extend the beauty pageant analogy, the more we try to be objective about beauty, the sooner we end up with standard issue busty blonds (Shiraz and Chardonnay) or 16 year-old models that look like 12 year-old boys (Pinot, cool climate whatever).

This logically reductive inability to acknowledge or reward difference in wine making or appreciation is culturally disastrous for the future of the industry.

3) Wine shows have been proven to have no statistical validity for consistent assessment by a number of serious academics. The research shows that there are a few tasters / judges that are very consistent but they are a very small minority of judges. But, as with driving, 90% of respondents would, no doubt, rate themselves “above average.” This makes entrants, from a scientific point of view, little more than lottery ticket buyers.

4) I have many boxes of wine that, if I were a judge who followed “the rules,” would knock it out for “faults” (see #1 above). However, if were a critic, I would score these same wines between 94 and 100 points. For example, Lynch Bages in particular, has a house style of bret that never seems to develop beyond a hint but its there. And, I love it. How can it be that it would be knocked off the bench at a show but praised by judges over dinner that evening? This simply makes no sense and has no credibility.

5) 20 point scoring? It’s like defending rods, chains, leagues and fathoms in a metric world. “Adjusting” 20 point scoring by multiplying by 5 and adjusting? Python-esque. Discuss amongst yourselves.

6) Fault picking obsession – trained monkeys and dogs can pick faults (seriously) and often with greater precision than humans. Picking great wines seems a bit harder in a committee. Lots of un-faulty wine is seriously un-great. Lots of faulty wine is seriously great. I understand that fault elimination was a core part of the “improving the breed” mission. But with hundreds of Uni degree’d winemakers now working as cellar hands, I’m pretty sure we’ve largely mostly addressed the original problem that was being solved with fault reduction and education.

Funny story – as I enjoy a bit of mischief, I once submitted three wines in the same class. Two were components. The third was an equal blend of the first two. The first two got “faulty” comments for the same fault. The third was well received. Does the associative principle of addition have “quantum effects” in wine chemistry? Or, does wine judging have ‘quantum effects”? What would Heisenberg say?

Werner Heisenberg

7) There are so many shows, the media could care less about wine shows beyond their advertising potential with retailers. The only ones really interested are the folks that entered, the judge / critic community and lazy retailers. We’re talking to ourselves (mostly). We need to instead find ways to engage consumers in our passion and share it.

8) Having said all this, the harried punter at Dan’s (or insert any other low service chain here) could do worse than pick the bottle with gold stickers. It will likely be free of faults and be reasonable table wine.

Medal stickers have more to do with cheap retailers with no sales staff to educate customers than good wine. Big stores love those shiny things. Less work for them and it shifts product.

But, what happens when that brand doesn’t win any stickers the next year and has ramped up production based on the big order from Dan’s in the prior year? Poooft!

Should they just enter more shows until they win some more stickers? Lower their price and beg? Not good.

This process is definitely not brand or category building….but Dan’s brand wins. As producer’s, we all lose for playing Dan’s brand game instead of our own game. And, ultimately, the consumer’s interest dies the slow death of boredom. Is there any correlation to exports declining by $1.2 billion and our import share increasing rapidly? Or, do we dismiss these facts by citing the strong Aussie dollar and learn nothing?

Multiply this scenario by hundreds of times, year after year. Each time it happens, the Australian brand gets another chink in it. What responsibility do shows have for this? Are the producers just “mugs?” that got what was coming to them?

9) State shows – the best wine at the Royal Adelaide Show was Jacob’s Creek Reserve Shiraz a couple years back. Really? Who entered?

Either that wasn’t a real commercial wine or the judges should have been barred from judging again or the show system simply breeds out the recognition of greatness. (Writer’s note – this was the year Dr. Jay Miller was the international judge….) Take your pick – there are no other serious possibilities.

By the way, the winner was a perfectly good wine. Just not a great wine – how many of you stocked up on it based on this prize? What a sad day for exceptional Australian wine and winemakers. The Royal Adelaide Show pocketed about $100k. What did they put back?

10) The truly big winners in shows are not the consumers or the entrants but the judges especially the winemaker judges who get to spend several days and nights with influential retail buyers and critics. Most winemakers would give nearly anything to get five minutes with these folks. It is inevitable that an advantage accrues to these winemaker judges through familiarity. This is also human nature. Life isn’t fair, it’s ok. But, this does make one wonder about “purpose” a bit more. Whose purpose? For what purpose?

While not usually paid, judges are usually treated like royalty during shows. The dinners are extraordinary. The wines served with meals are eye popping (and sometimes “faulty”). Does the entrant know how much of their entry fee goes to pay for this hospitality? Is this lack of transparency a desirable trait for shows?

While no one in the judging system seems to have a problem with any of this, its just not what I care to underwrite financially as an entrant. As a judge or as a consumer, do you care? And, if not, why not?

So, we’re left with the real question of “purpose.” What is it? The breed improvement purpose seems to have lead to more uniformity and less diversity. As any parent or boss knows, its pretty hard to get positive results through discouragement.

A head judge giving “lower alcohol” or “cool climate only” instructions to judges (but not the entrants in advance) is not only applying their subjective filter to a process meant to be objective but is also dunning the entrants for their money. In high school we called people like this “seriously un-cool.” Now we call them Head Judge.

Should shows’ purpose be about regional expression or benchmarked against another region country or style? For example, comparing Canberra vs. Barossa in Shiraz is pointless – both can be excellent – why does one have to be “better?”

Shouldn’t diversity of expression and recognition be the goal of judging and wine education? Isn’t the joy of wine also the joy of discovery and difference? Why aren’t shows about spreading that joy and love? What are they afraid of?

I honestly don’t think anyone has bad intentions in judging or holding shows. It is just that the reward system(s) of shows suffer from ACIS (anal cranial inversion syndrome). And as any student of business or psychology knows, behavior follows compensation. Whose compensation? The wine show owners? The judges? The show lottery winners who get stickers?

The one great advantage shows have is this: anyone familiar with B.F. Skinner’s work, or anyone who plays the pokies or plays golf, irregular reward is an amazing motivator. The sheer randomness of the results of shows keeps the entrants interested for quite a while. But, not forever.

B.F. Skinner with the Skinner Box

The result is that mediocre wines without faults or futures tend to do well, many great wines don’t enter or win, entrants and young judges who should be pushing boundaries are intimidated into conformity (that conformity expresses itself in medals and wines that we export with shiny stickers), diversity and greatness suffer and the world thinks that we not only like this stuff, that we’re proud of it.

I read a lot of blogs and tweets by people who judge – they never seem to mention Jacobs Creek Reserve Shiraz or any other show winners in what they are drinking. Why is that?

I think it is very unclear what shows are meant to achieve in a nation of 2000+ wineries in 61 regions with maybe a hundred varieties, plus blends, aside from making it easy for Dan’s to buy and sell wine. I appreciate what shows were set up to do and think we are way past where that is what shows are about anymore. The communal anarchy and joy of the medieval fair has been subsumed by a system that deters innovation and encourages conformity.

There should far more experimentation with formats, classes, criteria, judges’ cultural relationships (e.g. Junior vs. Head judge rules), locations, crowd sourcing, transparent compensation vs. lavish hospitality (it worked in tennis), etc. In short, the cure for ACIS is to invert the balance of order and anarchy, objectivity and subjectivity, in shows. Given the nature of the condition, a mere colonic won’t get the job done.

Embrace the market for ideas other than those of your elders or forefathers by doing things like explicitly telling the entrants your implicit or subjective / implicit criteria or passion (and your hospitality budget) in advance and see who shows up. The results would be extraordinary.

Does any wine show have classes like “Beautiful” or “Elegant” or “Soulful” or “Destined for Greatness (but not there just yet)” or anything that emotionally or even intellectually connects with the consumer?

Maybe this approach would improve the breed.

Maybe we could win back, even surprise and delight, the only person that matters in the industry – the worldwide consumer.

And, perchance, make Len proud.

An Open Letter to Mark McKenzie

An Open Letter to Mark McKenzie

After reading Mark McKenzie’s article in the July issue of Grapegrower & Winemaker, I feel compelled to point out there are many more variables to consider in the grape and wine supply business than Mark mentions to arrive at his simplistic and divisive conclusions and that these variables are changing at “real time” speed.

Mark’s basic point in his article is that “warm” inland growing regions in Australia have “done their bit” by removing 10,000 hectares of vines in the past few years and that “cool” and “temperate” climate regions have not, thereby imperiling a potentially balanced wine grape market in Australia. In a national market of 170,000 hectares of vines this is less than a 6% correction to a 30% problem. On this point alone, we can probably agree.

Mark McKenzie

Warm vs. Cool

The most important thing to understand is the “warm climate” vs. “cool climate” argument Mark assumes. This distinction is important, as it is a reflection of the top-down thinking promulgated by the various industry bodies and large wine companies that hatched the government subsidized vine planting disaster 15 years ago. Despite this experience, Mark still has faith that top-down analysis will always lead to the “right” solution. While the Wine Restructuring Action Agenda (WRAA) was both necessary and helpful, it has almost nothing to do with how thousands of industry growers and wine companies actually make decisions.

The reality is that the only person in the wine grape and wine industry that matters is the consumer of wine grapes or wine. Unsurprisingly, these customers do a cost vs. quality analysis that translates into “value” every time they purchase grapes or wine. This is the foundation of how a marketplace works – from the bottom up. These customers may also consider variety, brand, regional branding, etc. but almost none value “climate” in their purchasing calculus per se.

That Mark has not moved on from the “cool” or “temperate” vs. “warm” climate labels used by the wine industry to keep growers regionally divided for many years is a detriment to wine growers everywhere in Australia. And, not “cool.”

As the former CEO of the Wine Grape Growers of Australia (WGGA) and current CEO of the Murray Valley Winegrowers as well as a current board member of the WGGA, Mark should move on to arguments and actions that provide real benefit to growers.

Grapes and Grades

The next layer of logic that Mark seems to not understand enough is that the consumers of wine grapes – wine companies – generally do so on a grading system ranging from “A” (highest quality and price) down to “E” (lowest quality and price). As with consumers of wine, they understand high to low value. The spread of prices for wine grapes is the widest in Australian agriculture; from $15,000 down to $150 per tonne. In wine, from $1000 to $1 per bottle.

In the Australian market, grades A, B, D and E are roughly in balance. Where there is a surplus is at the C level. As it stands, nearly every one of the 61 wine regions in Australia can grow C grade fruit while only a handful can consistently deliver A and B grades. While the D and E grades can be grown anywhere, they are principally, but not exclusively, grown in the “warm” inland areas that Mark is concerned about.

Where the trouble comes in is that the C fruit tier gets bought up at near D and E prices as a result of the quantity available thereby pressuring the D and E growers’ prices. Growers of supposedly unprofitable C grade production are the only ones that can decide how to go forward with their businesses. If they choose to lose money, isn’t this their right?

Here are the only three alternatives I can see for Mark:

1) find new markets for his growers’ fruit

2) encourage his growers to reduce production of D and E fruit by improving quality, yield reduction, exiting grape production or switching crops

3) find a game changer.

The Yanks

The USA had a similar grape oversupply problem in the early 2000’s. The result was that acreage equivalent almost half of total current Australian grape production was removed in a two-year period voluntarily, principally in the “warm inland” part of California. The acreage was largely replanted to profitable almond and pistachio production.

Ten years on and the “warm inland” grape growers who remained are receiving historic highs for their D and E grade fruit as California has tipped into wine grape under-supply. The bulk exports of similar grade wine from Australia are helping make up this under-supply and putting a creaky floor under Australian D and E fruit prices today – perhaps more so than Australian vine removals.

Here is the interesting part that many are not aware of – the US market for wine has historically increased by around 3% per year (2% from population growth and 1% from growing consumer interest in wine). Further, the US only supplies about half of its domestic market for wine with the rest filled in by imports. The fast growing part of the market for wine in the US (and the UK) is at $15 per bottle and up (C grade and higher). Australia conversely exports about 80% of its production and imports less than 20% of its consumption.

Taken together, this means a few things:

1)   The California wine industry is realistically contemplating a twenty to thirty year grape shortage, perhaps permanent, for its needs because:

a) the easy to plant vineyard land is gone, perhaps forever, to other crops

b) the harder to plant land is more expensive, variable and close to people who don’t necessarily want vines near them,

c) the regulatory framework has become more difficult to create large vineyards suitable for D and E grade production in desirable areas

2)   That over the next twenty or so years, the US wine industry could well shrink to half to two-thirds of its current domestic market share

3)   That there is a huge opportunity for Australia to more than correct any “imbalance” it has in this one market alone over the coming years particularly at the C, D and E grades as these are highly substitutable for US grapes of similar quality.

Despite the foregoing opportunity, as anyone who has visited and done the sums knows, South Africa, Chile and Argentina have large structural cost advantages over Australian growers at the C, D and E quality levels with or without a strong Australian dollar. There are many reasons to believe that Australian export market growth at these levels may never return.

Perhaps the wine companies that Mark accuses of going “very quiet” and maintaining a “stony silence” on continuing vineyard removals have an awareness of these international market conditions and have already made the hard decisions to pursue more profitable market segments above $15 per bottle. Treasury, for one, has done so by exiting the cask market altogether.

Why isn’t Mark sharing any of this information instead of chastising growers from other “climates” for not fitting into his dated worldview? Doesn’t he know this? Can he adjust his thinking to new facts? Or is he just waiting for a boomerang that ain’t coming back? Why isn’t he on a plane to the US trying to line up long term bulk wine supply agreements for his growers?

Water and Tax

Mark also ignores the effect of two massive subsidies that many lower grade growers and wine makers receive from the Australian government through water and tax policy. Growers in the the inland D and E growers are beneficiaries of nearly free irrigation water from the Murray Darling system and winemakers of the ad valorem tax regime.

Most countries tax alcohol products by the volume of alcohol a product contains. Most of the Australian alcohol tax regime – (liquor, etc) – is the same while wine is instead taxed by value. As such, the wine industry beneficiaries in this regime are the growers, producers and consumers of inexpensive wine who pay little tax and the losers are those who grow, produce and consume high value wine that contains the same amount of alcohol as the cheap end of the market.

With nearly free water and a generous tax regime for inexpensive wine, is it any wonder that the D and E growers have not responded with the same speed as their US brethren did 10 years ago?

And, is it any wonder that the alcohol of choice for problem drinkers is wine?

Outback rubbish pile

There are signs that this ground is shifting quickly as well. Treasury and Pernod Ricard have both publicly called for the volumetric taxation of wine. And, the Murray Darling Basin Plan has yet to be sorted. Any change to either of these regimes would be particularly bad for Mark’s growers.

The social and ecological costs of these regimes are enormous. Once cash strapped governments realize they are getting done over for money, things can change very quickly. Just since I started writing this entry, the government has started down this path.

Yanked vs. Not Yanked

As for Mark’s contention that cool climate vine removals have been insufficient in “cool and temperate” regions, this isn’t exactly the whole story either. Ten years ago, it was common to see two, three and even four cordons of fruit grown in high value regions like the Barossa or McLaren Vale. Today, even two cordons are becoming the exception in these regions. Growers now understand that they are competing on quality, have changed their practices and have often chosen to reduce their productive capacity to remain viable.

High tonnage vines

These growers may not have reduced their vineyard area per se but they have significantly reduced their productive capacity. In McLaren Vale, regional yields are down by 30-50% from just eight years ago. This is equivalent to 2000 – 3000 hectares of “removals” in this one region alone. But these hectares aren’t counted in Mark’s analysis of who, and who has not, “done their bit.” Not to mention, these growers sometimes pay up to 100x of what most inland growers pay for mains irrigation water as well.

Growers in McLaren Vale were famously told by Warren Randall (now the owner of Seppeltsfield and huge vineyard holdings) and others to ”You have to change. Grow A or B grades, get out, or go bust” in a public meeting as early as 2005 – well before the Wine Restructuring Agenda was undertaken. This message wasn’t enthusiastically received but it took real leadership and made a real impact. This is how real change happens – in person.

Single cordon (dormant) vine

Other evidence of how quickly the wine grape market is changing are reports from local growers who have not had contracts for their grapes for years having sold their entire crop for the 2013 vintage before bud burst.

The most glaring omission from Mark’s argument for more vine removals is that all hectares of vines are not created equal. Any rational analysis would conclude that removing one hectare of less expensive vineyard that bears a crop of 15-25 tonnes of less valuable fruit is more desirable in every dimension than a more expensive hectare bearing 5-8 tonnes of more expensive fruit to achieve reductions in oversupply.

Are you with me Dr. Gu?

Finally, just yesterday I read results of Dr. Sanliang Gu’s research on “vine forcing” at CSU Fresno, in the warm inland heart of California, showing that wine grape crops in warm areas can be delayed two or three months, dramatically improving quality without sacrificing significant yield.

Interestingly, the Chairman of Dr. Gu’s department is Jim Kennedy, formerly of the Australian Wine Research Institute. Dr. Gu’s research has been underway for a number of years and Mark should be seriously engaged with any “game changer” that would benefit the growers who pay his wages.

Dr. Sanliang Gu

The Net

Whatever angle you look at it – understanding consumers, growers, fruit grades, market segmentation, regulatory regimes, risk factors, international markets, increased demand for top grade fruit or new research and technology, Mark seems to be blithely unaware of the quickly changing reality, opportunities and threats of a worldwide marketplace.

Responsible industry leadership involves understanding how markets work, identifying market opportunities for growth, communicating realistic expectations to stakeholders as well as identifying alternative strategies for the growers who are being bled dry by oversupply.

Playing the blame game and buying time is far worse for growers than the hard word that viability may well never return – just ask the profitable nut tree growers in California if they regret the hard choices they made ten years ago.

The WRAA was very clear about the scope, structure and nature of the oversupply issue but only the marketplace will sort out the winners and losers, one load of grapes at a time.

My advice? Go see Dr. Gu Mark. And, maybe line up some contracts for bulk wine while you’re there.

Dudley Brown

Wine Grower

The Wine Rules – The 55% Solution

What are you drinking? Exactly…?

The word “solution” has two very different meanings. The first, “the state of being solved” and the second, “a mixture of two or more different substances” can be mathematically represented in the wine industry as “Mixture = Problem Solved.”

Varieties and Labels

Under the rules of wine-making in Australia, any bottle labeled as a single variety (e.g. Cabernet, Shiraz, Chardonnay) must contain at least 85% of that variety and need not disclose what the other 15% (or less) is. If there is more than one variety named on the bottle, then they need to: in sum make up at least 85% of the wine, be listed in descending order of their proportions and be in greater proportion than any variety not named. On the other hand, a winemaker can choose to label a wine as Grenache / Shiraz even if it contains only 1% Shiraz. On the surface, these seem like reasonable rules.

My understanding of the purpose of these rules is that they should assure the consumer that what is on the label is what is in the bottle. In other words, the rules intend to provide integrity, transparency and authenticity to the consumer.

But, do the rules do enough?

Varieties and Blending

As the winemaker of Inkwell, we regularly run blending trials of different barrels and varieties. This involves lots of sample bottles, wine glasses, graduated beakers and pipettes that measure in millilitres. We make up 100 ml blends because the math on percentages is easy. We start with glasses containing a 100% pure sample, a 95/5, a 90/10, an 85/15 blend and so forth to explore the possibilities.

Then, we identify the most promising ones and start to work in 1% increments from there. The crazy bit is the huge flavor differences that those 1% additions and subtractions can make. The point here is that 15% are a very large number when it comes to blending.

Vintages and Blending

The first blending trick I learned was to blend up to 15% of the same variety and region but from a more recent vintage of the predominant variety of the blend. We always try this out on the blending bench and the wine almost always taste better. While we have never chosen to bottle two vintages together, it is a common practice. It is also helpful in evening out the problem of bigger and smaller vintages over time for many winemakers.

From a consumer’s point of view, when the 85% rule for varieties are combined with the 85% rules for vintage and region, things can get positively, umm, strange.

The Problem

The problem is, to quote Max Allen: “a wine labeled 2008 Barossa Shiraz could theoretically contain 15 per cent 2009 Barossa Shiraz, 15 per cent 2008 Coonawarra Shiraz and 15 per cent 2008 Barossa Cabernet and still be within the letter of the law – because, look, it is 85 per cent 2008, it is 85 per cent Barossa and it is 85 per cent shiraz – even if only 55 per cent of the wine is shiraz grown in the Barossa in the 2008 vintage….”

How many times have you ever seen that on a label?

While Max’s theorem is a terrific solution for a winemaker who wants to solve a problem like improving a weak wine or balancing out their vintage volumes or stretching a small amount of excellent wine into a real money spinner, doesn’t this 55% solution create a different problem for you, the consumer?

While it isn’t against the rules and not disclosed, it isn’t a problem for the winemaker’s appearance of integrity, authenticity or transparency. But, when you pay $30, $50 or $80 for a bottle of wine with a definitive variety, region and vintage declared on the label and discover that while it is 85% true for each of these variables but only 55% true in combination, isn’t it a problem for you?

While none of these individual rules is a significant problem on their own, the aggregate problem looms quite large. As a someone who sometimes pays a great deal of money for a bottle of wine, the application of the rules seem to invert the principles of integrity, transparency and authenticity entirely. As a consumer, I have no way of knowing how to differentiate between winemakers with the highest standards from those with the lowest because of the rules.

I am not against blending in any way. As a wine drinker, I want the best possible wine to drink. While it may seem axiomatic to recognize that those whose standards are not quite up to the mark of what the consumer expects use the well-intentioned rules as a cover, this is why societies have rules – to punish outliers and make them conform to accepted norms of behavior. But, are these norms enough to provide you with the assurance you seek when spending your hard-earned money?

Are these norms enough to assure the rest of the world that Brand Australia is a great wine country and not just a pretty good wine country?

The New Rule

Instead of all of these rules and problems for winemakers, is there was a solution for the consumer?

My proposal is for a label to plainly state what is in the bottle by vintage, variety and region of origin (author’s confession – I have failed this test once myself, failing to note a 4% Primitivo addition to our 2010 Shiraz).

It seems a fair trade – the consumer who pays the winemaker’s salary obtains the winemaker’s full disclosure and winemakers would be thus “freed” from the (old) rules. Those with authenticity, integrity and transparency would be rewarded and those with lesser traits will have to lift their game. In theory, everyone should benefit by letting the wine rule.

But, some of those “Southeastern Australia” wines might need some long labels… or, not.

Next up, regions.

The Wine Rules “2.1″ Alcohol – A “two-fer” for Australian wine?

A few seemingly random, but relevant, threads have been weaving around each other in my mind the past few days. Let me explain.

Exports

Australian wine has suffered horribly in most export markets for the past few years for two principal reasons – the high rate of currency exchange and a perception that Australian wines are somehow “not up to the mark.”

Critics – The Problem?

The “not up to the mark” comment is the result of two principal factors: the dominance of low-cost and / or critter labels on overseas grocery store shelves that reinforce the perception of Australian wines as “cheap” on one hand and the messy aftermath of the “Parker effect” on the other.

When US-based wine critic Robert Parker started handing out huge scores on some Australian wines (many with relatively high alcohol content) in the late 1990’s, a high-end export frenzy resulted. In short, it was all “too much, too soon” for the market and often with wines that didn’t meet the best standard for high-priced wine, age-ability.

These wines were, rightly or wrongly, also often derided as “high alcohol fruit bombs” by much of the world’s wine cognoscenti. I remember the famous US winemaker and boffin, Randall Grahm, saying somewhere that Australian wines tasted like they were from “nowhere” because of our “lack of limestone.” That such fact free silliness is even printed is evidence of how little Australian wine is understood in overseas, and conversely, how poorly we have educated the world about our unique (and often limestone rich – Coonawarra and McLaren Vale come to mind here), vineyard geologies.

One specialist retailer who carries Inkwell in the USA told me that he spent 15 years building the Australian category to $7 million per year in sales to see it crash to $2 million almost overnight. Mind you, a lot of wineries, distributors, and retailers made good money during the ascent due to Parker’s scores but, never-mind. It just wasn’t sustainable without decades of patient education. And, the only way to prove a wine is “age-able” and worth a significant intrinsic premium is to age it for a few decades. This same retailer now sees the category growing slowly again because Australian wines are increasingly diverse and wine makers are (now) taking the time to educate the market. This is a good thing.

Critics – The Solution?

When UK-based Rhone expert Jonathon Livingstone-Learmonth visited McLaren Vale (http://www.drinkrhone.com/mclaren_vale.html) a few years ago, he very gently told us publicly that our wine makers and wines lacked “precision.” By this he meant that too many wine makers he had met with couldn’t recall all-important nuances or details of vineyards that in turn contribute to more accurate wine-making and blending – (sugar levels at picking (e.g. potential alcohol), handling details, acid additions, percentages of fruit used from different vineyards, etc) that he expected in well-crafted wine.

JLL also noted a lack of delineation in the “terroir” of many wines resulting from injudicious blending of various vineyards. He did not mean that all wine should be of single vineyard provenance but that our wines, while many were very good, often simply lacked a focus or story. He also encouraged a freer, less statist outlook, with growers ready to try whole bunch fermentation, for example, or do more in the vineyard and less in the cellar. Finally, he suggested that wine schools should not be the only originator of thought and action.

Analog

None of this is to suggest that Australia resume a position of colonial cringe and submission to the whims of overseas opinion makers. Quite the opposite.

The most notable new world example, Napa Valley, only truly came into its own in the mid to late 1980’s when they cast off their aspiration to beat Bordeaux with Bordeaux style blends and started making uniquely precise Napa styled wines focused on Cabernet, often exclusively. Australian wine needs to find new ways to achieve the same effect.

Other “Problems”

The past few years have seen the rise of an “anti-alcohol” lobby – principally pushed forward as a health issue that takes many forms. The Winemakers Federation of Australia has spent enormous amounts of time and money defending the status quo of alcohol related rules and taxes, both in lobbying and communicating about their efforts. In fact, the WFA sees this lobby’s rise as one of the greatest strategic threats to the wine industry.

In parallel, the WFA treats the 1.5% acceptable variance in labeling of wine as a matter of treaty equity between wine-producing countries and not as a health issue. As a result, they have inadvertently left the wine industry’s flank wide open to attack from the “health” lobby for this very reason.

On another front, the UK is well on its way to adopting Australian styled “alcohol unit” labeling along with an US styled pregnancy warning on all wine bottles. As we have discussed in the prior post on alcohol, “units” are calculated on the stated percentage of alcohol, not the actual percentage in the wine. How can this lack of precision promote “healthy” habits of alcohol consumption and education?

So, what sort of rope could these diverse threads weave themselves into aside from the hangin’ kind?

A Modest Proposal

Australia could break from the pack of all wine-producing countries and treaties and lead the world in one facet of “precision” by labeling alcohol within the tightest reasonable variance (maybe .3% alc/vol?).

Accurate alcohol labeling would not be a panacea for a high currency or critter labels. It would not make wine makers make better wine overnight (although it might get them thinking about other ways to be more “precise” in their wine-making. This would be no bad thing either).

But, accurate labeling could establish Australia as the standard setter for integrity and transparency in the entire world of alcoholic grape juice at a swift stroke. This could be a tipping point where doing the right thing and marketing interests coincide for Brand Australia in a trust mark that could lead to a cascade of positive consumer interest and custom from overseas.

And, the health lobby would have lost one soapbox to stand on.

What do you think?