The Wine Rules according to Warren Randall
by Dudley Brown
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.
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?