25/05/2021 - 14:00

Enduring rewards from rich local vintage

25/05/2021 - 14:00

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WA’s wine sector provides quality produce and a rich business tapestry for business reporters.

Vasse Felix was among Margaret River’s first wineries. Photo: Attila Csaszar

There are plenty of interesting sectors to cover for those who report on business in Western Australia, but it’s hard to trump the wine industry.

Of course, from my point of view, it is fortuitous that I enjoy a glass or two, and that WA has plenty of world-class producers.

At some stage, I became a fiercely one-eyed consumer of local wine, both from quality and economic points of view.

My memory doesn’t serve me well enough to easily recall the makeup of the WA sector’s top-five producers 30 or so years ago, but South Australian giant BRL Hardy was the number one here because it owned local major Houghton Wines, in the Swan Valley.

Other than that, I suspect it was a fair distance to second, as most of WA’s wine was held in family estates or small consortia of aficionados who had been inspired by the impact of the first wave of startups in the late 1960s and early 1970s, such as Vasse Felix, Cullen Wines, Cape Mentelle Vineyards and Leeuwin Estate around Margaret River, as well as some outliers like Goundrey Wines and Plantagenet Wines in the Great Southern.

BRL’s other Australian rival, Southcorp, was a late and much lower-level entrant to WA, although it did eventually swoop on Devil’s Lair in 1999, starting something of a consolidation here as the major players of national wine sought boutique brands that would appeal to a global audience.

The other big trend in the 1990s was the extraordinary growth in tax-effective investment in primary industry.

It started off in blue gum plantations but soon expanded into vineyards and, later, wine brands.

As a business reporter, this was a significant development, which preceded real interest by the big players and probably drew them to WA later because of grape volumes.

This provided some scale to the region, allowing producers such as Evans & Tate, Goundrey and Xanadu Wines to fund expansion cheaply as well as creating brand new players overnight; Ferngrove Vineyards, Watershed Premium Wines and Palandri come to mind.

By 2006, the earliest I can check from our Book of Lists, these trends had changed the local wine scene. Number one, toppling Houghton, was Evans & Tate, now run by its founding family’s second generation and listed on the ASX.

At the time it was expanding east via big acquisitions.

Ferngrove was third, Goundrey fourth and Palandri fifth.

North American beverage giant Constellation had taken over BRL Hardy by that stage and clearly it had an appetite for more; a trend that affected wine makers all over.

By 2011, Evans & Tate had been wound up by its bankers, and Houghton was back on top.

In fact, had we ranked producers by owner, Constellation would have been head and shoulders above the pack, given it also owned Goundrey in the top five as well as the number six, Amberley Estate.

Ferngove was, by then, second, while Watershed was eighth and Palandri, at number seven, had already succumbed to debt and was owned by the Chinese, rebadged as 3 Oceans Wine Company.

The real development in this pack was Fogarty Wine Group, a local consolidation play by technology entrepreneur Peter Fogarty.

Established in 2000, 11 years later it was already number five.

Fast forward to 2021 and I have mellowed on being parochial, preferring to sample regional difference.

A lot of the names above have disappeared or been re-engineered.

Fogarty is number one, by volume, followed by Houghton (now owned by national player Accolade Wines), Devil’s Lair (owned by another listed national player, Treasury Wine Estates) and then rounded off by two major local family players, Burch Family Wines and Calneggia Family Vineyards.

This list shows there’s success in being a regional player, although Fogarty has expanded interstate. Like each previous iteration, the next chapter is hard to read.

Temporary issues such as China import tariffs and COVID-19 labour shortages may cause longer term pain.

Personally, my money is on local entrepreneurs continuing to rise.

They say the way to create a small fortune is to start with a big one and go into the wine industry, but many locals have challenged that view.

The value in creating powerful brands has been proved not just in the wine industry but also by craft beer makers such as Little Creatures.

I’ll drink to that.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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