Spirit revives as wine returns to balance

The recent lousy summer might have spoiled a holiday or two, but the Western Australian wine industry was on tenterhooks for these important months as unseasonal rains and cool weather threatened the 2017 vintage.

As it turns out, the damage was minimal, especially for later-picking varieties that are the staple of key regions such as state’s premier region, Margaret River, and a relatively good vintage has been topped off with strong yields.

Ross Pamment, chief winemaker across all of Accolade Wine’s brands in WA, said the Swan Valley had been particularly badly hit by rain and flooding, especially as varieties there tended to be picked earlier.

But while volumes were down, especially for chenin blanc, which is Houghton Classic White’s key variety, there was silver lining.

“What we did bring in was sound and higher yielding,” Mr Pamment said.

The summer weather had threatened to rain on Margaret River’s big parade, namely its celebration of 50 years since the first commercial vineyard plantings by Tom Cullity at what became Vasse Felix.

Also threatening to mar the anniversary were changes to the federal government’s Wine Equalisation Tax, announced in the May 2016 budget. However, heavy lobbying efforts since the budget have: pushed the date for the introduction of cuts to the $500,000 rebate out to 2018; limited the reduction to $150,000 rather than $210,000; and introduced a new $100,000 component to allow for cellar door expenses.

WA producers cautiously welcomed the reprieve, but Wines of Western Australia CEO Larry Jorgensen said the benefits of the rebate could be limited by a $10 million cap placed on the scheme by the government, which was up to $5 million short of what could be expected from businesses seeking rebates.

Furthermore, Mr Jorgensen said there was an overly bureaucratic approach to managing the new cellar door element.

“It does introduce a layer of compliance and administration that is not flash,” Mr Jorgensen told Business News.

“We are still pushing back on that to some extent.”

Nevertheless, many in the sector think the darkest days are behind them, as export markets improve and the glut recedes.

Wine industry numbers show that, while China has become WA’s top export market, it has been volatile and unable to fully replace the lost revenue from other key markets of around a decade ago – the UK and US.

There are a number of Chinese sales initiatives driven by various WA wineries, including some big ones owned by billionaires from that nation.

Mr Jorgensen said a retail approach, including Perth and Chinese stores, linked to a consortium led by Watershed Premium Wines was a positive step, but China remained a challenge for most local producers.

Helpfully, he said, there had been some improvement in the US market, where many WA producers had experience and market knowledge was stronger.

Calneggia Family Vineyards owner Mike Calneggia, who also is also a director advisory at consultancy and specialist business broker Gaetjens Langley, said large amounts of vineyard removal during the past decade had brought the industry back to supply-and-demand equilibrium providing some incentive for acquisitions.

Mr Calneggia said recent asset sales were at prices that, at the very least, allowed some owners to exit the industry with a respectable return, especially where the lean times had discouraged generational continuity.

“Most growers can get out with a level of dignity,” he said.

Mr Calneggia’s family wine business is also playing at the fringes of the traditional model, an increasing trend as the industry faces disruption.

For instance, it has been making wine in Italy to sell in Australia, including a nero d’avola-shiraz blend made in Sicily, which it is selling through online specialist Naked Wines under the brand of family business’s winemaker, Brian Fletcher Wines.

There is a suggestion that lean times and the expense of getting a winery off the ground have led to many such disruptive strategies, both from established players and those wanting to make their own start.

Some of that is about their approach to market; in other cases it is tackling blends, varieties and styles that challenge traditional notions of local wine.

One winery named by others in the sector as a trendsetter is Andrew Hoadley’s Great Southern winery La Violetta, which appears to be heavily influenced by European wine styles outside the mainstream.

Also getting noticed are LAS Vino, by Nic Peterkin (son of Pierro founder Mike Peterkin), which has a Pirate Blend with three Portuguese varieties, and Dormilona by Josephine Perry, who takes a very rustic approach to developing her micro batches.

While this approach to winemaking is in a fashion familiar to many craft brewers, their influence on the wider market is hard to gauge, as consumer choices evolve slowly and big winemakers can take years to gear up to meet demand.

Mr Pamment said the Accolade group offered small-batch wines at its popular Houghton winery cellar door in the Swan Valley, but this was just one method of understanding the market. While the success of its own special editions and that of other boutique producers can be a guide to future winemaking, national group Accolade has considerable other resources to analyse market trends, such as major chain sales data, which are supplemented locally by independent retailers’ purchasing decisions.

Mr Pamment said the longer-term trend he was reacting to was expanding access to pinot gris and developing tempranillo stocks, the latter being particularly suited to the Swan Valley.

He said chardonnay was also experiencing a comeback, but remained resistant to the trend towards leaner styles preferring to retain richer flavours that the variety offered.