Brian Croser on Wine War and Meta(for)

by Dudley Brown

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.

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

About these ads