Resurgent sector faces challenges

The climate and Australian consumers are helping produce a rosier forecast for Western Australia’s winemakers as they cash in on reduced national supply and a growing taste for styles made here.

The winemakers enjoying the better times, though, are in many cases vastly different from those who dominated five years ago, as increasing corporatisation changes the dynamics of sector.

A group of bigger players, owned interstate or overseas, now represents a major proportion of the state’s wine production capacity.

In many cases they have recognised the potential of the state, especially the Margaret River region, and sought to gain a footprint here as the local quality and styles have become more sought after in the marketplace.

And, while they may reap the rewards of an improvement in the sector, they may also be better placed to deal with the growing shadow being cast over the sector by producers from New Zealand.

All the factors that are helping WA producers gather momentum after some hard years are also working in the favour of winemakers across the Tasman, where production is surging.

“They [NZ] have had a huge vintage this year,” said Wine Shack Pty Ltd chief executive Mike Calneggia, who believes the New Zealanders are four or five years behind Australia in the trajectory of their plantings.

“New Zealand sauvignon blanc is going to be an issue for Margaret River semillon sauvignon blancs.”

McWilliam’s Wines chief executive George Wahby said NZ wines were showing considerable growth, reflecting changing tastes.

“Consumers like a fresher, crisper style of wines,” Mr Wahby said.

“They are coming out of WA and New Zealand.”

Ferngrove chief executive Anthony Wilkes has similar views.

“There is still a lot of opportunity for WA wines given the styles we make, but there is a lot of competition,” Mr Wilkes said.

All of these players have participated in the changes that have taken place in the WA industry during the past year or two – though at very different levels.

Mr Calneggia, a former director of Evans & Tate Wines some years ago, recently bought most of the wine brands – Bunker Bay, Rosabrook and Alexandra Bridge – from Australian Wine Holdings Ltd, a company he ran and which remains a listed WA company, albeit it with a much diminished wine interest and a new focus on resources.

Mr Wahby’s McWilliam’s has bought up the key wine brand of Evans & Tate, which collapsed last year after struggling to survive the industry downturn.

Mr Wilkes’ Ferngrove was a bidder in the process but failed to beat McWilliam’s. He said he still saw Margaret River as a logical place for Ferngrove to have a presence.

Evans & Tate had been the listed powerhouse of the WA industry, growing to be a top 10 producer after buying major assets around the country.

It has now been dismembered, opening the door to McWilliam’s to become the state’s second biggest wine producer through the ownership of flagship brands such as Margaret River Classic and Gnangara Shiraz.

McWilliam’s WA wine will be made under contract by South Australian contract manufacturer Boar’s Rock, which bought the 11,000-tonne capacity Evans & Tate winery in Margaret River.

Evans & Tate’s minor brands remain in the listed shell, which will be renamed ETW Ltd.

But this recent change is nothing compared with new dominance of US-based Constellation Wines which has emerged as the true giant of the local industry, producing at least 17,000t through the purchase Canadian-based Vincor, which has delivered it the Goundrey, Houghton, Amberley and Brookland Valley brands.

Another big player that has been on the scene for some time is Foster’s, which has the Devil’s Lair portfolio, including the big-selling brand, Fifth Leg.

The proposed sale of the wine assets of corporate failure Palandri Ltd (see story page 16) to Chinese-controlled Global Wine Holdings would leave Jeff Burch as the only locally-based proprietor among the state’s top five own-brand producers.

Mr Burch owns Howard Park Wines, which has wineries in Denmark and Margaret River, and makes its own big-selling brand, Madfish.

The Howard Park proprietor believes WA wine is well positioned, especially given smaller national vintages and the latest good vintage here, but bemoans the fact that the wine sector faces the same skills shortages and issues with the rising Australian dollar that the minerals sector does – without the price rises that go with it.

In terms of labour, Mr Burch said Rio Tinto’s decision to offer fly-in, fly-out services from Busselton had exacerbated the region’s staffing problems. He  lost his plant engineer as soon as the flights started.

“Its like putting a vacuum cleaner in there,” Mr Burch said.

“A lot of young people who will work on vineyards are exactly the type of people who will work in mines, they are prime candidates.”

Lionel Samson-owned Plantagenet Wines head Ian Mayo says the same thing of the Great Southern region, with Ravensthorpe mining operations competing with the wine sector for staff.