Wine, War and Mixed Meta(for)
by Dudley Brown
“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?
When you leave your typewriter you leave your machine-gun and the rats come pouring through – Charles Bukowski
As the delightful Ian Sutton (then WFA boss) boasted to me upon my questioning of the economic viability of his planned National Wine Center (in the Adelaide Botanic Gardens, for chrissake): “I’m not here to consult the wine industry. I’m here to represent the wine industry!”
Thanks Whitey. Precisely. We need pigs not chickens (both make a contribution to breakfast but the pig is committed).
Nice to hear a bit of laughter in the trench! Now, over we go … (cue the piper)
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.
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
Great article. Unfortunately this is a problem most industries face – I work in transport and logistics, and its disappointing to see our supposedly great and innovative wine industry suffer from the same frustrations we have: the old guard seek to protect their interests and won’t make way for new ideas, new blood.
Thanks Rose! Get involved. Start blogging about them!
Cheers,
Dudley
[...] Submitted on 2013/01/18 at 5:53 pm [...]
Dear Dudley,
I am sorry I do not remember meeting you as described and for “turning on heel” and walking away. There are few topics I would more willingly engage in than the scientific understanding of terroir so the alternative must have been compelling or perhaps I was just distressed at losing the debate.
I put aside for the moment the substantial issues and accusations you have levelled as an escalation of the exchange.
Your petty and personal attacks have intensified in your response to my protest of January 18 about your original article.
Your ongoing schoolboy insults levelled at the appearance of the current CEO of Wine Australia and at Paul van de Lee as a “Croser animal” are unacceptable.
Most of the rest is on the public record although you do allude to contributions from unidentified “acquaintances of mine” and “private sources” to your download.
The public record says I had no involvement in the construction of the 2025 plan as it was started and completed in Perry Gunner’s and Stephen Shelmerdine’s tenures as presidents of the WFA. It was launched in June 2006 and my first term as president was completed in October 2003 and I didn’t return to the position until September 2007.
By the time I came back to the job it was just complete and it was too early to review it against reality.
The plan established a perfectly reasonable scenario of doubling plantings by 2025, which we now all know in reality happened by 2003.
To answer some of your other accusations, as Deputy Chancellor of the University of Adelaide with responsibilities for the total welfare of the institution, during my tenure I deliberately and correctly avoided championing any wine industry initiatives. After I retired from that position I did initiate Wine 2030 to help harness the considerable resources of that fine institution to the benefit of the industry.
On the tax issue the original 1993 Dawkins proposal was to instantly increase the sales tax on wine from 20% to 31%, which could have had dire consequences and we fought that back to a staged implementation to 26%. The large companies negotiated the vineyard depreciation offset.
In my second tenure as President the implementation of the GST and the implications for the wine industry were the preoccupation of the time. I happily stand by the outcome, which is the WET with exemptions for the small producers as it stands today.
The alternative was an excise, which you imply provides the best outcome for society and the wine industry.
The current excise rate for spirits applied to the wine industry would only benefit producers of bottles over $39/bottle, penalise those at a lower price and would double the price of a $9 bottle to $18. Once the wine industry is in the excise system then Treasury and the anti alcohol lobby would be advocating an equal excise on all alcohol regardless of source and Treasury is unlikely to reduce the spirits rate.
Besides the major cost of compliance and the lack of precedent for producer exemptions in the excise system there is the biannual indexation of the rate, which inexorably increases prices of excised products.
Having in mind I left wine industry politics completely in September 2009, I am not sure, nor can you be, of what excited plantings (bearing+non bearing) in Australia to go from 77,000 hectares in 1996 to 123,00 in 1999 and 174,000 in 2007. As I have said before it could not have happened without the commercial encouragement of the big producers who are the only possible purchasers, although accelerated depreciation and the tax minimisation industry played their parts. All of that was played out in private negotiations and commercial decision-making environments not in industry boardrooms.
Your escalation of the petty personal attacks in your last reply, mitigate against any further public contribution from me to any future issues you and “acquaintances” and “private sources” will undoubtedly raise.
I have to agree strongly with Brian Croser. Dudley, your revisionist history of what happened in the 1990′s is simplistic, lacking in perpective, selective and often simply wrong. This is coming from someone who lived the 90′s, in Canberra as an inside observer and then in Mudgee as someone doing those all-important nightime pumpovers that seem to be your punitive pre-requisite for anyone having an opinion on the subject.
Regarding post-2002, there are many hundreds of observors who have repeatedly stated that we, as an industry, need to focus on fine wine with Brian Croser probably its foremost advocate for at least three decades.
There is, and was, nothing new or heroic in this view – what would be heroic is if someone came up with an actual solution instead of taking an Alan Jones approach of hurling personal abuse and whingeing about anyone in a position of power.
Finally, I am not a stooge of Brian Croser, I have not spoken to him or any of the other leaders you referred to, for many years.
Tim Stevens
Huntington Estate
Mudgee
Thank you Tim. I appreciate your comments and have nothing but respect for you raising them. The revisionism is not mine – this is the point and the longer the carrying on goes, the more this will be apparent.
For your interest, you will find a feature from The Economist from 1998 online that is half admiring and half warning about oversupply, etc. Kym Anderson is one of the finest economics modellers alive in Australia who merely happens to study the wine industry. He also warned us in 1998. I have much older grower friends who provided warning to Brian and others to not let accelerated depreceation happen. As Liberal party stalwarts who knew Peter Costello well, they pleaded with him for years to end once he was in Treasury it but were told “the industry says it needs it’ as late as 2003. These are not people who cried big tears after 2002 but people who did the numbers many years before.
The point of the first post was for the need for massive generational change accompanied by skill set change in industry leadership. One of the best is Stephen Strachan (ex-WFA CEO) who is now Chair of the Victorian Association. He grew up on a farm, is smart as hell, has strong convictions and breathes this industry. He and i have maintained a very respectful and friendly dialogue in private despite frequently seeing through different ends of the telescope. If you want to lead, you have to be prepared to wear a few. Any long time reader of Drinkster can attest to me having had both both ends of the stick applied!
Brian’s statement ‘the public record says I had no involvement in the construction of the 2025 plan’ is not true. Len Evans, in a 2003 interview (held in the State Library of South Australia and quoted in my 2012 book, ‘The History of Australian Wine’) said this:
“Now, 2025 was very interesting. Brian Croser and I were in a hotel suite in 1995 and Croser was talking about will we get to a billion [dollars worth of export sales], yes or no, by 2000. At that time the indicators were not good. And I said, ‘Well, it doesn’t matter if we get to a billion or not. We’re going to get to 800, 850.’ He said, ‘The press will railroad us.’ I said, ‘I don’t care. That’s a huge advance. So it’s a billion a year later, or two years later, who cares? What we should really be thinking about is the future and what we should be looking at is what do we need to say’ – and I grabbed these things out of the air as I spoke; I mean, there was certainly no philosophical reason for doing it – I said, ‘Let’s say that we want to be in the top five or six [of the world’s wine-producing countries in] thirty years’ time. What would it take?’ And Croser said, ‘Well, very good. Let’s find out.’ So we spent some of the money of the Wine Foundation, of which I was Chairman then [to research the figures]. We said [in the plan based on that research] that by 2025, we had to do six or seven billion turnover, which put us in this category … “
Thank you Max. I was nearly about to quote this passage from your book but your source material is even more clear as to the veracity of Mr. Croser’s statement.
Sorry I got these R2 gremlins battered now. Here’s the link : http://drinkster.blogspot.com/2009/07/halliday-feels-chill-new-heat.html
Just to ensure the record is straight, I was in attendance at the birth of the idea sort of as described by Len, but as I have already stated, I played no part in the construction or delivery of the plan. QED. BJC.
Thank you Brian.
If you weren’t real I might have needed to make you up. You’re a gift for someone with a limited imagination.
Dudley
I’ve been trying very hard to not contribute to this, but as somebody who was around for most of it, and who saw the contribution that Brian Croser (and others) made to industry affairs, I can’t let you distort the record on all of this. Tax, WRAA, water policy and Strategy 2025 are all matters that warrant debate (and matters where you and I don’t agree), but your comments about Brian’s involvement in Strategy 2025 are wrong. I joined the Winemakers’ Federation in 1995. At that time the target of $1B in exports that Len mentions had been in circulation for a couple of years. I wasn’t around for the gestation of the 2025 concept, but I was for all of the research, all of the Committee meetings, all of the workshops and all of the industry presentations prior to its release. From memory it was about 18 months from beginning to end. During that period, Stephen Shelmerdene was President of WFA and Brian Croser was a Commissioner on the Industry Commission Inquiry into the wine industry. I’m not sure when his tenure with the IC finished, but I do know that he was not involved in any of the preparation (nor from memory, the execution) of Strategy 2025. If Brian had any involvement it would have been after release, and knowing Brian, to debate any shortfalls!
Stephen Strachan
Dear Readers,
In fairness to all concerned, Stephen and I coincidentally had a long scheduled lunch this Monday at Ding Hao on Gouger Street where no alcohol was consumed by either of us for restorative reasons. (Ding Hao was excellent quality / value, much recommended.) We discussed this blog for 5-10 minutes of that lunch. We have lunched once a year for 4 or 5 years now where we discuss many things in trust and confidence in each other. I know Stephen to be a capable and intelligent man of integrity despite the fact that we manage to find something new to disagree on each year. He has a lively mind and a civil disposition. More conversations like these are needed in the industry. After receiving this response yesterday, I rang Stephen and discussed the substance of what readers will find below. Surprising those you like and trust is never a great idea.
Cheers,
Dudley
Dear Stephen,
Thank you for your comments. I wasn’t there and you were so your contribution is an important one. I admire your defense of someone you describe as a friend and a mentor. There are not enough of these people in life and even less who will go to bat for them when they appear to be doing poorly in an exchange such as this one. In 1995 and 1996, you started out two to three reporting levels below the President of WFA. As such it is difficult to imagine that you had any insight into what was occurring between Board members of WFA at that time let alone what may or may not have been occurring between Board members and those not on the Board at that time such as Mr. Croser. This is not to refute your recollection at all but to add color to what you did not say in your response. If you do have insight into those intra and extra Board conversations, feel free to chip in. Otherwise, I will assume my statement is both true and reasonable.
I think Len Evans, Max Allen and now Mr. Croser can have have the last word that Strategy 2025 was the fruit of Evans and Croser alone (but together) in a hotel room in 1995. That they did none of the work on Strategy 2025 once the idea had been sold to WFA seems equally un-contestable from your comments and Croser’s. That the goals Evans and Croser discussed and established (not an inconsequential part of strategy development as all else has to fall in behind the established goal) were purely about the size of the Australian industry also remains uncontested. That this goal is utterly inconsistent with a national fine wine strategy also seems plain. I read somewhere yesterday that total US sales of California wine priced over $20 per bottle were on the quantum of $400-$500 million in 2013. (http://blogs.reuters.com/felix-salmon/2012/09/04/americas-minuscule-high-end-wine-market/) There is simply no way to contemplate a $4-$5 billion dollar Australian wine industry in 1995 without it being overwhelmingly dominated by exports of lower end wine. Just an observation.
The problematic part of this is what came after the release of Strategy 2025 in mid-1996. By late 1998, The Economist wrote a glowing article that you will likely remember (http://www.economist.com/node/177260) where a note of eerily prescient caution was offered ” Unfortunately wine drinkers are a restless lot and could grow tired of the “blockbuster” style of many Australian wines, some of which rely too much on the taste of oak from the casks in which they are put to mature (“lumberjack wines” in the local jargon) or too big and blowsy (“Dolly Parton wines”). There is also a danger of an increasing reliance on grapes from over-productive regions like Riverlands where, according to local legend, “you plant a nail and grow a crowbar”. Already there is a looming surplus of Chardonnay and the investors who have rushed to invest in new vineyards will catch a cold—as did their predecessors who plunged into other Australian booms.” (italics mine) As Mr. Croser was interviewed and quoted saying that “the Australian wine industry has virtually reinvented itself” in this article, it is reasonable to assume he is familiar with it. The article also says this: “…exports of Australian wine have increased 100 times in 20 years, reaching over A$850m ($540m) this year. This is well on target for the 2000 figure of A$1 billion envisaged in a discussion document called “Strategy 2025” that shocked the wine world two years ago.” I believe The Economist to be the finest general news magazine published in the English language and of the highest standard of reportage, commentary and integrity. I have subscribed to it for thirty years. If they get it wrong, they publish retractions and apologies as requested.
As Mr. Croser returned to WFA as its President sometime in 1997, he was speaking as the President of WFA when he made these comments to the Economist. As President of WFA, he would have been asked about Strategy 2025 in that interview as Strategy 2025 was a clearly impressive WFA document that “shocked the wine world” and of interest. It does not appear that he communicated anything to the effect that he did not approve of Strategy 2025 such as a letter to the editor disabusing The Economist of Strategy 2025′s primacy in industry thinking at that time. The comments regarding Strategy 2025 are glowing and he would have had no reason to not be proud of this kind of coverage.
Now, spinning back in time, Mr. Croser was awarded the NAB Agribusiness Leader of the Year for 1997 by the Monash University School of Business and Economics. You would agree this is heady stuff. Among other comments made publicly in presenting this award to Mr. Croser, the following was said: “As President of the Winemakers’ Federation of Australia (Inc) 1991-93 Brian led the industry’s rejection of proposed cuts to Federal Government research and development funding in 1991. In 1993 he resisted the Government’s budget announcement of an increase in Wholesale Sales tax of 55% (20% – 31%) after 65 days of intensive lobbying. In something of a heroic stand taken by Brian Croser on behalf of the winemakers and grapegrowers the tax was wound back to 20 % then stepped to 26% over the next three years, saving the Australian wine industry millions of dollars. Brian Croser is also a past President of the Australian Winemakers’ forum (which he founded in 1984) and the Australian Society of Viticulture and Oenology. Brian Croser is the Australian wine industry’s leading visionary, playing a leading role in the industry’s five and 30 year plans” (italics mine). (http://www.buseco.monash.edu.au/mgt/agribis/agrileader1997.html). I am assuming Mr. Croser accepted this award. I can find nothing on the public record where he rebutted or requested changes to any of the statements made about him in this presentation.
After Mr. Croser became president of WFA in 1997, Strategy 2025 was not modified, shelved, shredded, updated, reviewed or revised. Nada. Zip. Zilch. Nothing was changed. You, of all people, are in a position to refute the prior statement. Had it been changed, it would have been your job to do the leg work. As stated in my prior post, in 1999 Mr. Croser was still publicly spruiking the industry in terms described in Strategy 2025 and Strategy 2025 was still being spoken of highly. The public record is bereft of comments by Mr. Croser saying anything negative about it or the industry’s direction until after he sold Petaluma in 2001. Those are the facts of the public record.
Today, in Mr Croser’s remembrances of things past, he personally got the tax held down and the wine companies were responsible for the accelerated vineyard depreceation in 1993. When he was awarded a big award, in 1997, it was all his, the wine companies got no credit at all! First he said he had nothing to do with Strategy 2025, and then just very little after Max Allen said “not true” in public. But when accepting a big award, he was the “visionary”, playing a leading role in it. Later he seems to have done nothing as WFA President to diminish Strategy 2025′s importance or change its content.
Having read the foregoing, surely you can see how and why I have developed a different take on the history of Mr. Croser and the wine industry than the views presented to me by Mr. Croser in his responses over the past week.
At the very least, credulity has been aroused. If I wanted to write a blog about “taking down” Mr. Croser, I would have named it BrianCroserMustBeStopped.com or something similar. I did not. I’m not a terribly subtle person as you know. I barely knew who Brian Croser was until he started responding to a single blog post of mine in a provocative way one week ago.
I started a blog called The Wine Rules about that cultural space where human beings intersect with the fruit of vitis vinifera. Some call it the wine industry but I am concerned with a broader space than that as you may see from other posts. The name is a literary reference and tribute to The Cider House Rules by John Irving where the theme of written rules being different to the real rules in life for good and bad are explored in many ways. Mr. Croser’s emails to me have been utterly magical in capturing the essence of how the cider house rules play out in the wine industry. As I wrote yesterday, I might have needed to make him up had he not been so real, so utterly and, ultimately, banally human. I do not not think Mr. Croser to be all good or all bad, all nice or all mean, all knowing or stupid. I do not know the man. He has accomplished a great deal of which he should be proud. Why he attempted to impose a view of the world that only seems to exist between his ears on me, we can only guess. I bear no grudge or anger, just an abiding interest in a more complete and honest understanding of the world. I’m sure there is more to the events than I have been able to discover with google and a pc. Hopefully, we can share a drink one day. Mr. Croser is clearly a fascinating man with a story to tell.
On a different note, you did mention at lunch that you thought my comments about a certain person’s hair were probably not helpful and a bit adolescent. You also agreed it was funny in an adolescent fashion. I agree on all points made. The thing that worries me is the prospect of a cultural context where the Australian wine industry has lost its cheeky sense of humor and forgotten its irreverence e.g. how to take the piss with ourselves and the rest of the world, we will have lost something of immense value. In that spirit, I am offering to anyone who feels i offended them directly to buy them a beer or glass of wine at the Adelaide establishment of their choice.
Thank you for caring enough to write Stephen. There are quite a few that lack the courage you and Brian have in spades. We need more like you. I look forward to catching up near New Years next year.
Cheers,
Dudley
Luck vintage 2013 is about to start and we will all be far, far too busy for this…except for that Max Allen character. Bloody Journalists.