A Vintage Year for Bank Managers

Perhaps the last thing the Australian wine industry needed right now was good news. The good news of a good vintage, I mean. But right across the board, 1990 looks superb. Yields and quality are both high and wineries are working overtime to ensure that every last drop gets processed on cue. But that, you see, is the bad news. Most of the large and medium-sized wineries in Australia still have stocks left in their tanks from the preceding vintage. Some are struggling to make sufficient room for the new crop. So who wins in the good year if the wine industry itself doesn’t? That’s simple. You do.

Thanks to a number of contributing factors of which this bountiful season is just one, wine will become cheaper in Australia, reversing the trend of the last few years since the Federal Government broke its word and imposed a sales tax on wine…and then doubled it. Take away the vintage you first thought of and prices would still have risen, thanks to an overseas market that showed potential, a slight but significant return to red wine drinking and interest rates that look like forcing an alarming number of small winemakers to the wall.

In my home state of Victoria, word is around that fifteen or so wineries are for sale or are otherwise looking for a significant injection of capital. I expect that number to rise even higher by the end of the year. Much as I hate to say it, many such ventures began around a dream rather than round a business plan, and winemaking chews up money almost as fast as racing twelve-metre yachts. There is a saying in California that the only millionaire winemakers in the Napa Valley are the ex-multi-millionaires. Making wine isn’t all beer and skittles.

We’re facing an over-supply of the very grapes we’d beg, steal, borrow and cheat for only a few years ago. Massive new plantings all over Australia of premium varieties such as chardonnay and cabernet sauvignon have just produced their first crops. Bulk chardonnay is for sale again – a situation that only twelve months ago was inconceiveable to many. Thousands of cases of Australian wine remain unsold in American warehouses and retail outlets, many awaiting a return voyage.

The 1990 vintage has seen a dramatic decline in wine grape prices, which in many cases is in the order of 50. The new prices still offer the grower a good deal, and give some idea as to how out of hand prices had become. Cheaper prices this year should assist the companies in putting out quality cheaper bottled and cask wine.

From the consumer’s point of view, it must have been depressing to watch wine prices climb ever upwards over the last four years, but I can assure you that the five to seven dollar bracket is about to become extremely competitive again. Quality will return at a price. There is, for example, a considerable proportion of chardonnay in the latest Houghton White Burgundy, making a new and better style of wine that is totally unrecognisable in the glass from the White Burgundy Australians have grown to love. But the new wine is better and its price on the shelves is more than accessible.

Our various Governments are now doing very nicely out of the industry Mr Hawke said he would never tax. Nearly than one dollar in every five that you pay for wine is syphoned from the top. Each state has its own licence fee, which is actually taxed on top of the federal 20 sales tax. What’s more, wine companies are pressured to pay the sales tax on the 21st of the month following the sale, when the reality is that most of them will not be paid for that same wine for around three months.

Not only are we making more than ever, but Australians are now beginning to drink less wine. You don’t need an economics degree to realise that unless we get our export act together, our surplus will continue to increase. In the short term that would be outstanding news for the domestic wine drinker, for wine could easily end up cheaper than milk. At the same time, the long-term viability of the wine industry as a whole would pall under a dark and gloomy shadow.

Export is the answer, but at the rate some Australian companies are burning their export bridges, we could soon be test-marketing Venus. The really serious Australian wine exporters of Hardy’s, Lindemans now part of the Penfolds mega-empire, Brown Brothers, Seppelt, Rosemount and a few others have developed a solid reputation based around quality, but too many wines are sent off without marketing direction or support, continuity of supply or rationale. Sales of such are based around the fluctuating fortunes of what remains of the Australian dollar.

Incidentally, one of the more successful Australian labels in America is the cringingly-named ‘Koala Ridge’, whose insipid label illustrating a carefully posed but appallingly drawn koala perched athwart a gum tree bough, shows that its originator, Mark Swann, is a realistic businessman unlikely ever to over-estimate the intelligence of his market.

Fortunately the key players in the export game remain optimistic, but I’d bet good money they’d be happier still if the amateurs would finally stay home and let them get on with the serous job of raising the international profile of Australian wine.

The main reason Australians are drinking less wine is that they are beginning to share my point of view that most cask wines are more a source of trouble than pleasure, tending to conflict with, rather than complementing a meal. Quality of four and five litre casks has slipped a lot over the last five years, although some of the two-litre packs around today are a handy inclusion in the fridge door.

As we mature and begin to discriminate our wine drinking habits on the basis of quality rather than sheer quantity, the cask buyer of the past is now choosing to drink from glass; buying less wine than before, but of a better quality. That’s the good news for the wine industry, for there is far more profit in value-added wine, such as wood-matured and bottled cabernet sauvignon or chardonnay. Wine casks are a grocery item, wine bottles a quality commodity. Some are even a luxury, but don’t let on to Mr Keating.

Bottled wine consumption is on the up, but as I have suggested, expect the price of bottled wine to fall and the quality of softpacks improve.

Another reason well known to the medical community why total wine consumption is declining is the influence of the new health lobby and neo-prohibitionist movement, who outrightly condemn the drinking of wine and all other alcoholic beverages as a dangerous, irresponsible, anti-social and subversive activity.

Wine is alcohol and alcohol is a drug. Therefore wine is a drug, discussed by the various pressure groups and the media in the same breath as narcotics and amphetamines, regardless of evidence coming to light that moderate and sensible wine consumption is of more benefit than none at all. Personally, I find that attitude about as realistic as ordering a thimbleful of crack to complement a Beef Wellington – but that’s the way it is.

In Europe the movement is referred to as ‘health fascism’. English wine commentator Robert Joseph describes those involved as “people who want to control all our lives and make us healthy for our own good. In the US the wine industry cannot advertise now and cannot speak. You in Australia have not got to that situation yet, but that American influence is coming and many industries, not only the wine industry, will be sorely tested”, he says.

The wine industry recognises that alcohol plays a sad role in the road toll, but studies have shown that the role of wine in road trauma is negligible. Wine represents a mere fraction of the threat imposed to the community by spirits and beer.

The medical profession appears to be evenly divided on these issues, but the loudest group is that which decries all drinking of alcohol, including wine, as harmful, which cannot be ignored as a contributing factor in Australia’s declining wine consumption. The point is, at least you have the choice. And if you enjoy wine, 1990 will be your year. Please login to post comment