David Pike has emerged from the recent holiday period refreshed and enthusiastically
positive. He’s certainly not buying in to the gloomy forecast for the local wine industry.
AS fruit begins to ripen on vines around this great State it’s probably worth a moment’s reflection on what might be in store for the industry as we launch into a new year.
Simmering in the back of my mind over the festive break has been the gloomy forecast for the local wine industry presented by the Western Australian Wine Industry Association.
The industry body’s Christmas outburst, in which it expressed its concerns regarding the red wine glut, was, in my view, ill timed.
While I am not disagreeing that there is a surplus of red wine, as the wine industry’s representative body perhaps the WIA should have been a little more circumspect in the broadcasting of its opinions on this matter.
The association seems more concerned with the marketing of its so-called ‘Brand Western Australia’ than confronting the issues it was originally set up to address – tax, workers’ rights and the like.
Anyway, the WIA’s outburst would not have done ‘Brand Western Australia’ much of a favour.
Marketing is a very important tool when attempting to sell wine into a very crowded marketplace, but surely this is something that must be undertaken individually by producers.
Just how effective the mass introduction of ‘Brand Western Australia’ to markets in Asia or the US will prove to be remains to be answered.
Would the industry perhaps be better off appointing a manager for ‘Brand Western Australia” in emerging markets in much the same way the Australian Wine Bureau fostered the growth of wine in London during the late 1980s and early 1990s? It is my understanding that grants are available for such undertakings, meaning little or no financial impact on the local industry body and its budget.
Establishing export markets is understandably very important to producers exploring other options to sell their stocks. Once producers have had a taste of the action overseas, however, they should ensure they’re well prepared for the enormity of the task to sustain those new markets.
Brands such as Leeuwin, Howard Park and even smaller producers such as Frankland Estate and Galafrey have spent thousands of dollars establishing their brands in overseas markets. Those markets aren’t simply mail-order customers caught up in a marketing swirl. Many of the buyers overseas are expecting support when selling the product, as well as a quality product to work with.
Now to the question du jour – is there a wine glut here in WA? I doubt many producers are going to lay their cards on the table, but there are certainly some good poker players. According to the Australian Bureau of Statistics, wine production tripled in the period 1997-1998 to 2001-02 to 39.1 million litres, representing an increase of 207.6 per cent.
Red grapes now make up just over half those litres and, as pointed out by the industry, in the past four years there has been a 165 per cent increase in vines planted. Again, many of those vines have been red varieties.
The concerns of a glut have been around for at least the past five years, but what is important is that it is a world-wide issue and not just one faced by producers here in WA. The European Union has been offering subsidies to growers and producers for several year, helping them to restructure vineyards by converting less marketable grapes to more marketable grape varieties. Last year more than 67,971 hectares throughout Europe were subsidised.
The most alarming wake-up call was when Beaujolais producers in France made the decision to take 15 million bottles of 2002 vintage wine off the market. It affected producers at all levels.
Yet another indicator from the EU is the narrowing of the gap between what those in the ‘old world’ term quality wine versus table wine. According to a report released by ONIVINS, quality wines now make up 66.028 million hectolitres against table wine at 75.771 hectolitres.
And this gap is expected to close rapidly in coming years.
Given that high-end red wines in the US are struggling to sell – the reputable wines of Bordeaux are in the same boat – you would tend to assume that, either there is a glut of red grapes, or are consumers becoming more astute.
In WA, premium prices are still being commanded for good fruit, suggesting there is no glut of good wine but rather a surplus that’s being filtered down the ladder, invariably ending up in lower-end wines. But where are those lower-priced wines? Perhaps the cost of production here in WA has led to the purported excess of red wine.
As one winemaker suggested to me: “It is always difficult to tell if there is a surplus at the high end, as it will cascade down to a lower-priced product, and eventually it is the low end wine that is pushed out of final blends and makes up the glut.
“So maybe, overall, there is a surplus. Either way, it’s good for the consumer.”
As the 2004 vintage approaches the problem may become more apparent, but I doubt it.
I am led to believe that a number of producers have bought new tanks in the belief they will be able to offload any excess during the next year.
The myth here in WA that only the small producers with bad marketing plans or business plans experience these production problems is just that … a myth. The surplus of wine spreads across all level of producers.
The WIA must represent and support the industry and its members on all levels and on all the issues concerning its community.
The wine industry community in WA generates significant fiscal benefits to the State and many producers are very generous in their support of the association.
There seems to be concern among members I have spoken with that the industry has taken its finger off the pulse regarding the needs of its members and in the direction it is heading.
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