10/04/2007 - 22:00

Wine sector a success story for value adding

10/04/2007 - 22:00


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Like many other Western Australians, I enjoy wines from the state. Admittedly, my loyalty to WA-only products has waned over the years as I have learned to appreciate that our winemakers have some worthy competition elsewhere around the globe.

Wine sector a success story for value adding

Like many other Western Australians, I enjoy wines from the state. Admittedly, my loyalty to WA-only products has waned over the years as I have learned to appreciate that our winemakers have some worthy competition elsewhere around the globe.

But I still go out of my way to buy wine from here whenever possible. My taste buds, parochial or not, though, are not the reason behind our cover story on the wine industry and its latest vintage.

In my view, wine is the only sector where we compete globally for the attention of retail consumers.

Brands like Leeuwin Estate, Cape Mentelle, Howard Park and Vasse Felix to name a few compete in the restaurants and specialist shopping aisles in a market that is as sophisticated as any other. This is something that no other industry from WA has achieved at this level, across so many producers.

There are a few distinct retail brands outside wine that have succeeded in penetrating outside WA. Peters & Brownes Connoisseur icecream is one that comes to mind - it used to be popular in Japan. Pearl producer Kailis has gained some exposure in Europe. ISP iiNet has become a national internet player up against the goliaths like Telstra.

But these are rare individual case studies rather than being representative of industry success.

Another reason I like to follow the wine industry is an extension of the thinking above – it is a value-added success story.

Unlike most of our resources – from minerals to wool – the wine sector mainly produces the end product. Western Australians grow the grapes (though not always), process and bottle the wine and take it to market. In the meantime, they invest heavily in machinery (specialist stuff, regrettably, is mostly imported), winemaking expertise and all sorts of ancillary activity such as paying design consultants to develop their brands.

Again, show me a WA industry that has a similar value-adding success story.

A further fascination with wine is the people involved in this sector. There are thousands of people who have devoted time, energy and money to build wine businesses.

While I admit that wine has a certain romance, enticing enough for many to risk their life’s savings, the sector is not much different from many others when it is stripped back to its basics. The small cottage producers compete with sophisticated multinational behemoths. Survival is not based on any one strategy.

I am not certain of the secret behind the distinction of wine from so many other businesses.

Is it the specific geographic qualities that differentiate it or the perception of a collective attitude to industry development?

One final area of fascination to me is wine’s reliance on climate. In this respect, it is like any other agribusiness – with El Ninos and longer-term changes in climactic conditions watched closely as producers try to predict the impact of the weather on their business.

Wine to me is like the canary in the coal mine, because so many of its business people began life as practitioners in other disciplines. They were often successful in other fields and have become involved in wine as both a passion and a challenge, sometimes as a project for semi-retirement.


Union falling apart

I was stunned to spend a bit of time last week trawling the Australian Bureau of Statistics data on union involvement.

The WA workforce led the way in divesting itself of union membership, with numbers down 10 per cent in the 12 months ending August. This was even more dire when you consider the workforce actually grew by about 4.5 per cent during the same period.

The trend in WA is pretty strong – and being followed across the nation. Unions are on the way out, having represented almost one-third of the workforce in the early 1990s; they are struggling hold one-sixth of it today.

From a business point of view, the interest in this trend is pretty obvious. Many in business hold no love for unions, which have often acted irresponsibly.

But there is also genuine interest in the perceived consumer trend. Union status may be historically valid in this nation, but the concept has lost the interest of today’s worker. Like many things that I have discussed in the past, such as free university education, it is possible that unions have served their purpose.

By collectively fighting exploitation, workers now have strong laws to protect their rights. In this day and age of individualism, perhaps most people feel comfortable to run their own race. Even the new IR laws seem to have failed to intimidate the new worker, though I’d like to see this proposition tested in the next set of data and the next federal election.

Perhaps, also, the booming economy and shortage of workers makes people feel more confident. This argument is a bit thin, though, when you consider the fall in union membership has been taking place over decades.

The economy aside, unions also have themselves to blame. They have truly failed to adapt to the needs of their potential members. You need only have to see their public face, the likes of Kevin Reynolds and Joe McDonald, to see they are hardly projecting an image most other modern organisations would seek.

Today’s worker is put off by all this – and it’s showing clearly in the numbers.


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