“Sod the wine, I want to suck on the writing. This man White is an instinctive writer, bloody rare to find one who actually pulls it off, as in still gets a meaning across with concision. Sharp arbitrage of speed and risk, closest thing I can think of to Cicero’s ‘motus continuum animi.’

Probably takes a drink or two to connect like that: he literally paints his senses on the page.”

DBC Pierre (Vernon God Little, Ludmila’s Broken English, Lights Out In Wonderland)

Winner: Booker prize; Whitbread prize; Bollinger Wodehouse Everyman prize; James Joyce Award from the Literary & Historical Society of University College Dublin

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30 September 2011

TWO SOUTHERN PINOTS GET THE SNIFF

This is the old barn at Yering Station, Yarra Valley, set up for a tasting. To see a Youtube clip of the DRINKSTER tasting the current Yering Station Pinot noir, and the latest Tasmanian offering from Ninth Island, click the image.

FALSTAFF'S SACK TERROIR ROCKING MADLY

SIR JOHN FALSTAFF by MARK ANSON

The Canary Islands, source of the sherris-sack (or canary-sack) beloved by the great Sir John Falstaff, appear to be on the edge of washing the Boar’s Head tavern clean into the Thames and off down the English Channel.

First, listen to Sir John pondering his potage:

“A good sherris sack hath a two-fold operation in it. It ascends me into the brain; dries me there all the foolish and dull and curdy vapours which environ it; makes it apprehensive, quick, forgetive, full of nimble fiery and delectable shapes, which, delivered o'er to the voice, the tongue, which is the birth, becomes excellent wit. The second property of your excellent sherris is, the warming of the blood; which, before cold and settled, left the liver white and pale, which is the badge of pusillanimity and cowardice; but the sherris warms it and makes it course from the inwards to the parts extreme: it illumineth the face, which as a beacon gives warning to all the rest of this little kingdom, man, to arm; and then the vital commoners and inland petty spirits muster me all to their captain, the heart, who, great and puffed up with this retinue, doth any deed of courage; and this valour comes of sherris. So that skill in the weapon is nothing without sack, for that sets it a-work; and learning a mere hoard of gold kept by a devil, till sack commences it and sets it in act and use. Hereof comes it that Prince Harry is valiant; for the cold blood he did naturally inherit of his father, he hath, like lean, sterile and bare land, manured, husbanded and tilled with excellent endeavour of drinking good and good store of fertile sherris, that he is become very hot and valiant. If I had a thousand sons, the first humane principle I would teach them should be, to forswear thin potations and to addict themselves to sack.”

This is the sort of wine writing many of us could learn from. Notice its brilliant disregard to occupational health and safety, and the urgency with which overindulgence is encouraged. It’s Shakespeare, of course, from Henry IV, letting Sir John describe the tsunami of lust and passion the yellow wine unleashes within his mighty minions.

But this brief essay is more about the geology and terroir of the islands, and the marketing challenge it presents for all wine regions that export to the eastern seaboard of the USA and the UK.

If the earth tremors currently rocking the Canaries do the terrible deed, and loosen the flank of the Cumbre Vieja volcano on La Palma, the resulting tsunami would simply remove most life from ALL north Atlantic shores.

This is a very good reason to live on the south coast of Australia. The faultline I live on hasn't moved much in 50 million years.

THE DURAZNERO VOLCANO IN THE CUMBRE VIEJA ON LA PALMA, CANARY ISLANDS ... IF THIS BIG CRACK GIVES WAY, 500 BILLION TONNES OF ROCK WILL FALL INTO THE ATLANTIC, AND ALL HELL WILL BREAK LOOSE ... CLICK IMAGE FOR TODAY'S TREMOR REPORTS FROM EL HIERRO, AN ISLAND SIXTY KILOMETRES SOUTH OF THIS TREACHEROUS TIME BOMB ON LA PALMA ... CLICK HERE FOR STORY ABOUT ONE HUGE LANDSLIDE THAT OCCURED LONG AGO ON TENERIFE .... FOR MORE STUNNING IMAGES OF THE HIGHLY UNSTABLE CANARY TERROIR AND TERRANE, CLICK HERE.

SA FROST & HAIL DAMAGE NOT TOO BAD

Hail and frost have given some premium South Australian vignobles a touch of what for early in the growing season. Click James Hook's photograph for his report at DJs Growers.

29 September 2011

AUSTRALIA "MORE THAN JUST CHEAP WINE"

Click on ace Hunter winemaker Andrew Margan to listen to the BBC's Phil Mercer discussing the state of Australian wine with him, Brian McGuigan, and Christina Tulloch

BOSTON BOFFINS DEBUNK OZ WOWSERS

In the midst of the current wowser/dry/proho uprising in the thirstiest country on Earth, click on Charles Bukowski to read a withering but cool demolition of the latest Australian wowser Docs' brochure masquerading as science ... Charlie wouldna stood for it!

28 September 2011

WET: BIG SQUIRTERS ROLL OUT RAZOR WIRE

New SAW Gang Sweats Over WET
Paranoid Fantasies Rule Rorters
Big Tribes Panic Over Tax Rebate
by PHILIP WHITE

What do Yalumba, McWilliams, Tyrrells, Tabilk, Angoves, Brown Brothers and Taylors have in common with Neil McGuigan, the Casella family and Yellowtail?

I might usually suggest, that when all is said and done, the vast bulk of their wines are generally of equal quality.

But in this instance, that is not my case; this obvious appellation, whilst helpful for their gang, is not news: it is a stale old headline.

The really new news this week is their formal announcement of their love of the Wine Equalisation Tax (WET), which was sold to the wine industry at the introduction of the Goods and Services Tax (GST - VAT) on the grounds that it would protect very small wineries by giving them a rebate on tax paid when their profits were low, or simply not there.

So why, at a time when they boast of the industry undergoing dramatic restructuring, would these rather large-to-huge wineries be so worried about protecting the army of their smallest, least efficient rivals, whether these littlies wanted such protection or not? Why would these big companies argue for the retention of the WET, when much bigger companies, like Foster’s Treasury group, including Penfolds and Wolf Blass, and Pernod Ricard, including Jacob’s Creek and Wyndham, are arguing that the WET is a mess which adds to the turbid Australian wine lake and is open to rorting on a vast scale?

Surely these grand old family wine houses aren’t claiming the WET rebate?

I can’t say for sure. There are so many loopholes in the WET that I’m surprised it didn’t dry right out years back. You can rifle it easily without breaking any law. The fact of its survival is reflection, more than anything else, of the overt lobbying power which rorting ethanol dealers exert over the Australian Labor Party, which seems to be run by the Shoppies, the trade union whose members work in the discount booze stores owned by the liquor retail duopoly, Coles and Woolworths.

I can’t quite believe that the Winemakers' Federation of Australia (WFA, or The Woofer) would have told the health lobbyist, the Alcohol Education & Rehabilitation Foundation (EARF), that $50 million of WET rebate goes to retailers, and if I did, I couldn’t accept that it could possibly be this humungous duopoly of mass discounters who get that fifty large. But something along these lines has been suggested by the EARF, and given the nature of the law, it could happen without any law being broken.

Then, when I digest this, and I include my feelings toward The Woofer's attitude to numbers, I should also consider the possibility that you could double that fifty without anybody, except, perhaps, the poor folks who drink the stuff, being crook. I mean, how would The Woofer know the exact figure?

These loopholes make space for such great suspicions and rumours amongst those who don’t exploit them. The most recent conspiracy theory I’ve heard concerns a very big exporting winery whose wines are, shall we say, not exceptionally beautiful drinks. The accusation suggests that since the Aussie dollar went up to where every intelligent human knew it should be, sales of this product in the USA have not been so swift. Not a lot of star winemakers, the rumour goes, actually want to work in that refinery. So, within the restrictions of the WET, its winemakers are encouraged to act as individual producers who make wine in the refinery and then sell it wholesale to the refinery which becomes the retailer, but pays them such a small fee that they can then individually claim the WET rebate, which is fortunately for them a lot more money than the refinery would ever pay them as salary.

In lieu of me having great understanding of accounting and law, and the gumshoe yearning and wherewithal to pursue such a yarn, I presume this to be nothing more than the paranoid fantasies of an embittered and disenfranchised rival, or a former employee.

I mention it merely to indicate the types of goss wild in the business, particularly after the mass rorting of the spirit of the WET which occurred this last horrible vintage.

WITHOUT BREAKING ANY LAW, THE REV HAROLD CAMPING CONVINCED MANY CHRISTIANS THAT THE RAPTURE WOULD OCCUR ON MAY 21st THIS YEAR

On these precepts alone, the WET deserves a forensic dissection, and a quick scraping into the slops bin. The taxpayer should not be subsidizing these ethanol mongers.

Most of this posh new gang last year displayed their disappointment in their very own wine industry councils, like The Woofer, and Wine Australia (formerly the Australian Wine and Brandy Corporation), by forming another exclusive marketing and lobbying group, Family First Winemakers. This exclusive silvertail gang had some prominent exceptions. The McGuigan family wasn’t there, or the Angoves, whilst the newcomer, Howard Park, strangely was.

But now we do have this new gang, which includes some of those enormous omissions, like the Casellas of Yellowtail, the McGuigans, and the Angoves: truly great families all.

So why, in order to distance themselves from their rivals in the international marketplace, why would they this year be suddenly forming yet another alliance, but this time with the prominent inclusion of some that were not invited last time, and the glaring exclusion of a few beauties, like Henschke, Jim Barry, and d’Arenberg? And why would they be doing this to fight against the makers of Grange, Wolf Blass, and Jacob’s Creek?

When The Woofer negotiated the WET, its major players knew that they had encouraged such ridiculous overplanting of vineyards that there was a very good chance of a dangerous oversupply, against which the honest-to-goodness producers of premium wine, most of which are very small, would struggle to compete.

If you own a wine refinery, you need a few tiny, friendly, ivy-covered, nuts-and-berries beauties around you, to give you credibility.

But the WET was also a convenient manoeuvre which would, by minimalising the tax paid by megaswill refineries, cover their scam in the case that the rest of the world would not drink all the plonk Australia suddenly thought it should make.

Anyway, this new gang calls itself Supporting Australian Wine (SAW). It also includes grapegrowers’ associations from all over the Murray-Darling Basin, and somebody I don’t believe I’ve heard of before, called First Creek Wines. I suppose you need your creeks to make a river.

Oh, and two more. The Woofer, which is squirming like a cut snake since it lost the love of its two star performers, Foster’s Treasury and Pernod Ricard’s Orlando-Wyndham-Jacob’s Creek.

And DRINKSTER’s lifetime pal, Constellation, or Galaxy, or Heavens Above or whatever the skeleton of the Hardy Wine Company is now dressed as. They're SAW too. In fact, it sounds like Troy Christensen, the CEO, is sorely pissed off.

CONSTELLATION'S LAST GREAT COUP BEFORE WITHDRAWING FROM AUSTRALIA WAS THE REMOVAL OF THIS VINEYARD FROM THE SOUTH AUSTRALIAN STATE HERITAGE LIST, ORIGINALLY PLANTED BY JOHN REYNELL 162 YEARS BEFORE, THEY REPLACED IT WITH INTENSIVE HOUSING. photo KATE ELMES

A Contrary View From Paul Lloyd, Business Manager Of Coriole Vineyards:

CORIOLE CELLAR DOOR IN McLAREN VALE


I think a few of your comments, and those of others, re the Wine Equalisation Tax need some modification.

For a start I find it difficult to understand how a $200 million tax rebate in a $5 billion industry creates an oversupply.

The history of the WET is a little different to what you have written.

In 92 or 93 the Keating Dawkins budget put a large increase in tax on wine producers and gave substantial tax breaks to grape growers.

This was at the start of the export boom and everyone jumped in. Croser then at Winemakers’ Fedearion of Australia negotiated the deal, which personally, as a small producer, I was never happy about. If memory serves me correctly he was floating Petaluma at the time and the wine market was in crisis while the Government, the Opposition and the industry attempted to
resolve things.

Later on in ’96 or ’97 and the Howard government was in - I remember a visit from a minister who made it clear the industry shouldn’t expect help as they were still sore about that budget event.

Due to long lead times any investment in the wine industry takes about 10 years to have an impact. Little wonder about the time of the World Trade Centre the export market started to collapse and markets didn’t exist to take on the volumes of wine coming through.

The lead time figures in past events as well – the Whitlam Government changed the stock valuation rules in 1973 – by 1984 we had vine pull.

The WET came in with the Goods and Services Tax and kept the same rate as the old wholesale sales tax but our GST was an effective 12.9% not 10% - an argument the industry lost. In addition there was a small rebate covering all producers and the states offered various Cellar Door rebates. This changed when the High Court ruled some state taxes were invalid leaving Costello to come up with a system whereby the Feds collected the tax and re-imbursed the states. Soon after this the WET rebate was introduced (2004?) and then increased (2005?). Ob
viously they hadn’t considered NZ which turned out that under the CER agreement became subject to the same rebate when sold within Australia. So NZ producers got the rebate in 2005 backdated to the start of the scheme.

It would seem to me the Rebate was introduced to provide some assistance to the industry – it’s likely the Keating/Dawkins budget was as much to blame for the oversupply as any other factor. Unlike the beer & spirits industries the wine industry is focused on regions and generate a great deal of regional activity. The rebate is not a loss of general tax revenue and is directly funded from the comparatively high rates of tax paid on domestic wine sales (refer the Gillard deal with Bluescope and the Carbon Tax). Most small producers won’t get anywhere near the full rebate (otherwise it would be $1B+). I don’t understand how the rebate could affect the cask market as that is the preserve of major producers – where WET rebates will be exhausted anyway. To the extent of some rorting that is up to the Australian Tax Office and treasury. Deloittes data shows that most small producers are reliant on the rebate for profits and cash flow. The rebate had the effect of enabling growers to convert to wine producers – many have and many of them have been successful. The cost of setting up crushing facilities etc is significant hence the use of the contract processors. By my reckonings there are no more wineries with crushing facilities now than when I was at Roseworthy in 1976 – around 400.

How have we used th
e rebate? Stabilised our business, invested in vineyard upgrades/replants etc and winemaking leading to we believe improved quality. In addition we’ve managed to hold (and in fact grow) all our export markets despite the Global Financial Collapse and the high Australian dollar – not by discounting. We have a stable selection of excellent growers whom we work with closely and they receive good prices for their fruit.

Should the rebate stay or be replaced with an excise? The rebate is a catch 22. Long term maybe we can live without it – based on many of our competitors going broke before we do. As I’ve said before investment in our industry is very long term and to simply announce a tax change on a budget night in May causes immense problems (See Whitlam and Keating above). Any change should have a long lead in perhaps in steps to enable the industry to cope. We don’t know what impact such a change would have on the market. You suggest the price of sub $20 will go up and >$20 come down. I doubt this, as I imagine there would be cross subsidisation between the two. The market as you’re aware works on price points and a sudden change would play havoc with these.

Alcohol abuse through casks – and not all cask consumption is abuse – can be managed in other ways. The beer and spirit lobbies promote this abuse but it would seem largely on the basis that those abusing
wine in casks should be equally abusing beer and spirits in bottles. My experience is that wine is a minor issue with the young. My own kids and their mates have access to as much alcohol as they like (not that I offer it) – for free – and yet don’t touch the stuff – preferring beer & spirits.

It’s wrong to think that bad wine will sell just because of the rebate. The diseased fruit that was processed was mostly from growers watching their investments collapse under them in an extremely difficult year. The contract processors may have a lot of it in tanks but it’s unlikely to go anywhere.

The big laugh is the major producers complaining. They’ve managed to dumb down the quality of Australian wine and now complain of lack of markets, apparently because of a WET rebate – go figure.

The reality is, in my view, they’ve badly managed their business models in an industry which ideally is no place for large corporates.

Paul Lloyd
Business Manager
Coriole Vineyards


If anyone else feels they have an essay in them, send them in - DRINKSTER

A Contrary View From John Casella, Managing Director, Casella Wines (Makers Of Yellowtail)

PRESS STATEMENT:

Casella Wines managing director, John Casella (left) , said that proposals to switch tax formats and remove the Wine Equalisation Tax (WET) Rebate would cause the closure of dozens of regional wineries, forcing job losses and, ultimately, the forced sale of family vineyards.

“The WET rebate needs to be reviewed to close loop holes, but it should not be abolished because it is doing its job. It is supporting small winemakers and supporting diversity in the wine industry. The proposal to remove the WET rebate will impact on the diversity of the wine industry, a key strength of the industry, and also impact regional economies which rely on the jobs created by small wineries and the tourist business they draw to regions,” Mr Casella said.

“For many small wineries and grape producers, the land they cultivate provides not only their livelihood but their only significant asset, providing security in retirement and a future for their family.”

Australian Vintage chief executive, Neil McGuigan, said the switch to a volumetric tax would effectively increase the cost of accessible mainstream wines while reducing the cost of high-end premium wines.

“It’s interesting logic, to push a scheme that puts up the cost of mainstream wines, that most consumers buy - allegedly as a means of reducing an industry oversupply situation,” Mr McGuigan said.

“Under a volumetric tax we will certainly change the Australian wine industry, but in a negative way that will see regional winemakers going broke, regional jobs and family vineyards disappearing and more Australian wine being sold at unsustainable prices into international markets as companies struggle to survive.

“Introducing a volumetric tax will have impacts beyond domestic sales and consumption,” Mr McGuigan said.

“As it will affect sales of mainstream wines it will affect the economies of scale of Australian wineries and impact our ability to compete effectively in tough international markets.

“Given the strength of the Australian Dollar in key export wine markets, like the UK and US, even small increases in wine costs will significantly reduce Australia’s export competitiveness and will also impact Australia’s ability to compete in emerging markets like China.

“The Australian wine industry is going through a process of painful change at the moment – we planted too many grapes when export markets were taking off and now we are struggling with a high dollar and stiff competition in international markets.

“The situation is turning around, there are many more vineyards being pulled out than are being planted, grapegrowers are switching businesses or crops and winemakers are looking at new markets,” Mr McGuigan said.

He said Victorian Department of Primary Industry figures showed that in the Murray Valley and Swan Hill region the grape crush was down 20% in 2011 compared to the previous season.

The South Australian Department of Primary of Industries reported a similar trend in the Riverland (Australia’s largest grape growing area) noting a reduction by 4,306ha (17%) of irrigated grapevines between July 2007 and January 2011.

“The proposal to switch to a volumetric tax will plunge the industry into catastrophic change that threatens tens of thousands of jobs in wine producing regions across the country and will destabilise wine businesses when they most need to focus on business strategy in order to survive,” Mr McGuigan said.

Representative of one of Australia’s largest grapegrower groups, Murray Valley WineGrowers, Mr Mark McKenzie, warned that a volumetric tax would have an absolutely devastating impact on inland winegrape growing regions.

“The Government needs to think very carefully in assessing changes to wine industry tax. They need to think long and hard about whether they want a broad based grape growing industry because this tax will hit 60 percent of the production base,” Mr McKenzie said.

Accolade Wines Chief Executive Troy Christensen said Australia’s wine industry was already facing significant challenges, including access to water, climate change, imported surplus wine and the unprecedented strength of the Australian dollar.

“The industry is facing its challenges and for a real industry solution it needs to work together.”

“Supporting Australian Wine is calling for the retention of the status quo in wine taxation for the sake of jobs, Australia’s wine industry and our regional communities.’’

“We believe if the WET rebate is being rorted it should be tackled through the appropriate channels, via a tax office crackdown, rather than turning the industry on its head.”

If anyone else feels they have an essay in them, send them in - DRINKSTER

WONG ALL WRONG ON WINE RESTRUCTURE

Bacchus only knows who advises the Federal Minister for Finance, Penny Wong (above), but she's got absolutely no hope of getting her head around the current collapse of the Australian wine business if today's blithe Radio National interview is any guide.

DRINKSTER normally affords much more respect for this savvy minister than we can stretch to her ramshackle colleagues and most of the current crop of lamebrain Labor twerps, hard right Catholic wierdo thugs and shelf-stackers from the Shoppies. But she's gonna have to do a lot better than this:

STEPHEN DZIEDZIC: And how about alcohol? You've got doctors' groups this morning in Parliament House - they're saying that you need to look at the way that you're taxing wine and at the moment it isn't taxed enough. Is that something the Government's willing to look at next week?

PENNY WONG: Look, can I say on alcohol this Government's got a very strong record of reform in the area of managing alcohol abuse and lessening alcohol abuse in Australia, both through the tax system but also health policy. But when it comes to tax what we would say is we are seeing a very significant restructure in the wine industry at the moment. We don't believe this is the time to be looking to additional changes of taxation regime.

Questions on Notice:

1 The Gillard federal government, and its intellectually crippled South Australian infant, have a disgusting record in the area of "managing alcohol abuse" and "lessening" [sic] it. Give one credible example of this "very strong record", in, for example, the APY Lands, or the bed of the Todd River in The Alice.


2 What is "the significant restructure" you are seeing in the wine industry "at the moment"? Who is managing this restructure?
Does it have anything to do with the collapse of irrigated desert viticulture as we knew it, and which existed almost solely to provide bladder pack plonk which is hardly taxed at all relative to good wine, but contributes a great deal to Australia's annual $15 billion plus bill for alcohol-related harm?


TONY BILSON: RATTLIN' THEM POTS'N' PANS

BILSON DOES BRONSON: PICKIN' SOME SOUP TINS OFF THE FENCE, KANGARILLA, ABOUT 1988 photo PHILIP WHITE

Australia's most accurate bellwether for impending international financial chaos: Tony Bilson: his front-running restaurants seem to be the first to shiver when the money suddenly disappears.

On her Radio National ABC program, Julia Baird chats with "the godfather of Australian cuisine" about Bilson's forthcoming memoir, Insatiable, just as all the money in the world crumbles and his two Sydney restaurants go into voluntary administration. Click the image above to hear or read Julia's tantalising interview. DRINKSTER will review this remarkable book as soon as it's been properly chewed and digested.

Assisted by trainee chefs from Le Cordon Bleu's Adelaide campus, Bilson will be back at Yangarra Estate, McLaren Vale, to cook his annual feast on October 29th. Call the winery on 08 8383 7459 for bookings.

Go here to see the menu and the breath-taking wine list at the triumphant Penfolds dinner Bilson presented with Peter Gago in Australia's Paris embassy earlier this year.

WFA FIGURES BLURRY, HEALTH LOBBY SAYS

"Myths & Mistruths" Docs Claim
Woofer Woofs Up Wrong Tree
Kick In Teeth For Plonk Wallahs

Media Release - 28 September, 2011

Fact or fiction – The real impacts of tax reform on the Australian wine industry

An Australia Institute report to be launched today has torn up the myths and mistruths perpetuated by the Winemakers Federation of Australia (WFA) that wine tax reform would result in a fall in production by 34 per cent and the loss of up to 12,000 Australian jobs.

Commissioned by the Alcohol Education & Rehabilitation Foundation (AER Foundation), the “Australian wine tax regime: Assessing industry claims” report concludes that the WFA has grossly exaggerated its claims on the impact of tax reform on the Australian wine industry in the event of a switch to a volumetric tax for wine.

The report’s co-author and Executive Director of The Australia Institute, Dr Richard Denniss confirms that the WFA claims regarding the loss of production and jobs as a result of tax reform are flawed.

“Our modelling shows that moving wine to a volumetric tax would likely result in a fall in production of 5.2 per cent – a far cry from the 34 per cent that the WFA espouse.

“Importantly, the loss of jobs associated with a reduction in the production and consumption of wine would be in the order of 600 jobs – or 95 per cent lower than what the WFA alleges.

“The Wine Equalisation Tax and Wine Equalisation Tax rebate encourage people to drink irresponsibly, encourage farmers to use water irresponsibly, and contribute significantly to the grape glut.

AER Foundation Chief Executive Michael Thorn welcomes the findings. “This report corrects the WFA’s gross exaggerations in its continuing efforts to muddy the waters and stall the debate to reform the Wine Equalisation Tax.

“The Australia Institute report is the latest in a long line of reports that has established the absurdity of Australia’s current wine tax arrangements and importantly, it has begun dismantling the defensive claims made by the WFA to influence the policy debate.

“It’s time that the Government stops hiding behind the excuse of the wine glut and the unfounded industry excuses to avoid reforming the tax system on alcohol. They must dismantle the Wine Equalisation Tax regime to provide a sustainable future for Australia’s wine industry, and to address the harms and cost to the community caused by the oversupply of cheap mass-produced wine.

“Last week, we saw two of Australia’s most prestigious wine companies, Premium Wine Brands and Treasury Wines Estates, makers of Penfolds and Jacobs Creek, call for the abolition of the Wine Equalisation Tax rebate and the introduction of modified volumetric taxation.

“Isn’t it time the Government came on board?”

-Ends –

The AER Foundation will officially launch the report this morning at the National Alliance for Action on Alcohol’s (NAAA) Alcohol Tax Forum hosted by the Australian Medical Association (AMA) in Canberra, which is calling for the Government to adopt a more consistent approach to alcohol taxation.

Go here to read the full report.

25 September 2011

FOSTER'S CARKS ON SMALL BEER: ELLIOT





















"Essentially they've been badly run: bad board, bad management. I think the new guy who is there now knows what he's doing, but he got there too late."


Former Foster's brewing boss, John Elliott, told Fairfax that "reducing the alcohol content of popular beers including Victoria Bitter from 4.9 per cent to 4.7 per cent combined with poor marketing" had undermined some of Foster's best products.

"You don't change the quality of your product, and that's what they've done. And I think that's a grave error."

Click here for an example of "good marketing": a classic Paul Hogan Foster's ad for UK; click here for a perfect example of Foster's product placement in them good old days, and click here for Elliot's latest summary of the SABMiller takeover of the maker of the world's most boring friggin beer.

And for dessert, try and work out what this Constellation marketing genius thinks he's talking about: he never once mentions wine! Perhaps it was this level of acuity which saw his company take a billion dollar dump and flee from Australia.

24 September 2011

TALTARNI TAKES WHITEY TO VACQUEYRAS

Click image to watch review of Taltarni's two top Heathcotes

22 September 2011

WET REBATE DOOMED TO DRY RIGHT OUT

Huge Crack In Ozwine Ramparts
Two Biggies Desert The Woofer
Call For Excise In Place Of WET

by PHILIP WHITE

Australia’s Wine Equalisation Tax is doomed.

Both Treasury Wine Estates (owners of Penfolds and Wolf Blass), and Pernod Ricard (owners of Jacob’s Creek), have called for an overhaul in the way in which Australian wine is taxed.

In very similar statements, these huge wineries have called for the current system to be replaced by an excise, as is currently imposed on other alcohol. This involves the drinker paying tax on the amount of pure ethanol in his/her drink, instead of paying tax on the retail value of the item.

This must come as a huge embarrassment to the Winemakers Federation of Australia (WFA), as it indicates that some of the biggest wine companies in Australia have lost patience with the botch such industry councils have made in their attempts to “rationalize” the punch drunk wine business.

To add the most severe insult, in their impatience with the WFA's hopeless efforts to correct the mess the business is in, they appear to have joined the wowser lobby's crusade to remove the WET.

Either that, or they've been reading DRINKSTER.

Between them, Treasury and Pernod Ricard annually vinify around 350,000 tonnes of grapes.

Chairman and CEO of Pernod Ricard’s Premium Wine Brands, Jean-Christophe Coutures (right), said:

“The sustainability of the industry is seriously threatened by oversupply and the real damage to the strong brand that Australian wine has built for itself over years that this is causing [sic]. Industry efforts to restructure have not succeeded and there is an urgent need for intervention to remove impediments to the restructure process – we believe that this includes the current wine tax arrangements and we would like to work with industry and Government to address this.”

Treasury Wine Estates CEO, David Dearie (below)said:


“Tax has a fundamental influence on both the structure and sustainability of the Australian wine industry. In the context of our industry’s current challenges, ambitious reforms are urgently required if we are to achieve our vision of an Australian wine industry that is economically, socially and environmentally sustainable.

“In particular, the WET rebate must be abolished or fundamentally reformed. It is untenable to have a tax mechanism that inhibits restructuring and works against the long term best interests of our industry, whilst also costing Australian taxpayers more than $200m a year.”

The troubled brainchild of Brian Croser and Ian Sutton, then heads of the WFA (known disparagingly as The Woofer), the WET was introduced with the Goods and Services Tax. It was sold as a triumph for the little guys, the big nasty government assisting small producers by offering a rebate on tax paid when their income was low.

Sceptics like this writer called it, from the start, an unfair system which saw makers of bladder pack plonk pay much less tax per litre than makers of premium bottled wine, and that this tax system had a whole lot to do with keeping bladder pack prices low to alleviate the forthcoming surplus.

Put simply, the WET encouraged the enormously wasteful irrigated plonk business of the Murray Darling by keeping bladder prices down. This wreaks social, economic and environmental havoc.

Echoing a call I made here a fortnight ago “Wet, Dry, Whatever – Oz Wine Hits Wall” the Treasury statement wisely “supports investing a percentage of the savings from WET reform to assist industry restructuring”.

All this has happened since the September 6th launch, in Parliament House, Canberra, of the report, Alcohol Taxation Reform – Starting With The Wine Equalisation Tax .

This was compiled by The Allen Consulting Group for The Alcohol Education & Rehabilitation Foundation (EARF), an alliance of health bodies established as “an independent, charitable organisation working to prevent the harmful use of alcohol in Australia”.

At that forum, I said “many communities in the irrigated inland will need counselling, rebuilding, cash and perhaps even relocating” when this totally unequal tax system is replaced by a fair and logical volumetric excise, where tax is paid on the amount of alcohol in your drink, and not on its retail value.

The excise recommended by former Australian Treasury boss Ken Henry (right) – not to be confused with Treasury Wine Estates – would see wine of bladder pack quality increase to the equivalent of about $6 a bottle. There’d be little change to the price of a $20 bottle; expensive wine would fall in price.

This report was ridiculed by industry councils like the WFA, but it seems to have rung out some raw truth in the ears of these very significant wine companies.

The rorting of the WET has reached a perverse pitch. Pernod Ricard believes $30 million of WET rebate goes straight to New Zealand; the WFA itself told AERF they believed another $50 million is being rorted by retailers, who are taking money which was supposed to go to the same winemakers they discount to doom.

Speculators have been buying fruit from growers who couldn’t afford to pick their crops, getting somebody to make wine from it, pocketing the WET rebate, giving the grower a pittance, and adding to the swilling wine lake which has not diminished in size, in spite of 2011 being the worst vintage in most people’s memory.

It was in fact the second-wettest vintage in the history of Australian wine, and enormous amounts of mouldy and rotten fruit has been vinified, both by shady opportunists and panicking, desperate wineries.

While refusing to accept that an enormous amount of the current wine lake is of dreadful quality, WFA CEO Stephen Strachan (left) admitted to the ABC that “the reality is that the WET rebate is contributing to some of the problems in the marketplace.

“It comes down to the tax office looking at the intent of the law and applying it,” he said, “and there are a whole range of audits that are being undertaken at the moment, and those audits potentially will find that there are some who are abusing loopholes ... it probably requires a rewrite of the legislation so that the original intent of the WET rebate is delivered, not the outcome that we’re seeing now.

“Let’s not forget that we’ve got a significant over-supply of grapes and wine in Australia. That oversupply was not caused by the tax position. A number of people argue that that’s the case, but it’s just not true. It was caused by a whole lot of plantings that happened in the industry in the late 1990s.”

Yes, Mr Strachan, indeed. “That happened.” Gee whizz. An oversupply that your organization should accept credit for. I'll tell you how that happened. It was the WFA’s 30-year-plan, instituted in 1995 to manage the growth of the Australian business until 2025 that encouraged such ridiculous levels of plantings that the whole thirty years’ worth went in before 2000.

Croser and Sutton knew full well those plantings were in before they went off to Canberra to contrive the WET. They anticipated the fruits of their labour even before they'd produced a berry.

So, as two of the biggest wineries seem to understand, the oversupply and the WET have been very firmly entwined ever since.



For an image of what the wine business was like immediately before the GST and WET were introduced, go here. For a recent point of view from Brian Croser, go here.

PERNOD-RICARD ALSO WANTS WET AXED

PRESS STATEMENT

Premium Wine Brands Calls for Tax Reform to Address Oversupply of Australian Wine

In a submission to the Federal Government’s upcoming tax forum, Premium Wine Brands will today call for significant reform of the wine taxation system to help address the oversupply issues facing the Australian wine industry.

As one of the largest winemakers in Australia, with global wine brands such as Jacob’s Creek and Wyndham Estate, Premium Wine Brands believes that the current wine glut is one of the most serious challenges facing the Australian wine industry.

In the submission Premium Wine Brands states that recent figures for vintage 2011 released by the WFA showing an increase in wine production, despite adverse weather conditions, are further evidence that industry efforts to tackle oversupply have not resulted in any significant restructuring.

The submission goes on to state that current wine tax arrangements are actually impeding efforts to restructure the wine industry as they distort market forces that would otherwise operate to address the structural oversupply issues.

Premium Wine Brands is urging the Government to reconsider its policy position in relation to wine tax arrangements and has suggested:

• The abolition or significant reform of the WET rebate system that currently provides a subsidy to all wine producers totalling over $200 million per year (around $30 million of which is estimated to go to NZ producers); and,

• Taxing wine on a volumetric basis, with the tax rate set at a revenue neutral level (in line with the existing category based tax approach).

Launching the submission, Premium Wine Brands Chairman and CEO, Jean-Christophe Coutures, said: “Premium Wine Brands is passionate about the future growth and development of the Australian wine industry and we are investing behind our vision of an industry lead by strong brands and premium quality wines.

“The sustainability of the industry is seriously threatened by oversupply and the real damage to the strong brand that Australian wine has built for itself over years that this is causing. Industry efforts to restructure have not succeeded and there is an urgent need for intervention to remove impediments to the restructure process – we believe that this includes the current wine tax arrangements and we would like to work with industry and Government to address this.”

James Wright
Global Corporate Communications Manager, Premium Wine Brands, Pernod-Ricard

21 September 2011

HOT!!! TREASURY WANTS WET AXED!!!









DRINKSTER Scores A Top Goal
Tower Of Babel Gets Big Crack
Years Of Arguing Lets Light In


TREASURY WINE ESTATES LIMITED

ABN 24 004 373 862
77 SOUTHBANK BOULEVARD
SOUTHBANK VIC 3006 AUSTRALI A
WWW.TWEGLOBAL.COM

21 September 2011

Media Release

Tax Reform for a Sustainable Australian Wine Industry

Australia’s leading premium wine business, Treasury Wine Estates (TWE), has thrown its support behind substantial wine tax reform in the lead up to the federal government’s Tax Forum in October 2011.

In a submission released today, TWE advocates the abolition or fundamental reform of the Wine Equalisation Tax (WET) rebate and the taxation of wine on a volumetric and revenue neutral basis, with a phased introduction to allow industry time to adapt.

Abolish or reform WET rebate

TWE urges the government to either abolish the WET rebate, or fundamentally recast it as a true cellar door (retail based) rebate available only to genuine wine producers.

The current WET rebate system is effectively preventing consolidation and sustaining uneconomic production, at a time when the industry urgently needs to retire excess supply and rebuild value in the Australian wine category.

Further, a significant percentage of WET rebate beneficiaries are neither Australian nor genuine winemakers – calling into question the value of a $200m+ per year investment of Australian taxpayer funds.

TWE supports investing a percentage of the savings from WET reform to assist industry restructuring and grow demand, as part of a balanced approach to industry sustainability.

Volumetric, revenue neutral wine tax

TWE supports taxation of wine on a volumetric, revenue neutral basis. A simple three-tiered tax structure, based on alcohol content by volume, would create a direct relationship between applicable tax and alcohol content without introducing undue complexity into tax arrangements.

*TWE firmly opposes the imposition of a flat volumetric tax across all alcohol categories. This approach would be out of step with international practice, and would not reflect the different cost and benefit profiles attributed to various alcohol products and categories.

Treasury Wine Estates CEO, David Dearie said:

“Tax has a fundamental influence on both the structure and sustainability of the Australian wine industry. In the context of our industry’s current challenges, ambitious reforms are urgently required if we are to achieve our vision of an Australian wine industry that is economically, socially and environmentally sustainable.

“In particular, the WET rebate must be abolished or fundamentally reformed. It is untenable to have a tax mechanism that inhibits restructuring and works against the long term best interests of our industry, whilst also costing Australian taxpayers more than $200m a year.

“Significant wine tax reform won’t be easy to implement and we understand the considerable impact it will have on some sections of the industry, and therefore advocate the need for appropriate support and transition arrangements. It will, however, be critical if we are to fundamentally address our industry’s challenges and protect the sustainability of Australia’s wine sector over the long term” said Mr Dearie.

About Treasury Wine Estates


Treasury Wine Estates (TWE) is one of the world’s leading premium wine businesses, headquartered in Melbourne and encompassing some of Australia’s best loved and iconic wine brands including Penfolds, Lindeman’s, Wolf Blass, Rosemount, Wynns Coonawarra Estate,
Seppelt, Coldstream Hills and Devil’s Lair.

With over 11,000 hectares of vineyards, sales totalling over 33 million cases of wine annually, and revenues of approximately $1.8 billion, TWE is Australia’s largest premium wine business.

We employ over 4,000 winemakers, viticulturists, sales, distribution and support staff in Australia and eleven other countries.

With our leading presence in the market and the Australian wine community comes a responsibility to contribute to its sustainability.

This includes advocating product tax arrangements that are consistent with our vision for an industry that is socially, economically and environmentally sustainable, with a reputation for quality and delighting wine consumers around the world.

ENDS

* DRINKSTER would love to know what this means ... any ideas?

20 September 2011

RIESLING: ALL ABOUT TESTOSTERONE?

PROPER RIESLING PEOPLE: COLIN FORBES, left, MAKER OF MANY OF THE GREATEST HIGH BAROSSA - EDEN VALLEY RIESLINGS KNOWN TO DRINKSTER, WITH MARIE LINKE OF KARRA YERTA WHERE THEY MAKE SOME OF THE BEST OF THE REST, IN TINY, DRY-GROWN VOLUMES photo MILTON WORDLEY

Wine Mavens Hot On The Lash:
No Chance In Softcock Chardy v.
King Hell Mofo Top Whizz Rizza
by PHILIP WHITE


BACK IN the olden days, newspaper editors would bark orders to their wine writers, demanding more stuff about women winemakers. This had little to do with the quality of their wine, but was about getting more lasses onto the page. If the editor was male, like the one who called me his “squirt writer,” I’d cringe, knowing their tendency to bugger it up with a sexist photograph and dumb headline.

Feminist editors were perversely insistent, on the other hand, on including the word feisty in their headline. Something in my Vikin soul told me this was wrong. It wasn’t so much the insinuation that winemakers with vaginas would make wines of better flavour than those made by people with penises; my problem had more to do with feisty coming from feist, which is a constantly yapping mongrel cur, usually small.

The term originates in the Old Norse and Icelandic fisa, which means fart.

There must be ways of measuring the relationship of gender and wine, but I’m sure it’s more about hormones and pheromones than your actual genitalia: more about fuel and electricity than gearbox.

A recent study in the Philippines has revealed how testosterone levels vary: how this affects the way men live their lives, and how rotely accepting they are at the loss of it.

Christopher W. Kuzawa, PhD, of Northwestern University in Evanston, Illinois, and his colleagues, tested 624 men over a stretch of years, and have discovered that young men with high testosterone levels are more likely to become fathers early, at which point their testosterone levels tumble and they become much more nurturing and protective and very much less horny. The fearless hunter becomes the mungbean sprout cultivator.

The dummy washer.

Scientists had long known of similar patterns occurring in many other animal species, but had, until now, only suspected its parallel occurrence amongst humans.

Of course this made me think of Riesling.

LOUISA ROSE: AS CHIEF WINEMAKER AT YALUMBA, SHE'S BOSS OF SOME KING-HELL RIESLING

It’s not so much the actual gender that makes the difference. I suspect it’s the winemaker’s level of testosterone. While women produce only a fraction of the amount manufactured by men, this hormone is still a very important part of the character and attitude of all of us. And I suspect Riesling, particularly the best stuff from the Eden and Clare Valleys, is preferred by men and women with very healthy testosterone levels.

Riesling is grown and made to be challenging, bracing, austere wine. It is deliberately designed to be tight with steely, macho acidity. It is the wine of the dominatrix and the severe, the head prefect and the righteous. Morticia Addams drinks Riesling.

I regard Chardonnay, in contrast, to be generally made to be the carer’s wine: the tipple of the cuddlepot and the motherly, even the dangerously sensitive.

Of all grapes, Chardonnay seems to react most overtly to the malo-lactic fermentation, in which bacteria, not yeast, convert its harsh natural malic acid (which tastes metallic, like Riesling) to the fatty lactic acid, the natural acid of mother’s milk and, well, vaginas.

Fair dinkum.

Good Chardonnay is generally creamy and comforting; quite the opposite of your savage lashing Rizza, which does not have a malo-lactic fermentation. Which is not to say that’s always the case: in her Chapel Hill days, Pam Dunsford seemed determined to make her unoaked Chardonnays more like Riesling.

The late winemaker Dr. Max Lake theorized a lot about these things and wrote many books on the topic of aromas and pheromones. Derided while alive by the sorts of zombie winemakers who come off the University of Adelaide production line in their hard hats and steel capped boots to make wines which have led to the collapse of the Australian business, Max was the ultimate sensualist, and many of his suppositions and postulations are gradually earning respect.

THE OTHER MAX:
Dr MAX LAKE



















I wish he was here to urge the Australian Wine Institute to test my theory. Surely Mike Rann could fix this before he goes: he could get Winestate magazine to sponsor Chris Kuzawa and his team on the Adelaide campus. Does the fearless Riesling-drinking hunter always become the mungbean sprouting Chardonnay drinker? A dummy-washer?

Not if you think at length about my list of true Riesling masters. I suspect that once your testosterone leads you into the Riesling camp, you’re here for life. Perhaps Riesling triggers testosterone manufacture.

RIESLING WOMEN: KERRI THOMPSON (left) WITH CRABTREE CO-OWNER RASA FABIAN photo JOHN KRUGER

Think of the great Riesling makers of our age. Brian Barry. Wolf Blass. John Vickery. Colin Gramp. Colin Forbes. Jeff Grosset. O’Leary Walker. Ben Jeanneret. Andrew Hardy. Tim Knappstein. Some of these blokes are even older than me: the wise scientist would hire a diligent social historian rather than a whitecoat taking swabs to estimate the testosterone that drove them in their heyday.

Few have ever gone on to become famous for Chardonnay.

Brian Croser regarded himself as something of a Riesling maker back at Hardy’s, but he later cross-dressed his Petaluma Rizza with a peculiar Graves yeast which released sooky esters I felt were more akin to the mood of Chardonnay than to your whiprod-and-rapier, steel-and-lemon Riesling.

While Blass (leaning on tractor, left, with colleagues) was sweetening his Riesling with pasteurized unfermented Riesling juice to tickle the national sweet tooth, Croser and his Chairman Len Evans preferred the illusion of sweetness which their R2 yeast offered, with all that artifice of estery banana and pineapple.

Surely they missed the point. How many use R2 today?

While he affected the strut of a Riesling king, Evans (below)was always a runny Chardonnay in the middle.

“Chardonnay will be the vanilla of the Australian wine industry” was his mantra. Then, as if such stuff was suddenly about to appear out of our desert, he’d pop a great Mersault or Montrachet Burgundy that cost somebody hundreds of dollars. (White Burgundy should never ever be confused with Chardonnay, which is what it happens to be made from.)

But, c’mon, vanilla? Why didn’t he preach the lactic acid gospel? The cream!

So there went the Petaluma Chardonnay. On the Riesling front, Petal mercilessly flogged its R2 yeast culture to its rivals, until the point where much of Australia’s Riesling smelt of R2. But no R2 Riesling ever achieved what Blassie did, getting his Yellow Label Riesling into the number one sales slot with neutral commercial yeast and a dash of pure unfermented juice.

Blassie was never an R2 man, and never a Chardonnay: he spent the ’eighties questioning Australia’s lunge to the variety, insisting it wouldn’t work. He preferred his characterful blends of things like Semillon, Colombard, Trebbiano and Crouchen, which he called Classic Dry White. The Margaret River lot pinched his CDW moniker for their blends of Semillon and Sauvignon blanc: admixtures designed to give Sauvignon blanc some creamy Chardonnay-like nurture.

On my testosterone index, most Sauvignon blanc is thin, pissy Riesling with aftershave in it. I realized this in the later ’eighties. Suddenly a girl couldn’t steer her Manolos more than ten steps up Double Bay without teetering into an ice bucket full of Cloudy Bay. But these pioneering Sauvignon blanc boulevardiennes were, shall we say, fully grown-up women, beginning to worry about things like osteoporosis.

My occasional role as a manfriend has revealed that some of these mature types quite like their HRT testosterone, the sudden application of which generally triggers a savage lurch to Savvy-b.

Riesling with aftershave, see?

Which leads to the Riesling-making womenfolk; our dominant winemavens. You don’t get too much along the way of teetering going down in their neck of the woods. These women march.

Julie Barry (Good Catholic Girl), Elizabeth Heidenreich (Sevenhill), Kerri Thompson (KT and the Falcon; Crabtree), Keeda Zilm (O’Leary-Walker; Zilm-Heidenreich, with the author on the lash, '09, right), Judi Cullam (Frankland Estate), Stephanie Toole (Mt Horrocks), Louisa Rose (Yalumba), Elena Brooks (Dandelion Vineyards) … while these winemakers can be fierce red beasts when provoked, they first hone their thirst on the Riesling strop. They are masters all, and not one of them a feist.

They can souse my dummy in Riesling any time they like.

And while I suspect that they would rarely equal, say, Wolf Blass on the testometer - at his peak, anyway - I reckon for determination, intelligence and demeanour, as well as their beautifully strapping, bracing Rieslings, they’re an easy match for them cocky old Riesling farts.

17 September 2011

YANGARRA: A CHAT ABOUT ORGANICS

Having rounded it up, Yangarra Estate viticulturer Michael Lane is hand-rearing part of the new replacement team charged with doing a better job than Roundup weedicide/herbicide in the big McLaren Vale vineyard. Click image for Youtube vid chat.

14 September 2011

LABELS ON THE CATWALK: HOW IT'S DONE

In case you're wondering why modern wine label art is so droll, check out this outfit's solution, and the rapturous response Neil Marolia, of Banrock Station ... just one of the morsels that drop into DRINKSTER's basket:

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“Wine Intelligence have exceeded my expectations. It’s great to work with a research company who have such a strong grasp of the wine category, alongside great consumer understanding.They have a great ability of articulating consumer needs into actionable insight. The result of which has allowed me to be much more reassured with the decision to launch new packaging.”

Neil Marolia, Brand Manager, Banrock Station & Nobilo

Does your product pass the Vinitrac packaging test? Click here.

If you obtain a client number, you can see your stuff on the shelves of a digital store ... for the full range of research tools, click here.

AS this source keeps altering one's access to sites it sent me, hoping for promotion, I shall attempt to post verbatim the message it sent me:


You’ve spent months and a significant amount of your marketing budget on a new packaging design and now you and your team can’t decide which one to choose?

Ask wine drinkers in one or up t
o 15 key wine consumption markets for their opinion with Vinitrac® Global and make a fact-based decision.

Vinitrac® - the global wine drinker survey - is the preferred packaging & advertising test and brand & region health tracking solution for many key players in the wine industry.

Wine Intelligence have exceeded my expectations. It’s great to work with a research company who have such a strong grasp of the wine category, alongside great consumer understanding.They have a great ability of articulating consumer needs into actionable insight. The result of which has allowed me to be much more reassured with the decision to launch new packaging.”
Neil Marolia, Brand Manager, Banrock Station & Nobilo



View an example of a standard Vinitrac® packaging test




Visit one of our simulated online wine shops



Vinitrac® October surveys are filling up fast. Contact us to submit your questions for your target markets.

Deadline for questions is the 3rd October 2011. Launching in the following wine markets:

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Natasha Rastegar
Project Manager

Wine Intelligence Ltd

12 September 2011

AC/DC WINE & FAST FOOD: ALL BENT TOYS?

Click the pretty to hear an advertising man highly regarded somewhere analysing the new Akka Dakka plonk WITHOUT mention that it's a WOOLWORTHS product. As for using toys to sell fast food? How fast do you need it?

WET, DRY, WHATEVER - OZ WINE HITS WALL

CHINA UNDERSTANDS WHAT HAPPENS WHEN A BULL MARKET HITS THE WALL: PEOPLE GET SPLATTERED ... BEIJING SCULPTURE WHAT YOU SEE MAY NOT BE REAL BY CHEN WEN LING

Oz Wine: New Terms Of Trade
Entire Business Out To 90 Days

Bully Boom Done And Dusted

by PHILIP WHITE

Roger Pike, of Marius Wines, has new terms of trade.

“When they ring me to ask for some wine,” he says of certain corners of the retail world, “I say, ‘Sure, I’ll just explain my new terms of trade.’

“You send me the money, and start ringing me in thirty days to ask when I’ll deliver. You can keep ringing, and after ninety days or so I might start to consider sending you the wine’.”

There are many thousands of wine industry folk who wish they could risk being so prickly. Australia’s wine world has never looked in such financial disarray. Growers have not found buyers. When they have, they’re being paid a pittance, late ... less money than they paid to grow the crop.

Harvesting contractors, local tractor repair works, water dealers, honest middle men and industry suppliers of everything from chemicals through cardboard boxes to oak chips are hanging out for money they can only hope will some day trickle in.

James Hook, viticultural agronomist at the ever-busy DJ’s Grower Services and Supplies, says “We’re all part of the supply chain. We’re out to ninety days with many clients who are just hanging in there. It goes through the entire client base, right down the line.”

Processing wineries are itching to be paid by speculators who have hired them to make cheap wine from mouldy 2011 fruit which should never have been picked. They are also beginning to wonder whether they’ll ever find a market for the wine they made from crops they themselves speculated on.

It adds to the swilling wine lake, which has not diminished in size, but is certainly taking a dive in quality, in spite of hopeful comments like the respected industry writer Tony Keys (left) offers in the current edition of his Key Report:

“The industry is sorting out its issues, the main point being that money is being lost and there is only so much in any company funds that can be lost.”

Meaning, to this sceptic, that those limited funds have already been lost, and there’s no likely source of more funding for anything.

When you see Constellation, the world’s biggest wine company, after only six years, accept $290 million for 80% of the Australian wine conglomerate that cost it $1.6 billion, I begin to think the money is all gone.

Pity help the little guys.

HAVING MADE JOHN REYNELL'S LIFE WORK THEIR HEADQUARTERS, CONSTELLATION TOOK A $1.3 BILLION DUMP, PULLED HIS OLD VINEYARD OUT, MADE $6 MILLION SUBDIVIDING IT, AND WENT BACK TO NEW YORK, photo KATE ELMES

“The main issue for the whole industry,” James Hook says, “is not so much what wasn’t picked, but the amount of bad fruit that was picked that is now sitting in tanks everywhere as wine. People are beginning to wonder what they’ll do with it. They seem to think China is the solution. That’s very dangerous. Australia will have to be very careful with its quality image.”

If the Chinese, who now pay more money than any other lot for extremely expensive French wine, are wise enough to refuse any inferior plonk which happens to be approved for export by the Wine Australia Export Approval system, there’s another huge stack of money which will not be there.


SLOW BOAT TO CHINA?

There’s another issue. 2011 was the second wettest vintage in the history of Australian wine. It was the La Niña that sent the wet that saw mildews and botrytis moulds explode across the vineyards of South-eastern Australia, right at a time when money was as scarce as the fungicides required to sort the problem. Borderline vineyards big and small were caught with their pants down: rain and flood were the last things they needed.

Most respected sky doctors suggest the usual pattern for such climatic errantry will see a slightly less damp cycle hit us next vintage. If the weather stays damp in the interim, many of the vineyards left unpicked because of mould, and unpruned because of poverty, will work as efficient incubators for the spores still active from 2011, and there’ll be another demand for fungicide in huge volumes, and no money to pay for it.

One of the huge problems of 2011 was the shortage, pure and simple, of the right chemicals. Given the poverty of growers, the chemical suppliers had punted on the drought continuing and the year being dry, and stocked less fungicide anyway, to decrease their own financial risk. There simply wasn’t enough spray in the country, whether one had the money or not.

If the drought now settling on central New South Wales is an indicator of things returning to normal drought conditions across the rest of the south-east vignobles, the mould spores will probably not survive.

IF THE SEASON IS DRY ENOUGH TO KILL LAST YEAR'S MOULD SPORES, WE MAY WELL BE STRAIGHT BACK IN DROUGHT, MEANING THERE WON'T BE SUFFICIENT WATER TO KEEP IRRIGATING THE INLAND VINEYARDS AT THE SAME OLD RATE

Another of the tricky, infernally complex conundrums facing this punch drunk business is the matter of the Wine Equalisation Tax. This was introduced at the beginning of the GST to offer a rebate to smaller producers who found it difficult to compete with cheap wines, which are taxed at much lower rates than premium ones.

This is now being rorted to an enormous degree. 2011 saw growers who had no buyer, and no money to pick, “lend” their crops to opportunist speculators who had them picked, and then vinified by contract wineries, from where they hope to sell them through the bulk “grey” market in cleanskins, like to Woollies or Coles, or invent a temporary brand and dump them via the internet. They offer to pay the grower the profits, less the cost of picking and production, and of course, a handling fee. So without any investment in vineyard, land, winery or cellar, these opportunists can then pocket the WET rebate, add even more swill to the wine lake, and disappear. If this plonk does indeed find a buyer, the grower then sits back waiting to see whether there’s enough money left for them to be paid anything.

AUSTRALIAN DESERT FARMERS SHOULD NEVER FORGET THAT MOST TIMES, THE DESERT WINS


This was discussed at length at a forum in the Federal Parliament House last week, at the launch of a report, Alcohol Taxation Reform – Starting With The Wine Equalisation Tax .

This was compiled by The Allen Consulting Group for The Alcohol Education & Rehabilitation Foundation, an alliance of health bodies established as “an independent, charitable organisation working to prevent the harmful use of alcohol in Australia”.

In the last decade, this Foundation has “invested over $115 million in research and community projects to minimise the impact of alcohol misuse on Australians” ... which, through its national grants program and commissioned research, “has established itself as a leading voice on alcohol and other drugs issues” working with “community groups, all levels of government, police, emergency workers, research institutions and the private sector to address alcohol-related problems”.

The AER Foundation is demanding urgent reform of the Wine Equalisation Tax, claiming it “makes no sense for the economy, the Australian wine industry or the health of Australians”.

IT'S NOT UNCOMMON FOR HUMANS TO GET VERY BIG THINGS WRONG

The report concludes “that the current tax structure contributes to the Australian wine glut by rewarding producers of cheap, poor-quality wines and propping up inefficient producers.

“The WET and the WET rebate are costing Australian tax payers at least $250 million a year, of which the Wine Federation of Australia estimates $50 million is being rorted by retailers, who are exploiting WET loopholes.”

Dr Richard Denniss, Executive Director of The Australia Institute, and adjunct professor at the Crawford School of Economics and Government at the Australian National University, was moderator of a forum involving Kerry Barwise, economic and policy advisor from The Allen Consulting Group; international expert in health economics, Professor Chris Doran of the University of Newcastle, and this writer.

While the forum was confronting and ground-breaking on many levels, the infernal complexity and illogical nature of the WET will take many commentators a long time to unwind. The event gained considerable press, but much of the analysis was too vague and erroneous to have immediate sway.

However, this forensic report is out there now with the policy wonks and economics and business editors, and available for the wine industry to absorb in the fullness of time.

My contribution was the suggestion, that at this time of incurable financial constipation in the wine industry, the WET not only contributes significantly to Australia’s annual $15 billion plus bill for alcohol-related harm (as in the bed of the Todd River in Alice Springs), but also adds to the financial, economic, social and environmental woes currently infesting the source of the most destructive plonk, the Murray-Darling Basin.

THE TODD TAVERN, ALICE SPRINGS: HOME OF THE ORIGINAL 'ANIMAL BAR'

In the simplest metaphorical sense, we destroy one river system making the stuff, and the inhabitants of another when we take profits from the stuff we have made.

A large percentage of the extra money raised by the tax regime proposed by former Treasury boss, Ken Henry, should be divided between the likes of the Todd alcoholics and the Murray-Darling: the broke growers are going to require lots of assistance and rebuilding, just like the out-of-control drunks at the consumption end of the chain.

I can’t see the current wine industry councils ever managing to sort this mess fairly.

As The Key Report concludes, “this is a battle that wine will lose. It may take time but it will be lost. The damage that cask wine is doing to the industry is huge – probably bigger then it is actually doing to those that use it as a means of getting drunk quickly.”

Meanwhile, makers of sublime wine, like the stubborn Pike, continue to have little problem selling their product. They don’t even need China.



Click here to read of banks foreclosing on Murray Valley vignerons.

Click here to read of wine grapes hitting rock bottom up the Murray-Darling.

Click here to read of Shiraz collapsing in the US because it got too fat, dumb, and cheap. Take a bow for The Wall Street Journal, Yellowtail.