The big guns are still the hottest shots in town · 16 Peter Lehmann Wines 17 Littore Family Wines 18 Zilzie Wines 19 Berton Vineyards 20 Tyrrell's Vineyards 21 Garacama (Andrew Peace

22 The Australian & New Zealand Grapegrower & Winemaker www.winebiz.com.au April 2014 – Issue 603

The big guns are still the hottest shots in townGRAPEGROWER & Winemaker's review

of Australia’s Top 20 wineries shows the

big guns are still getting bigger and are

providing the sharp end of Australia’s

vital export industry.

On the back of which our legions of

boutique wineries producing some of the

world’s most outstanding product are

doing their best to enjoy the ride.

Business journalist Ed Merrison has

spoken to 19 of the Top 20. Unfortunately

one on that list declined to take part.

Merrison has provided some insightful

interviews as to what makes the big boys

tick and what they have in place for the

next era of the Australian wine industry.

In New Zealand high-profile wine

identity Bob Campbell MW has given a

cross section of the industry. As well as

naming the Top 5 Campbell has provided

interviews with a small, bigger and one of

the biggest operations there.

What this feature does show is that

Australia’s wine industry remains high

on the global agenda, not just in key

markets such as North America, the

UK and Asia, but also in more targeted

markets such as the Netherlands and

Scandinavia.

And more importantly, that the

decision makers of the Top 20 are

determined to ride out the current

downturn and make sure they stay there.

The statistical tables used in this

feature have been generated from the

2014 edition of The Australian & New

Zealand Wine Industry Directory, which

is now available for purchase.

Details can be found at www.winebiz.

com.au.

In next month’s issue we will take a

look at the nation’s boutique industry to

complete this profile of our marvellous

wine industry.

International wine writer Ed Merrison

this month presents his second Top

20 wine feature for Grapegrower &

Winemaker after speaking to each of the

industry’s major players.

# Top producers by revenue ($)

1 Treasury Wine Estates

2 Pernod Ricard Winemakers

3 Accolade Wines

4 Casella Wines

5 Australian Vintage

6 De Bortoli Wines

7 McWilliam's Wines Group

8 Warburn Estate

9 The Yalumba Wine Company

10 Brown Brothers Milawa Vineyard

11 Tahbilk Group

12 Kingston Estate Wines

13 Grant Burge Wines

14 Angove Family Winemakers

15 Qualia Wine Services

16 Peter Lehmann Wines

17 Littore Family Wines

18 Zilzie Wines

19 Berton Vineyards

20 Tyrrell's Vineyards

21 Garacama (Andrew Peace Wines)

22 Wingara Wine Group

23 Beelgara Estate Pty Ltd

24 Cumulus Wines Pty Ltd

25 Nugan Estate Pty Ltd

# Top producers by volume (litres)

1 Accolade

2 Treasury Wine Estates

3 Casella Wines Pty Ltd

4 Premium Wine Brands

5 Australian Vintage

6 Kingston Estate Wines Pty Ltd

7 De Bortoli Wines Pty Ltd

8 McWilliams Wines Group

9 Warburn Estate Pty Ltd

10 Qualia Wine Services

11 Zilzie Wines Pty Ltd

12 Garacama Pty Ltd

13 The Yalumba Wine Company

14 Littore Family Wines

15 Angove Family Winemakers

16 Wingara Wine Group Pty Ltd

17 Salena Estate Wines Pty Ltd

18 Brown Brothers Milawa Vineyard Pty Ltd

19 Berton Vineyards

20 Tahbilk Group

21 Grant Burge Wines Pty Ltd

22 Peter Lehmann Wines Ltd

23 Taylors Wines Pty Ltd

24 Beelgara Estate Pty Ltd

25 Nugan Estate Pty Ltd

Contents

Wine Australia .........................................6

Wine Grape Growers of Australia ..........23

Winemakers Federation of Australia ...... 24

Top 20 by revenue:

Treasury Wine Estates .......................... 25

Pernod Ricard .......................................26

Accolade Wines .................................... 27

Casella Wines .......................................29

Australian Vintage .................................30

De Bortoli Wines ................................... 31

McWilliam’s Wine Group .......................32

Warburn Estate .....................................33

The Yalumba Wine Company ................33

Brown Brothers .....................................34

The Tahbilk Group.................................35

Kingston Estate Wines ..........................35

Grant Burge Wines ...............................36

Angove Family Winemakers .................. 37

Qualia Wines Services ..........................38

Peter Lehmann Wines ...........................39

Littore Family Wines ..............................40

Zilzie Wines ...........................................40

Berton Vineyards ..................................42

Tyrell’s Vineyards ...................................43

April 2014 – Issue 603 www.winebiz.com.au The Australian & New Zealand Grapegrower & Winemaker 25

Treasury Wine EstatesIN 2013 this feature kicked off with

bullish words from then Treasury Wine

Estates chief executive David Dearie.

He said the global wine market was

the most positive it had been for 30 years

– and explained why TWE was primed

to cash in.

Fast forward one year and Dearie’s

gone, stepping down in September after

announcing what many would take to be

the defining moment of his management:

a $160m write down on its US inventory.

But company chief supply officer

Stuart McNab sees it differently.

Stuart McNab

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Those unhappy headlines don’t

disprove Dearie’s assertion the world’s

thirst for premium and luxury wine is

growing.

And the TWE team is “really looking

forward” to life under Michael Clarke,

the former Premier Foods boss who’s

stepped into Dearie’s shoes.

TWE reported a 38 per cent drop

in earnings before interest, tax and

adjustments for the value of vineyards

(EBITS) for the first half of 2013/14.

This came in at $45.8m from $73.4m

in the same period last year, with the

company blaming “increased investment

in marketing and distribution,

challenging conditions in Asia and a

number of factors in Australia”.

It sold 15.3 million cases worldwide,

down 7.5 per cent but translating to net

sales revenue of $812m, roughly in line

with the previous year.

McNab’s confidence for the year ahead

is based on the strength and breadth

of TWE’s brands and its inventory of

sought-after wines.

He points to the success of Penfolds,

whose 2008 Grange scored 100 points in

both Wine Spectator and Wine Advocate.

But perhaps more telling was the

performance of Rosemount, which

garnered 310 regional, national and

international awards over the year.

Product launches spanned the

portfolio. Penfolds added a 2012 Bin 9

Cabernet Sauvignon at $30 and a super-

premium 50-Year-Old Rare Tawny, while

Wolfgang Blass’s 50 years in the Barossa

were commemorated with a 2011 single-

vineyard Cabernet Sauvignon from

Greenock.

On the innovation side, TWE teamed

up with jewellery designer Samantha

Wills for the Yellowglen Peacock Lane

sparkling, while Pepperjack introduced

two new Barossa Shirazes to go with

specific cuts of steak.

The company, which has expanded

capacity of its Matua Marlborough winery

from 15,000 to 25,000 tonnes since buying

it outright in late 2012, has extended

an important long-term lease on the

predominantly Sauvignon Blanc-planted

Northbank vineyard in the region.

It’s also purchased two sites with a

combined 53 planted hectares in the

Upper Yarra for its Coldstream Hills

brand. Then got its “first toehold in

Tasmania” with the acquisition of the

White Hills vineyard in the Tamar

Valley. Those 83 hectares are planted to

Sauvignon Blanc and the key varieties of

Burgundy and Alsace.

McNab’s also excited about the

imminent launch of a new domestic

and export warehousing and logistics

network located in Adelaide.

Set up by TWE and fourth-party

logistics company Trebuchet, it’s close to

road, rail and shipping links, as well as

TWE’s production and storage facilities.

McNab sees it as a convenient, cost-

effective successor to the former Foster’s-

managed network and says it will benefit

others in the industry who’d like to get

involved.

On the subject of costs, McNab is

thankful the dollar has started to “head

in the right direction” but adds: “We

really have to see it down at 80c to 85c for

a while to see benefits in export markets.”

The UK and Ireland are still big

markets for TWE’s Australasian

offering, while Matua Sauvignon Blanc

is achieving 50 per cent year-on-year

growth in the States. Even so, the US is a

region where McNab wants to see “much

more promotion to highlight Australia’s

high quality and value for money” wines.

Canada is TWE’s next biggest market,

followed by Asia, where EBITS plunged

64 per cent in the first half, largely put

down to austerity measures in China.

McNab says Savour Australia was

effective in showcasing the quality and

range of Australia’s offering, though

perhaps hampered by a short gestation

time.

“I think it’s important to develop a

long-term, three- to five-year program for

invigorating the perception of Australian

wines in the international market and

driving up demand for our wines from

entry level right up the luxury chain,”

he says.

Pernod Ricard WinemakersLIKE the creek snaking through the

new logo of Australia’s biggest seller of

branded bottled wine, Pernod Ricard

Winemakers simply doesn’t stand still.

And this is what Australian managing

director Brett McKinnon loves most

about his company.

McKinnon counts Jacob’s Creek’s new

brand identity unveiled in January as the

defining moment of his year.

“It’s more contemporary and premium

and the biggest evolution we’ve had in 30

years,” he says.

It’s not just the logo that’s changed

for this company that sold 6.6 million

nine-litre cases worldwide in 2013. The

past 12 months have also seen the launch

of three wines to match Asian foods:

red Lamoon for Thai dishes, white Wah

for sushi and most recently red Wah,

designed with a chef who specialises in

Japanese red-meat dishes.

The low-alcohol Cool Harvest range

has expanded to take in Pinot Grigio,

while Fiano and Sangiovese have been

slotted into the Classic range. There’s

also been work on creating a new tier for

the separate St Hugo brand.

“Certainly we have it in the pipeline

to launch a couple of wines above the

current range,” he says. “If all goes well

we’ll bring those out later this year.”

McKinnon sees more scope for Jacob’s

Creek Twin Pickings, the light, fresh


whites with a sweet twist of Moscato

that hit shelves in August. They’ve been

“well received” in Australia and there’s a

chance they’ll soon be seen in the UK, US

and New Zealand.

The Kiwis were also the first to

experience pop-up project Blend by

Jacob’s Creek™. This invites members

of the public to chat to a winemaker and

create their own blend, taking home a

bottle or two when it’s done.

“With the technology, it’s as good as

anything you’d walk away with from a

bottling line,” says McKinnon.

People will also get the chance to vote

online for the best red and white blend,

with the winning wares available for

purchase from major retailers.

McKinnon says this and Twin Pickings

are examples of the company’s move to

more targeted promotions and products.

“If you look at where growth in wine is

globally, a lot of it comes from innovation.

We’re obviously trying to bring people

into the brand but we also have a big

existing customer base, so we want to

keep that balance.”

Jacob’s Creek has stuck to its guns

on pricing at the potential expense

of volume. “There’s almost no market

globally where we haven’t pushed up

prices in the past 12 to 18 months,” says

McKinnon.

The brand had a tough time of it in the

important UK market in the first half of

2013/14, while the US has also slipped

very slightly in the past year.

Canada and China have gone well in

recent times, while emerging markets

have given great encouragement.

“India, Russia and Poland are going

very strongly for us and that looks set to

continue,” he says.

McKinnon thinks Australia is showing

greater diversity and quality than ever, as

demonstrated by Savour Australia.

And he’d like to see another such

event – with a clear theme and purpose –

in 12 to 24 months’ time.

He’s also happy about the shape his

portfolio’s in.

“I keep being pleasantly surprised at

how strong our brand is and how well

received some of the things we do are by

consumers, the trade and the media.

“That gives us a lot more confidence to

deliver more innovation going forwards.”

Accolade WinesLIKE Mitch Johnson, Accolade had a

successful Ashes campaign.

But unlike Mitch and his Mo, the

company gained popularity in the UK,

where Hardys is currently the number

one wine brand.

“It was a great summer for us as we

commenced our sponsorship of Cricket

Australia with Hardys,” says Michael

East, general manager for Asia Pacific.

That deal coincided with the 160-

year anniversary of Hardys, a milestone

commemorated with special dinners in

Australia and the UK.

It was also accompanied by a

portfolio-wide refresh complete with

new, premium packaging for the brand

and the Australian launch of the William

Hardy range.

But East is keen to point out Accolade

isn’t putting all its energy into old names.

It’s in the process of releasing two new

premium brands.

The first is Eddystone Point from

Tasmania. Produced by the Bay of Fires

team and drawing fruit from the Derwent

Valley, East Coast and Coal River Valley,

Brett McKinnon


this range will comprise Pinot Noir, Pinot

Gris and Riesling.

It’s also reincarnating Starve Dog

Lane, with two lines under the label

coming out in 2014: the South Australian

Collection and the Regional Collection,

this latter sourced from Adelaide Hills

and Clare Valley. These will be followed

further down the track by a third, higher-

end tier including the fondly remembered

Shiraz Viognier.

East sees these as evidence of

Accolade’s “much stronger innovation

program” compared to last year. He’s also

confident the company can reinvigorate

the cask-format table wine market.

“It’s a tired area of the category that

requires innovation to make it more

relevant to consumers,” he says. “Pack

size and superior quality wine can

deliver this.”

The softening in the Australian dollar

also gives grounds for hope at Accolade,

which exports to 80 countries.

“Naturally we hope there will be

improvements in the exchange rate that

would support our export capability, but

we’re not relying on it,” says East.

As well as lifting Accolade’s earnings

profile, it could also even the playing

field with Australia’s key competitors.

“Chile’s agility in establishing free

trade agreements has given it additional

advantages in addition to its low cost of

labour,” he notes.

East says the UK market has performed

extremely well for Accolade Wines in the

past year, while continental Europe, New

Zealand, Asia and North America will

continue to be the next most important

regions in the coming 12 months.

Winning over the key retailer groups

in this last region represents the biggest

challenge for Australia, according to East.

“At present it’s extremely difficult to

gain new listings and distribution in

the States, limiting the opportunity to

promote to consumers. Brand Australia

doesn’t have the positive feeling it

enjoyed in the 1990s and 2000s. We have

to persevere and I’m sure the quality,

diversity and value Australian wine

offers to the consumer will ultimately

win through. “

On this point, East says Savour

Australia was a great success in getting

key influencers from the US, Asia and

Europe to look at Australia with fresh

eyes.

“The only way to follow it up is

by being persistent and continuing to

develop markets. We look forward to the

next Savour in the next 18 months as we

can’t afford to rest on our laurels.”

On balance, he feels more optimistic

now than he was 12 months ago.

“Our access to, and sales of, premium

wine have increased in the past year and

I believe this growth will be sustained

again this year.

“The coming year won’t be easy – the

marketplace growth will be modest but

that growth will come from wines at

more than $15, so margin and profit mix

will be improved.”

Michael East

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Casella WinesA BILLION. That’s the key number for

John Casella. Not $11.9m, the extent of

the company’s second loss in two years,

following a $30m shortfall for 2011/12. A

billion – the number of bottles of Yellow

Tail that have been sold around the world

since the product hit the shelves 13 years

ago.

“I think it says a lot about our capability

to produce a strong, consistent product

and keep it flowing, and it says a lot about

our relationship with our customers and

partners around the world.”

The past year was the biggest ever for

Yellow Tail sales, with more than 12.5

million cases sold worldwide, 8.5 million

of which went to the US.

That nudged up revenue from $334.5m

to $344.5m.

But Casella has also been busy

diversifying his offering this past 12

months.

Most conventional are the icon wines

launched under the Casella 1919 label at

an RRP of $100. The first releases were a

varietal Cabernet Sauvignon and Shiraz

from 2006.

The plan is to make these wines with

the best grapes at Casella’s disposal, so

the make-up may change from year to

year.

The Yellow Tail line has been extended

to take in a 5 per cent-alcohol sangria

that’s doing “exceptionally well” in the

US and Australia.

Along similar lines is Bondi Rd, a

Sauvignon Blanc spritzer at the same

alcoholic strength that comes in a pack of

four 275mL bottles, available in Original,

Elderflower and Mint and Ginger and

Green Tea flavours.

“It isn’t a category that’s well

understood, but this gives people the

opportunity to enjoy a high-quality

John Casella

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grape-based product rather than a spirit-

based one,” says Casella.

The company’s held its nerve on

pricing and has no immediate plans to

change things, though the lower dollar

has given a welcome confidence boost for

customers and backers.

After the US, the UK, Canada,

Australia and Japan are Casella’s biggest

markets. He makes about three full trips

a year taking in the US, Europe and

Asia, and stresses a great amount of the

company’s success is down to excellent

relationships with distributors, notably

W.J. Deutsch & Sons (US), Diageo (UK)

and Vins Philippe Dandurand (Canada).

Casella maintains Yellow Tail is as

relevant now as ever and serves as a

prime example to other producers who

want to get a good return.

“We need to be proudly Australian.

Forget about the high cost base. We’ve

got to look at how we make our wines

more interesting, more tasty and better

looking. The market hasn’t changed.

“No matter what the price point is,

people want boldness and a point of

difference.”

The company has enough retained

profits and support from financiers to

cope with two annual losses on the trot.

But Casella hopes to end this year in

the black.

“The intent is always to be profitable

and to be in a position to reinvest. Once you

fade, you often don’t come back,” he says.

Profitably is the number one challenge for

everyone in the wine industry, he adds.

But he’s more optimistic now than he

was a year ago, and reflecting on the road

from nowhere to a billion bottles drives

that faith.

“I’m at a place I’d never thought I’d be.

I never thought I could bring the family

company to the size it is or have a brand

as big as this,” he says.

“We need to be clear, firm and resolute

in building new products and line

extensions and building relationships

that are the foundation of a good business.

I’m confident we can do that.”

Australian VintageTHE DOLLAR’S easing has also eased Neil McGuigan’s mind.

Wait a few months and he’s sure the benefit will show.

When UK supermarkets start purchasing next year’s bulk-

wine supply, Australia will have a rosier look about it.

“They can make the margin they require in the £5 area that’s

the sweet spot in the UK,” says the chief executive of Australian

Vintage.

“The dollar will provide great opportunities all over the

world in some of our traditional markets and places like the US

where we’ve been unable to hit the sweet spot in terms of price.”

AV in February announced a first-half net profit of $4m, up

from $3.3m for the same period the previous year.

Australian bottled sales rose 15 per cent, boosted by a 29 per

cent jump for the Black Label range.

Canada, the company’s third largest market, was also strong,

while revenues crept up in Europe and the UK, this latter being

AV’s number one export customer.

The exchange-rate shift gives McGuigan heart that full-year

profit will be “significantly higher than last year and in line

with market expectations” – putting it between $11m and $12m.

AV’s cost base is “relevant and under control” but the quest

for efficiency goes on. It’s determined to find ways to make

its yield and sales forecasts more accurate and is working

“aggressively” to get fruit to the right point of ripeness and

quality at the same time in order to streamline processing.

Attention to the bottom line doesn’t mean product lines are

neglected. The company impressed again in competitions, with

the 2005 McGuigan Bin 9000 Semillon winning champion

white at the International Wine Challenge, where McGuigan

was again crowned best white winemaker.

“These awards give our salespeople, retailers and consumers

confidence in our brands, which means more distributions and

Neil McGuigan


more people tasting our wines,” he says.

“We’ve been working for a long time

on overdelivering at every price point

and that’s starting to come to fruition.”

This, indeed, is McGuigan’s mantra

and this month sees the launch of The

Philosophy, a $150 Clare Cabernet Shiraz,

to honour it.

Also new this year are McGuigan

ranges Expressions ($14) and Founders

($20), including a first Yarra Valley Pinot

Gris and McLaren Vale Cabernet Shiraz.

Tempus Two has added a Prosecco and

Tempranillo (both $25) and Nepenthe an

Altitude Shiraz and Altitude Tempranillo,

marking the CEO’s conviction

Tempranillo, like Chardonnay and Shiraz,

could be fantastic for Australia because it

works in warm and cool climates.

McGuigan Black Label is about to

adopt a new Semillon Blanc in the

old White Burgundy mould, while the

Short List range will sport a Barossa

Montepulciano.

McGuigan is “sick and tired of people

treating wine like a commodity”.

In an attempt to help them better

appreciate it; he’s teamed up with

Australia’s Lyndey Milan and UK

Masterchef presenter John Torode to

promote food and wine pairing.

He and Torode have co-created

recipes, a food-friendly Semillon and a

competition where UK-based consumers

win a trip to Australia to dine in the

vineyard with McGuigan wines and food

cooked by Torode.

McGuigan found Savour Australia

“very positive and effective” and would

like to see a structured follow-up in two

to three years.

In the meantime a drip-feed

promotional campaign is essential.

This would have 35- to 50-person

teams from key export markets – first

the US, say, then UK, then Japan and

so on – coming out every four months

for a 10-day immersion in Australian

wine, taking in a slightly different set

of regions every tour. “That way there

would always be some influential wine

people, somewhere in the world, talking

about Australia,” he says.

De Bortoli Wines“EVER so slightly cautiously optimistic.”

That’s how Leanne De Bortoli sums up

the family’s mood.

It might be a few notches down from

gung ho, but at least it’s an improvement

on last year.

After a couple of years of belt-

tightening and a reported full-year loss

of $24.7m for 2011/12, the weakening of

the dollar has offered a welcome chink

of light.

Behind the scenes De Bortoli has

continued to improve infrastructure

at its Griffith facility, including a new

bottling line to boost quality control and

give greater scope for packaging.

But the major strides have taken place

in the product sphere.

The company has added an off-dry

Riesling and Syrah/Gamay blend to

its La Bohème range, put out a rapid

sellout Pinot Blanc under its Vinoque

label, launched Villages Pinot Noir and

Chardonnay from the Yarra Valley at

$20 each, unveiled varietal Pinot Grigio

and Sangiovese BellaRiva wines and

refreshed the packaging for its estate-

grown wines.

“When our grandfather first started

the business, he had the mentality of

providing wines people wanted to drink.

If there was a market, he’d make it,” says

Leanne of the restless innovation.

“The beauty of our company, with the

mother ship in NSW and our holdings in

King Valley and here in the Yarra, is that

we can keep doing that.”

Making wine is one thing; making

money is another. And De Bortoli is

finding the latter just as tough as anyone.

“It’s almost like you have to work

harder for those same dollars. It’s not a

case of ‘if you build it, they will come’.

I think you’ve just got to be proactive

and that means getting out there to

consumer tastings and putting wine into

people’s mouths, engaging with trade and

sommeliers.”

With its finger on the pulse of changing

tastes, De Bortoli remains “dynamic” in

the digital space, mindful of the popularity

of shopping online and also the need to

communicate with consumers.

“We’re very active in social media.

That’s been holding us in good stead. For

not much outlay, you can get really good

exposure.”

Leanne’s brother Victor is the man

charged with building exposure in

overseas markets.

As De Bortoli export director, he

thinks the US will recover to reclaim

number two spot behind the UK.

At the moment, it’s not even in

De Bortoli’s top five, which instead

Leanne De Bortoli


McWilliam’s Wine Group“THE WINE industry is without doubt

the toughest industry I’ve worked in,”

says McWilliam’s chief executive and

former Ticketek boss Robert Blackwell.

“There are opportunities but you have

to work extra hard to capitalise on them.”

And work hard he has. In his three

years at the helm the team he has

“brought the key brands home”: Mount

Pleasant firmly planted back in the

Hunter, McWilliam’s in NSW, Brand’s

Laira in Coonawarra and Evans & Tate in

Margaret River.

That’s created a rock-solid platform

on which to promote regionality and

simplified the narrative for customers

across the world.

The company has also pulled right

back from buyer’s own brand wines and

“quick-moving bulk wine” sub-$10.

Instead its focus has shifted to $15-$30

wines and exclusives for consumers and

gatekeepers.

Thus Evans & Tate and Coles have come

up with E&T and Strange Bedfellows,

while Brand’s Laira Barrelman has been

developed for independents.

Staunchly traditional Mount Pleasant

boasts a white field blend and off-dry

Semillon under its cellar-door-only B

Side label.

“To have a strong relationship with

customers now it really has to be on

an innovation platform,” says Blackwell.

“Quite frankly I think this is the way the

strong get stronger.”

All four brands have had a facelift, in

packaging and online. “Wordy” labels

are out; pictures are in – though sacred

flagships such as Lovedale and O’Shea

have been left alone.

“The heritage of the family business is

wonderful and we keep it inside all we

do, but you’ve got to make changes to be

relevant and contemporary.”

The digital makeover landed

McWilliam’s the Wine Communicators

of Australia award for best website. The

four up-to-date, user-friendly sites include

video, interviews and social media add-

ons.

“It’s a very deliberate strategy to put

people resources and dollars into this

area. We want to attract people so they

come on a life journey with us while

also keeping in touch with existing

customers,” says Blackwell.

He’s also keen to bring new blood into

the business “to ask questions of us all”.

Bryan Currie, who was at McWilliam’s

in the ’90s, has been drafted to Hanwood

and Mount Pleasant has welcomed Jim

Chatto – and his dreams of Pinot Noir. The

company’s also brought in some “FMCG-

type” people as it continues to finetune

its supply chain. Blackwell says dollar

volatility has created uncertainty in export

markets, which won’t get a real boost until

we see the Australian dollar at 83c to 85c.

McWilliam’s is doing “OK volumes in

China” and Canada has overtaken the US

as number-one customer.

China’s been earmarked as the second-

largest export opportunity but right now

Blackwell, who used to run his own

business in the States, is bullish on the

US and is ramping up efforts there.

“They know us; Australian wine has a

very good reputation. When they decide

to spend, it’s the most dynamic economy

in the world.”

While Australia gave a good account

of itself at Savour Australia, Blackwell

thinks it would be more effective to

invite delegates who can tell Australia

what the world wants.

“I’d like to hear experts on innovation,

people who can share data, who

understand consumer needs, even people

who’ve lived it and failed. If I got two

days of that, I’d be in paradise.”

Still, Blackwell is happy with progress

at McWilliam’s.

“Putting out new products always

entails risk. We’ve had an exceptionally

high success rate, which enables us to

do more. Plus I’m really optimistic about

export opportunities.”

features Sweden, Japan, China and the

Netherlands. Victor also believes China

will continue to grow despite austerity

measures there.

The change in the dollar has had an

immediate impact on margins, bringing the

company “closer to a sustainable position”.

“We would be reluctant to adjust prices

at this point as we try to consolidate from

a tough period of holding shelf position at

challenging margins,” Victor adds.

Leanne says of their current position:

“I don’t think we can ever be complacent

but we feel we’re trying to hit the mark

with what people want.”

Setting aside the issue of oversupply

and the resulting squeeze on grape prices

and potential margin, Victor would say

the same about Australia’s current form.

“I actually think we’re regrouping

nicely,” he says. “I thought Savour was

great. For me it showed everyone at

Australia is very much alive, enthusiastic

and ready to do business. I believe

Australian wine is in a great position.

The wines are world class and have never

been better.”

Robert Blackwell


Warburn EstateWE regret to report that despite several

weeks of requests and discussions –

by phone and email – Warburn Estate

declined to be interviewed for this

feature.The Yalumba Wine CompanyIF ROBERT Hill-Smith could see past

Groundhog Day, he might well glimpse a

bright future.

“I’m no more or less optimistic than

I was 12 months ago. The dates have

changed but the outlook hasn’t,” he said.

“The industry’s dealing with more

variables, margin compression is

everywhere and consumers and the trade

are faced with ever more complexity

around choice. I don’t see a lot changing.”

Hill-Smith says the industry needs

the likes of Treasury Wine Estates and

Pernod Ricard Winemakers on top form.

That way they’re more likely to invest

and show leadership.

He’s also concerned the peak national

bodies lack the resources they need, due

in part to the impact of low tonnages in a

statutory levy system. This in turn affects

investment in compliance, thought

leadership and marketing.

“Regional bodies are far better

equipped to deal with regional issues

than national bodies are to deal with

national and internal issues, and that’s

a real problem. The dynamics of the

industry are still out of whack,” he says.

Another manifestation of this

imbalance is oversupply.

Hill-Smith thinks a number of

unprofitable players have stayed in the

game because it’s not their primary

investment, distorting market conditions

for full-time investors. “I hate seeing

growers getting low prices and going out

of business but wine companies can’t

act in a way that penalises them in the

marketplace.”

He’s also worried about the prospect

of wine destined for China either staying

in Australia or being returned to be

relabelled and sold here.

From a product perspective, Hill-

Smith thinks fresh aromatic varieties

will continue to do well and hasn’t given

up hope that Riesling will take off.

He also foresees growing demand for

quality sparkling wine such as Prosecco

and believes Pinot Noir and “serious

Chardonnay” will continue to grow in

stature, while Shiraz and Cabernet will

also stay strong.

“Quality wines with a story, which

express class and regionality, will

continue to find a mark,” he says.

To this point, Hill-Smith heaped

praise on Savour Australia but warned

a worthy sequel must come soon to take

full advantage.

“It galvanised the industry and

Robert Hill-Smith

AUSTRALIAN


Brown BrothersIF YOU can’t treat yourself to a facelift on

your 125th birthday, when can you?

That’s what Brown Brothers chose to

do with its 1889 wines, the range of classic

dry wines renamed to commemorate its

founding year.

“The previous label had been used

for 15 years,” explains chief executive

Roland Wahlquist.

“The new one is a big departure for

Brown Brothers. It’s much more relaxed

and inviting than it was in the past and

we’ve had very good consumer feedback.”

There’s also a youthful look to its new

product launches. The introduction of

Prosecco in piccolo format aims to attract

newcomers to a wine that “has a lot of

growth to come”.

Wahlquist also sees mileage in

bridging the gap between sweet and dry

wines, and has been pleasantly surprised

by the success of the new Moscato/

Sauvignon Blanc blend.

The company came into the year with

a spring in its step following a strong 2013

vintage. At the time, Brown Brothers was

growing 40 different varieties on eight

vineyards across two states.

Wahlquist says they all performed

well. “I can’t remember the last time that

happened. It gave us real confidence.”

But the changes wrought since then

have gone further than mere window

dressing. A renewed focus on its best

wines has seen that vineyard tally cut

from eight to six, with one site in the King

Valley and another in Tasmania sold off.

More recently Brown Brothers

established a joint venture with Clare

Valley-based Taylors to distribute the

wines of both companies in New Zealand.

The company, Taylor Brown, went live

in February.

“We’re very excited about it,” says

Wahlquist. “We’ve got a similar culture

and this gives us economies of scale that

we really couldn’t achieve on our own.

New Zealand is our number one export

market and this will help us grow there.”

This emphasis on its most valuable

markets has also led Brown Brothers

to scale back activities in Europe. The

dollar certainly hasn’t fallen enough to

persuade Wahlquist to redouble efforts in

those markets or to delve into new ones.

Although the likes of China and

Singapore, its fourth and fifth largest

export customers, continue to offer

grounds for optimism.

“We do see the Asian markets are where

our best prospects are and where we expect

to get the most growth over the next five

years. We have a wide range of wine styles

and have something to suit most palates.

Those markets want consistency and we’ve

been there for some time.”

Wahlquist sees “massive and

modernised” European producers as

being the main threat to Australia’s share

in most key export markets.

Even so, he thinks Savour Australia did

a good job of reminding the world what a

fantastic wine producer Australia is.

“Now it’s really up to producers to

build on that momentum and reclaim

some of the higher-price points in markets

around the world,” says Wahlquist.

“We haven’t spent enough time talking

about top-quality wines.”

And then there’s another area where

Wahlquist thinks more work is needed.

“The biggest challenge for the wine

industry is one we still haven’t really

dealt with. The oversupply is not going to

correct itself,” he says.

“The unviable producers really

need to exit the market. They’re just

making it more difficult for those with

fundamentally sound businesses.”

Overall, the changes the company

has made have left Wahlquist quietly

optimistic. “The business is in better

shape. For the first six months trading in

the domestic market has been good and

we’re very confident about where we’re

heading.”

energised all sectors. The mood is there

and most of the gatekeepers who attended

are ready to do something to stand up

and support us in their own markets.

“However without a budget to follow

it up and continue that momentum, we

might fall back to where we were.”

Meanwhile Yalumba is working on

reinforcing its own story and product

mix.

Last year it debuted Eden Valley

Roussanne, a variety connected to the

original family vineyard. We’ll also see

a “very exciting” new single-vineyard

Shiraz from 2010 and a first-time release

of a northern Barossa Shiraz called

Paradox, made from 100-year-old bush

vines.

Late-release, $150 Cabernet/Shiraz

blend Yalumba The Reserve will be given

more prominence and there will be some

museum releases of other top wines.

Yalumba’s also been experimenting

with clones across a number of varieties

and will this year be replanting the best

material on a commercial scale.

Yalumba celebrates its 165th year in

2014 and Hill-Smith takes strength in the

mere fact of survival.

The “loyal, smart and success-

oriented” people around him also

promise good things to come.

“I think we’re on the cusp of a new

story and a new beginning because of

the investment we’ve been making in the

vineyards and in our winemaking, as

well as having more confidence in who

we are and what we can do,” he says.

“We now have a determination to take

ourselves to market in a way that we’re

entitled to, as a leader rather than as a

member of the pack.”

Roland Wahlquist


The Tahbilk Group“FOR THE past four or five years there’s

been nothing but financial black sky

and serious headwinds,” says Alister

Purbrick.

“But during the past 12 months we’ve

seen a little blue sky and over the next

year expect more blue sky and maybe a

little ray of sunshine might creep through

occasionally.”

Tahbilk’s chief executive doesn’t have

to think hard when asked whether his

optimism’s grown.

It finally feels like the tough cost-

cutting decisions made some years ago

are paying off.

“The really big issue for the Tahbilk

Group over the past three to four years

has been getting our demand and supply

projections balanced. We turned a corner

in this respect after the 2013 vintage

and stocks are now below our sales

projections. In the current environment,

that’s a very healthy position to be in.”

Over the past year, the Group has

engineered minor price rises and

increased sales at home and abroad. And

it’s beefed up the IT system behind the

Tahbilk Wine Club, resulting in “better

database segmentation and more succinct

offers” going out to members.

Purbrick’s also excited about the

recent launch of Tahbilk’s new carbon

neutral-branded wine, The Tower.

Sweden’s the first overseas customer

to receive the range, which comprises a

Shiraz and a Chardonnay Viognier blend.

The Tower wines have “taken off like

a rocket” and are available domestically

as a Dan Murphy’s exclusive, marking

an effort to work more strategically and

successfully with the chains.

Also on the home front, the group

welcomed some key brands to its

distribution arm, The Wine Company.

Tyrrell’s signed up for Victoria in

February, while the portfolio has also

taken in the likes of Pirramimma, Paulett

and New Zealand’s Yealands Estate.

“This should increase sales by 45-50,000

dozen overall, which will be a significant

internal profit driver,” says Purbrick.

The Tahbilk Group, whose top five

export markets are the UK, Sweden,

Canada, US and China, was in an export

holding pattern this time last year. The

weakening Australian dollar has caused

a rethink.

“We’re getting on the front foot again,”

says Purbrick. “We’re focusing on all of

our best markets bar the UK, which is

problematic for us at the moment, though

still important.”

He’s also set to push a little harder in

China and Asia more generally.

“We’re certainly selling at the top end,

but where we’re looking to grow market

share is at the mid-range regional wine

level. Our Tahbilk, McPherson and Four

Sisters brands are all active in that area.”

France is having a big impact in some

of Australia’s emerging markets, such as

China, and Purbrick thinks Australia

needs to be wary of the Old World giant.

“It’s got the same dominant varieties and

a similar wine offering to us and, what’s

really scary, is starting to get its mojo back.”

So what about Australia’s mojo?

Purbrick can’t see the industry as a whole

making a concerted recovery until it rids

itself of the oversupply problem.

He thinks it’ll take a few more years

for this situation to resolve itself, when

a sustained period of low returns for

grapegrowers forces a mass exodus from

the industry.

On the other hand, Purbrick feels

Australia has sharpened its competitive

edge, thanks in no small part to Savour

Australia. He’d like to see a follow-up in

2015.

“There’s no doubt in my mind that

it’s been a great morale booster. We’re

feeling better about our place in the

world of wine. Now it’s really up to us

as individuals to get out and about and

capitalise on the momentum that Wine

Australia has created for us.”

Kingston Estate WinesASK BILL Moularadellis what defined

the last year and the response is

immediate: his winery crushed more

than 100,000 tonnes in 2013. But it’s not

about the number. “The real achievement

is the significant sales footprint we’ve

been able to create internationally. We’ve

really come to terms with the changing

international environment and instead of

resisting the change, embraced it. Retail

consolidation is a reality and must be

seen as an opportunity, not a threat.”

The growth has been made possible

by a long-term, stable team with genuine

expertise in its field.

It’s also entailed increasing capacity

along every part of the chain. On the

product front, Kingston continues to rely

heavily on Shiraz and Chardonnay. It’s

also shown a commitment to Petit Verdot,

and has acquired a large vineyard in

Coonawarra to add premium regional

Cabernet and Shiraz to its offering.

Moularadellis, who exports 95 per cent

of his production and counts the EU, UK,

North America and Asia as his biggest

customers, says the “rise and plateau” of

China has been a big disappointment for

the industry.

He describes the lack of a free trade

agreement, such as that enjoyed by rival

Alister Purbick


Chile, is a “significant disadvantage”.

And points to the success of such

arrangements with Korea and Japan and

says FTAs with China and the EU are

essential.

Moularadellis also urges policy

change on WET, to restrict rebates to

packaged wine from bona fide producers

to retailers with a turnover of less than

$10m.

He blames the current system for

encouraging some 1000 new producers

into the industry during one of its most

challenging periods, and says it’s led to

further industry fragmentation instead

of the consolidation one might have

expected in the face of the changing

retail landscape.

“The majority of these new producers

and many longstanding ones have turned

their backs on international sales to

focus on the domestic market, motivated

principally by the WET rebate,” he says.

“It’s the addiction preventing our

industry from fully developing its

international sales opportunity. We must

wean ourselves off it.”

Growing the export opportunity is

Australia’s priority, and it must happen at

both the commercial and premium level.

Moularadellis points to the fact that

only around 10 per cent of Australian

exports by volume are priced above $45

a case.

“You can’t expect someone on the

other side of the world to buy a premium

wine unless there’s a story and someone

selling it. You need the origin, the place,

the terroir but you also need more people

to project their personality and passion.”

Moularadellis views Savour Australia,

and especially the tie-in between Wine

Australia and Tourism Australia, as a

useful starting point.

However, he says it needs to be

vigorously followed up by Wine Australia

and individuals in all segments of the

industry.

Moularadellis is given heart by the

crop of emerging winemakers who show

pride in their wines and sites – and who

are keen to share their passion with the

world.

“The young guns are really answering

that call and I see great strides being

taken by some fresh young people who

head out on aeroplanes and pound the

streets like the old guard did 20 years

ago.

“They might be small producers

but they have great energy, vision and

vitality. They’re the future of Australia.”

Kingston is also well placed to

take advantage of new openings, says

Moularadellis. But clearly there will be

hiccups on the way and standards will

have to keep on rising. “You always

need to provide a higher level of energy

and activity to maintain your relative

position.”

Grant Burge WinesAN OPTIMIST by nature, Grant Burge is in

conservative mode. This time last year he

was confident when many were cautious.

But three financially-challenging

vintages have taken their toll on the fifth-

generation winemaker, who grows up to

55 per cent of his production.

“Our vineyards have let us down

in a yield sense, which has cost us a

fortune and lifted the bottom-line cost of

our product dramatically. Our margins

have dropped and it’s had an impact on

profitability.”

The company increased sales by 9 per

cent in 2012/13, buoyed by a domestic

sales hike of 19 per cent.

Which was then offset by a 10 per

cent decline in exports, much of which

was caused by a failed brand-building

partnership in China.

Burge has moved on from that

letdown, and is encouraged by steady

growth in Canada and good results in

Europe. Particularly Britain.

“We’ve stuck with the UK, making

very little margin on 30,000 cases sold

to restaurants and regional retailers. But

we’re in it for the long haul.”

Burge sees New Zealand as the fiercest

adversary in export markets and a shining

example of what Australia needs to do.

“They’re kicking butt. They’ve made a

huge name for themselves with a cohesive,

coherent message and have managed to

keep their cool, clean, green image while

holding onto higher price points.”

Meanwhile, Australia’s been suffering

from a lack of profitability and a resulting

tendency to look inwards.

“People haven’t been focused on

thinking forward but instead of how to

save their companies. We need everyone

to be cohesive, making money and

pouring it into marketing ourselves as a

word-class brand.”

He thinks the image projected by Savour

Australia is the right one, and would love

to see another such initiative in 2015.

Even in conservative mode, there’s

plenty going on. The company’s followed

up its refresh of the Fifth Generation

range with a new, more premium look

for its $19 to $25 Vineyard range built

around various Barossa blocks. Burge is

also keen to keep pushing Tempranillo.

He sees it as a good variety for the

Barossa and even wants to create his

own Rioja.

“We’re doing a lot of research. It’s not

some fad thing. We want to do it well and

make sure it’s sustainable in a market

sense.”

Another big move was February’s

merger between his distribution

arm, Vignerons of the World, and its

counterpart at the Rathbone Wine Group,

Four Seasons Fine Wine. “Irrespective of

how good the wine and brand are, you

have to have incredibly efficient ways

of making grapes into wine and getting

on the retail shelf. Burge & Rathbone

Fine Wine Merchants is an incredibly

Bill Moularadellis


compatible fit as a sales organisation,”

says Burge.

The changes don’t end there. Burge

has now completed a four-year replanting

program, switching many whites to

reds. Now the attention shifts to the

winery, which he promises to “massively

transform” over the next three years with

new technology. He’s got permission to

redevelop the red fermentation facility

in Tanunda, and sparkling wine is also

in focus.

Sales in this area have grown at around

20 per cent a year for the past 10 years.

But working with such large quantities

of mostly whole bunch-pressed fruit

presents challenges, especially with

cooling.

“We’re trying to revolutionise the

whole process, which we’ve done in

theory,” says Burge. “This will be a world

first. We’ve hit on something that’s going

to be very exciting.”

However, conservative for Burge

certainly doesn’t mean going into his shell.

“Despite my pessimism, I’m still

carrying on with experiments and

innovation in the winery. I’ve been in

the industry 45 years and I still love it.

It’s my life.”

Angove Family WinemakersJOHN Angove sounds at one with

McLaren Vale. The cellar door, opened in

2011, is something of a symbol of home

and hope.

“It’s continued to be a very successful

front door for us here, giving us some real

geographic identity in the mind of the

consumer. That was certainly a defining

activity.”

The company has developed a

microwinery, built to handle small

parcels of specially earmarked fruit.

It’s been tweaked this year to better

enable it to handle four- to six-tonne

batches and will continue to be developed

over the next couple of years.

In homage to home, the team is

also working on more single-vineyard

Grant Burge

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Qualia Wine Services

YOU GET the impression nothing

is wasted at Qualia Wine Services.

Efficiency is a buzzword for executive

director and winemaker John Pezzaniti.

A tripling of the crush from 17,000

tonnes four years ago to 52,000 in 2013

shows just how fast the business is

growing.

Investment in the winery has played

its part, with additional cross-flow

filtration and a move to up the front-end

crusher from 50 to 100 tonnes per hour.

But more than anything, Qualia’s

made it big by staying small. Pezzaniti

says its dynamism is down to a personal

and professional approach.

A year ago, Mildura-based Qualia’s

sales were split evenly between domestic

and exports. Now exports are back up to

70 per cent, with more than two thirds of

that shipped in bulk.

Europe has seen the biggest jump over

the past year. The company’s reeled in

new customers in the shape of Belgium,

Sweden and Russia, while the UK is

also showing growth again following “a

couple of slow years”.

Pezzaniti is “pretty happy” with the

customer base and distribution in China,

which is principally showing a thirst for

Shiraz and Cabernet.

He’s had to source more region-specific

fruit from places like Clare Valley and

McLaren Vale for his Asian customers,

whose interest lies at the premium end

of the spectrum. The UK in particular

is showing a growing taste for his Fiano.

Qualia views South Africa as its most

formidable rival in Britain, while Chile

vies with the Rainbow Nation as number

one competitor in the rest of Europe.

Pezzaniti reckons the Australian

dollar would have to fall to around 70

cents before it gave a lift to producers. But

that doesn’t bother him.

“The problem with a lot of things is

that people get too focused on price. Price

is the last thing you should be worried

about.”

Qualia’s got employees on the ground

in all key export markets but Pezzaniti

travels constantly throughout the year.

“We’re all about building a face-to-

face model, sitting down with customers

McLaren Vale wines. These are destined

to be cellar door exclusives to teach

visitors about subregions such as

Willunga and Blewitt Springs.

There are other things in the pipeline,

too. Noting strong growth in organic

wine, Angove has already got a Sauvignon

Blanc that’s “doing well” and a further

addition to this range will be unveiled

later this year.

The past year has also seen the

launch of Alternatus, a $25 range

exploring the “emerging variety and

style opportunities” of McLaren Vale’s

Mediterranean climate. It comprises

Tempranillo, Grenache, Fiano and

Vermentino and will be available through

cellar door and selected restaurants.

“Fiano and Vermentino are a long way

from being mainstream, but if we niggle

away we will see results,”says Angove.

He can’t hide his excitement at the

warm reception for the mid-priced Long

Row wines.

“We put them out there with some

trepidation about the quite unusual

packaging, but it works. The Riesling

clone we have dates back nearly 100

years to our Tea Tree Gully vineyards

and works very well in the Riverland.

Likewise Sauvignon Blanc works well in

our sandy soil, particularly when picked

early in the season. They’ve both had

amazing accolades.”

Notwithstanding his enthusiasm for

these products, Angove’s level of optimism

has barely shifted since last year.

Profitability is the biggest challenge

facing the industry and he doesn’t see a

smooth path to better returns.

The lower dollar has at least brought

a slight psychological boost at the

possibility that exports will turn around.

As things stand, the company’s opened

up a new opportunity in Russia.

“We hope in time it will be another

interesting market,” says Angove.

“Meanwhile in China we continue

our two-stream approach. One is the

corporate brand building, which is slow

and steady. We’re putting in the hard

work but I think we have a reasonably

good reputation. The other is buyer’s own

brand, which has been fast and furious

but has slowed down somewhat.”

Angove thought Savour Australia was

effective in giving the world a “better and

more sophisticated view” of the nation’s

wine.

But he’d like to see the industry do

more to get behind Wine Australia in

order to keep things going.

“We need to slot Savour Australia

in as a biennial event, so like ProWein

and other international wine events it

becomes a fixture on the calendar. This

is vital, because if you do something only

once, it just gets forgotten. You have to

keep it up.”

Angove booked his ticket to ProWein

early because “we need to be out there” if

exports are about to turn around.

But he also has a lot of irons in the fire,

and that’s some cause for comfort.

“Our products range from St Agnes

to Stone’s Ginger, Long Row to McLaren

Vale. Then there’s the distribution and

agency business.

“We’ve got a lot of fishing lines out

there trying to catch something. That

diversity is a fairly strong plus for us.”

John Angove

John Pezzaniti


Peter Lehmann Wines

IT’S OBVIOUS what defined the past

year: the death at age 82 of founding

father Peter Lehmann in late June.

“It was a truly sad day here for the

company, for Barossa and the Australian

wine industry. He contributed so much,”

says chief executive Jeff Bond.

“PL established a company with strong

values that it’s lived by since it started.

His legacy will be for those values to live

on after him.”

The company has continued to stick

to its guns, and Bond is more confident

about the future than he was a year ago.

“I’m pleased to say we’ve continued

with the momentum we’ve had. The

domestic market continues to be a good

story for us, with strong growth here

against a tough background.”

The decision to deal directly with the

chains is paying off and the company is

“unlocking good growth” on the direct-

to-consumer side.

It’s achieved its goal of boosting its

Futures club membership from 2500 to

10,000 and has welcomed more young

customers to the brand, with 25-to

39-year-olds increasing from 24 per cent

to 32 per cent of the total core consumer

group.

It’s also rebalanced the male/female

split; with aromatic varieties like Pinot

Grigio winning back some of those who

abandoned Barossa Semillon for New

Zealand Sauvignon Blanc.

The company is building on the wines

it has as it continues to implement its

long-term strategy.

It does have one new project on the go,

though. Called The Steward, it’s a premium

single-vineyard Bordeaux blend that will

be the company’s first carbon-neutral wine.

Bond says the company has its “shoulder

to the wheel in export markets” where

sales have declined slightly. This has been

the first year of selling icon and ultra-

premium tiers into the US and shipments

and depletion rates have gone according to

plan. “We’ve got to make that stick,” says

Bond. “We’ve also got a larger focus on

China. We’re building the business from

the ground up and don’t see that providing

an instant return. We’re looking to get the

benefits over five to 10 years.”

Bond praises the South Australian

Tourism Commission for its Barossa

campaign and likewise thought Savour

Australia created a great platform for

wine producers to work from.

But he says it’s up to individuals to get

out and follow up on the messages.

He sees New Zealand as both a key

competitor and a role model in how to get

a clear, simple message to cut through to

overseas markets.

Australia’s task is all the more difficult

because it fell out of favour at about the

same time the Kiwis moved in.

“The higher dollar may have done

more damage than we first thought in

terms of buyers’ awareness and shelf

space,” says Bond.

“It takes a long time to win back

the hearts and minds of consumers and

retailers.”

But the reality, says Bond, is that wine

is a high-cost industry with ongoing

structural issues.

“We’re not going to get an automatic

sales uplift. We’ve got to get our head

under the bonnet and try to figure

out how to make our operations more

productive.”

He feels his organisation understands

this reality and has taken tough decisions

to deal with it. Hence the optimism – and

the warning that ever-smarter thinking is

needed.

and seeing what they want,” he says.

“It’s not just low cost; it’s about products

and services and how flexible you are

as a supplier. It’s more about stronger

ties for longer-term relationships with

customers.

“If you can give them constant supply

at a reasonable price that won’t fluctuate

and at the quality they ordered, it takes

the pressure off their end.”

One of the challenges undermining

these efforts is oversupply and the lack

of sustainability among the Australian

grower base. “When overseas markets

read about that, it puts downward

pressure on prices,” says Pezzaniti.

On balance, though, he’s comfortable

with the situation at Qualia and says he’s

more optimistic than he was 12 months

ago.

“That’s based on the relationships

we’ve built over the past year and the

growth we’ve had with these customers,”

he says.

“A lot of that comes down to the

fact that although we’re a big producer

we’ve got a small team, and buyers are

dealing with a small number of people,

perhaps even just one person. That focus

is important.”

Jeff Bond


Littore Family Wines

“VOLATILITY" would be Andrew Byers’

watchword for the past year. “For us, it’s

been much more a case of consolidation,”

says the commercial manager at Littore

Family Wines.

“The wine industry has changed

significantly at our price points over

the past 12 to 24 months. There’s been

a great deal of flux. The main issue in

the marketplace, especially with overseas

buyers, is with the volatility of the

Australian dollar and mixed messages

from the market. They don’t know what

the correct price of Australian wine is, so

it’s hard to get them to commit to long-term

agreements. Volatility is in their thinking.”

That explains why there have been no

“great leaps forward” for the Geelong-

based business.

Even so, it’s continued to grow in each

of its top five export markets.

One of the largest is Russia, where

Littore is the number one Australian

brand, accounting for 35 per cent of

Australian wine sales in this market.

“It’s been a 10-year slow build for us

but the Russians continue to love our

wine and there’s still room to grow,” says

Byers.

The company hasn’t been immune

to the slowdown in the Chinese market

though the impact has not been as severe

as for higher-end brands.

“It’s still been a reasonable year for us.

The growth rate has declined but we’re

still growing,” says Byers.

Here in Australia, the main focus

remains private- and exclusive-label

wines but there is a five- to 10-year

plan afoot to gradually build up regional

brands around the Littore Family Wines

name.

It’s been about eight years since the

company last concentrated on its own

premium labels.

“Since then we’ve been focusing on

large-volume, commercial entry-level

wines,” says Byers.

“But that’s not all we can do. We’re

just dipping our toe back in the water.

We’re not looking for big numbers or

anything like that; we’re just looking at

something different.”

From an industry perspective, Byers

thinks issues surrounding the use of the

WET rebate need to be dealt with.

“It’s the elephant in the room. The

rebate system needs to be tightened so it

serves its original purpose of increasing

diversity in the industry, promoting cellar

door sales and regional employment.

“It’s not there to allow companies

to sell at a loss and then use the rebate

to make a profit. That just drives down

prices across the industry and no one

ends up winning.”

Littore sources the vast majority

of its fruit from its vineyards in the

Murray Darling area. Shiraz is the top

seller, followed by the usual suspects

of Chardonnay, Sauvignon Blanc and

Cabernet Sauvignon.

Moscato has plateaued somewhat over

the past nine months after taking off

about a year and a half ago.

“We’ve also seen a big surge in sales

of Pinot Grigio over the past 12 months,

particularly in the UK and in the

domestic market,” says Byers.

The company doesn’t often dabble in

domestic bulk. “We go into the market

and work with buyers and retailers to

look for long-term deals, which we can

do because we have our own vineyards.

That way you can lock in the price for

fruit, tonnes per hectare and baumé, and

can do so for multiple vintages.”

If volatility was last year’s word, 2014

has a better one: optimism. “I think

there’s a fair bit of hope out there that

the declining value of the dollar and our

value proposition can allow us to get

more traction,” says Byers.

“An end to the volatility would allow

us to get our forward plans going. If we

can do that, we’ll get more punch in the

marketplace and it’ll be good for all of

us.”

Zilzie Wines

ANDREW Forbes and the team crushed

43,800 tonnes at their Mildura winery

in 2013. That was 5000 more than the

previous record vintage and a long way

from the 10,200-tonne crush with which

they started 15 years ago.

With 90 per cent of the production

presold, Forbes is proud to have played

a part in realising his family’s long-term

goal.

“We’ve managed large-scale capital

expansion and grown the business on a

balanced pathway and in a climate that’s

been quite difficult,” he says.

The business is split 50:50 between

domestic sales and exports. Some 15 per

cent of production goes out under Zilzie’s

own brand, all of which is bottled in

Australia. “What’s kept us relevant is

we continue to observe and adapt our

business and distribution models both at

home and in exports,” says Forbes.

“We’re open-minded about finding

new and innovative routes to market.”

This past year the company took part

in a Victorian government initiative

aimed at developing opportunities in

emerging markets such as India. Forbes

is somewhat sceptical of industry herd

mentality; while Brand Australia has

“huge relevance” to Zilzie, he doesn’t see

much future in large groups “trying to

hunt down the next big thing”.

“You’ve got to look at your own business

model and develop a strategy for applying

it to meet the needs of the market. People

who jump on a bandwagon without a

long-term strategy and business plan,

and with the wrong relationships and

wrong distributor, find that things go

wrong very quickly.”

Over the past 18 months Forbes has

brought a number of new key roles into

the fold including a winery operations

manager as he continues on his path to

maximise efficiency.

“You can have the best machinery in

the world, but unless you have the right

people, you can’t execute your strategy,”

he says.

As Zilzie continues negotiations

on current vintage wine, the currency

continues to be problematic.

Forbes is yet to see any real gains from

the overall softening of the dollar and is


cautious about future movements.

“Due to the nature of our business,

a lot of my pricing is set for a 12-month

period, so it’s very much about what’s

happening at the time.”

Meanwhile, the more favourable

currencies of South Africa and Chile –

allied to their trade agreements – make

them key competitors in Forbes’s eyes.

But there’s another enemy within:

Forbes thinks Australian producers and

commentators who speak in imprecise

and unhelpful terms about oversupply

and environmental factors place doubts

in buyers’ minds over pricing.

The UK, China, US and Canada are

Zilzie’s biggest export customers and

remain the focus of its attention.

Of these, China’s the one that’s moving

up as the company is rewarded for its

slow, steady efforts to build relationships.

Zilzie recently released a high-end

wine called Ferghana (“heavenly horse”)

with a label commissioned from a famous

Chinese artist, to commemorate the Year

of the Horse.

More generally, it’s finding this market

particularly receptive to its premium

Regional Collection, comprising classics

such as Barossa Shiraz, Coonawarra

Cabernet and Yarra Valley Chardonnay.

A Pinot Noir remains on the to-do list

for this particular range, while Zilzie has

enjoyed success elsewhere with Pinot

Grigio, Moscato and Sauvignon Blanc.

“I would say I’m more confident in the

future than I was 12 months ago,” Forbes

concludes.

“Relationships, quality of product,

operating procedures; you’ve got to tick

all these boxes. We certainly see a future

in what we’re doing.”

Andrew Forbes

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Berton Vineyards

WHEN the Australian dollar finally

started to show some leniency, it provided

Bob Berton with his defining moment of

the past year.

“It created a light at the end of the

tunnel. Most of us are struggling with

exports, and when it came back we saw

some benefit to hanging in there.”

That respite hasn’t changed the way

Berton goes about his work, though.

He says there’s still too much volatility

and uncertainty over Australia’s place in

the wine world.

“It’s pretty much business as usual,”

says Berton. “What we’re doing now is

just changing some of our processes,

trying to automate some things so we can

move more quickly.

“The rest is about tidying up the

winery, keeping our costs under control

and being smart about what we’re doing.”

He’s pleased to have built up his Shiraz

stocks to strike a sought-after balance

between whites and reds. Overall, sales

are likely to remain equally spread

between domestic and exports, while the

split between own brands and Berton’s

labels continues to be about 60:40.

Roughly 95 per cent of what the company

makes goes to big chains in Australia and

agency importers abroad.

Over the past year, Berton Vineyards

has enjoyed reasonable growth in the UK

and China, seen “exciting” progress in

Sweden and scored small-scale success

among Pacific islands and New Zealand.

Italy has emerged as the key competitor

in the company’s main markets, though

France remains a formidable presence

and “sleeping giant” – and Spain can’t

be ignored.

At the same time, Berton Vineyards

is too busy ploughing its own furrow to

worry about these guys.

Similarly, while he applauds the

sentiment of Savour Australia, Berton

feels companies like his are somewhat

remote from the concept.

“We need prestige and personalities

in this industry but the warmer inland

areas which are producing the day-to-day

wines don’t have so much kudos.”

Now in its tenth year, Berton Vineyards

is not looking to push into unknown

markets nor force new products into

existing ones; what it’s after is “orderly,

natural growth”. “For us it’s always a

slowly, slowly approach,” says Berton.

“Our greatest asset is relationships

with people who, even in midst of certain

crises, have stuck by us and us by them.

“We’re probably not good marketers

in the classic sense but we’re prepared

to bide our time and let our products

make their way. If I look back at the great

brands, there’s not a lot of fuss about

them; they grew quietly. They weren’t

discounted; they stood quietly on the

shelf and earned respect over time. We

as an industry set ourselves targets that

are challenging and in setting them we

sometimes make poor decisions about

what the long-term brand is going to be.”

Looking at that long-term picture,

Berton can’t help but worry about the

way the odds seem to be stacking up

against primary producers and secondary

industries in Australia.

“Farmers have to put up with drought,

pestilence and floods but people think

they’re environmental vandals. It’s an

issue for industry generally. They should

be heralded, rewarded and admired rather

than constantly being scrutinised and

advised to improve by the self righteous.”

Even so, he’s feeling more confident

about the business than he was this time

last year. “The easing of the dollar has

given us hope and we’re getting a bit of

growth domestically. It’s a reasonable

outlook for where we’re going.”

Bob Berton


Tyrrell’s Vineyards

BRUCE Tyrrell looked at the big picture and it told him to

downsize.

“We’ve spent three or four months looking at what we’re

doing and where the wine industry is going, both domestically

and internationally,” he says.

“Tyrrell’s will be a smaller company. That means removing

ourselves from the under $10 market and out of the house-wine

market for on-premise. We want to play in the top and middle,

which is where we do very well.

“It’ll reduce turnover by around 15 per cent – but with

significant improvements to the cost end and better margin.”

This move will entail casualties, such as the Mystery Hill

and 30-year-old Glenbawn brands. Meanwhile, the $18 Lost

Block range was relaunched with a new look back in October, an

opening gambit ahead of “a total refresh” across the entire $25 to

$40 price range. Tyrrell’s has also switched to a distributor-based

model for interstate sales, most recently enlisting Tahbilk’s The

Wine Company as its distributor in Victoria.

“We’ve always had our own sales force in NSW and we’ll

continue with that,” adds Tyrrell.

The company has enjoyed ongoing growth in direct-to-

consumer sales and expects this to continue, while it’s also been

working to build its presence among the retail chains.

“They’re not the ogres they’re made out to be,” says Tyrrell.

“You’ve got to work with them, and once you have a good

relationship they become cheap to service.”

Looking further afield, there have been a few developments

on the export front. Like most others, Tyrrell’s has seen China

soften a bit. But the company is doing a little more in the US and

markets such as Japan are beginning to come good. Tyrrell is also

encouraged by opportunities in Central Africa, a “blue-sky market”.

To this end, the company has started to do some business

with regional hub, Nigeria.

Tyrrell doesn’t expect a helping hand from the currency

unless it falls closer to 80 cents. In any case, it makes no sense

for a company like his to compete on price. “If you want to make

or grow anything in Australia, you have to do it very, very well

so you can get a premium for the product.”

This emphasis on quality is something Savour Australia –

and some of the nation’s leading producers – has got right.

“If you look at what Treasury Wine Estates has done, it’s

really led with high-end brands. The whole of their push and

presentation has been at the top end and it’s something we’ve

all got to do more of” says Tyrrell.

The 2014 vintage has left Tyrrell somewhat heartened. The

reds came in “spot on target for flavour and structure” and he’s

tipping Chardonnay to be the star after this and Semillon came

in with yields 30 per cent up on 2013.

But his overall business confidence is on a par with last year.

He remains concerned about the anti-alcohol “zealots” but

right now they’ve been replaced by the weak economy as his

number one concern.

“The world’s still a tough place. The western world is going

to have to take a step back in terms of quality of life and salary

expectations. It’s unsustainable,” he says. “But I think Tyrrell’s

is set up for the next 30 years. Hopefully we’ve made all the

right decisions.”

Bruce Tyrell

Vineyard Manufacture &

Maintenance specialists

02 6964 3888 [email protected]

FERTILISER BANDING RIPPER & SPREADER

The big guns are still the hottest shots in town · 16 Peter Lehmann Wines 17 Littore Family Wines 18 Zilzie Wines 19 Berton Vineyards 20 Tyrrell's Vineyards 21 Garacama (Andrew Peace

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