AUSTRALIAN PLONK: WHO'S ON THE BRIDGE?

JOHN REYNELL'S SECOND HOMESTEAD, A LONG COLONIAL COTTAGE RENOVATED WHEN HARDY'S BOUGHT IT IN HONOUR OF THE VINEYARD OPPOSITE IN WHICH THEIR FOUNDER FIRST WORKED. CLICK IMAGE FOR BACKGROUND STORY - photo KATE ELMES

Press Gang Delivers New Oz Crew
What'd Old Tom And John Think?
by PHILIP WHITE

Sir James Hardy wrote in The Age, Melbourne, on 23 OCT 1984:

One day in 1850 my great grandfather Thomas Hardy walked down the drive-way of the Reynella winery and farm, to the south of Adelaide, and asked Mr. John Reynell for a job. He got it, for the humble wage of seven shillings and sixpence a week, and stayed for a year and a half, before leaving to earn some money, and, in 1853, start his own wine company.

Today my company owns the beautiful Reynella property, and of course, we are still making wines there which bear the name Reynella.

I sometimes wonder what John Reynell and Thomas Hardy would think of today’s South Australian wine industry.

So who actually runs the Australian wine industry?

There’s a new guard, some of which I shall attempt to summarise:

The Australian Wine and Brandy Corporation is the Australian Government statutory authority responsible for the global Wine Australia marketing program, regulating Australian wine exports, collating and analysing Australian wine sector statistics, assisting Australian wine producers and exporters with trade access issues, and defining and protecting Australia’s wine regions.

Changes there are dramatic. The brand new chairman is Jim Dominguez, a former investment banker who is Commissioner (chairman) of the Private Health Insurance Administration Council. Among his board positions are Arrow Voice & Data, O’Connell Street Associates Pty Ltd, Pacific Knowledge Systems Pty Ltd and Wesbeam Holdings. Previous board and advisory roles have included Tat Hong Holdings (Singapore) and Fuji Xerox (Tokyo).

Dominguez will join board members Andrew Moore, Mark Purbrick, Dr Tony Jordan, Dr Kevin McLintock, Josephine Rozman, Kate Thompson and Natalie Toohey.

And now this board keeps an eye on a brand new CEO, Andy Cheesman. In what was almost his last breath as Chairman, the outgoing Hon John Moore AO, a former Minister of Defence, said “As a highly experienced wine industry executive, Andrew has been tasked with forging closer links with the other wine sector organisations to provide coordinated strategic direction and leadership as the sector adjusts to a rapidly changing global wine environment. We are delighted to welcome an executive of Andrew's calibre.”

ANDREW CHEESMAN: CROSER ANIMAL?

Cheesman said: “I look forward to working closely with the new AW&BC board and the other industry organisations, to provide leadership to our stakeholders as we implement a consistent and credible industry strategy. I am committed to the AW&BC providing an efficient, agile, stakeholder orientated service and being genuinely accountable for implementation.”

Cheesman became Petaluma’s accountant in 1998. Founder Brian Croser floated, and when the brewer, Lion Nathan took it in 2001, Cheesman took his boss role. He became the brewer’s winery operations director in 2004 and took over as “strategy manager” in 2006. In fact, just as Croser spent his life preparing to sell his baby Petal, Cheeseman has spent years successfully grooming it, as well as Knappstein, St Hallett, Preece, Tatachilla and Stonier, for sale to the Japanese brewer, Kirin. Staff of these wineries hope Kirin will spend money on them; others say there is little chance of anything happening other than their dismemberment and sale. Kirin was interested in the breweries.

“As a highly experienced wine industry executive, Andrew has been tasked with forging closer links with the other wine sector organisations to provide coordinated strategic direction and leadership as the sector adjusts to a rapidly changing global wine environment,” Mr Moore said.

He made no response to allegations that Cheesman is a Croser animal.

The Winemakers’ Federation of Australia is the peak industry lobbyist, and body representing Australia's wineries on all national and international issues. It exists to advance and protect the interests of Australia's winery operators. It spends a lot of time telling the Australian Wine and Brandy Corporation what to do.

In February, Bruce Kemp was named its new president. Mr. Kemp was CEO of Southcorp from 1992 to 1999. Since then he was busy in his Global Wine Advice consultancy, and maintaining his chairmanships of Pipers Brook Vineyards and Anthony Smith & Associates, a manufacturer of synthetic wine stoppers. He’s on the board of Tarac and advises the Macquarie Bank on winery business issues. He was chairman of Winepros, the defunct wine website business set up by Len Evans and James Halliday.

“The industry's oversupply, policy risks associated with growing community and government concerns about binge drinking and better integration of our key industry bodies will be priorities during my term,” Kemp said in his first WFA statement.

In 2001, when Fosters Beringer were about to move on Southcorp, which he’d just left, he said “I think what we're seeing is some consolidation within the industry as major companies try and increase their size and scale to ensure that they are going to be able to move what is going to be significantly increasing volumes of wine into the international market.”

Mr. Kemp’s board includes Philip Laffer of Pernod Ricard Pacific, John Grant of Constellation Wines Australia, Ian Johnston of Foster’s Group, Brian McGuigan AM of Australian Vintage, John Angove of Angove’s, Robert Hill Smith of Yalumba, Mitchell Taylor of Taylors Wines, George Wahby of McWilliam’s Wines, John Ellis of The Hanging Rock Winery, Denis Horgan AM of Leeuwin Estate, Colin Campbell of Campbell Wines, and Peter Schulz of Turkey Flat Vineyards.

Which leads us to the biggest wine show on Earth. Constellation has had the gutting knives out. CEO Bob Sands went home this year with US$6.36 million, squeezed over the $6.2 he took in 08. On top of his $1.1 million salary, 10% up on 07. On top of $904,850 in performance incentives, and perks worth $266,449, mostly on private jets. He also took stock and options valued at $4.1 million on the day they were granted, up from $3.6 million the year before.

CONSTELLATION'S MAJOR AUSTRALIAN BUREAUCRACY BEEHIVE: OPEN-SPACE OFFICES NOW FILL THE OLD REYNELLA WINERY. Photo: KATE ELMES

Constellation was a bulk plonkmonger set up by Bob’s dad, Marvin, in 1945. It does Corona beer, many spirits, Robert Mondavi wines and Clos du Bois. It’s been flogging its cheaper rotgut spirit businesses, and says it’s moving into the premium wine business.

Bob had taken over from his big brother, Dick, who became chairman, and walked home with US$6.86 million in fiscal 2009. Plus perks.

Constellation bought BRL Hardy in 2001 for $1.1 billion, making it the world’s biggest vintner. It began its retreat from Australia in August, putting three wineries, 23 vineyards, and 350 jobs on the market. In March, it said it would lose another 400 jobs worldwide.

Constellation’s new CEO for Europe, Australia and New Zealand is Executive Vice President, Business Development Corporate Strategy and International, Paul Hetterich. But John Grant, Constellation’s Australian President, will have to answer now to a middle man, Troy Christensen. This came as Constellation admitted that its auditor, KPMG, had reported accurately when it said Constellation’s financial and inventory reporting systems left a lot to be desired. Grant’s Australian bit got the main share of the fire, particularly for its slack accounting of vineyard realities. This may or may not include the letting go of the main enviroman, Tony Sharley, at Constellation’s formerly green triumph, Banrock Station.

TONY SHARLEY, THE BRILLIANT ENVIRONMENTAL SCIENTIST WHO MANAGED THE BANROCK STATION SWAMPS AND MARSHES UNTIL THEY DRIED UP: SUDDENLY LET GO BY CONSTELLATION'S JOHN GRANT

"Management concluded that the company's internal control over financial reporting was not effective as of February 28, 2009,” the KPMG document said. "As a result it was at least reasonably possible for discrepancies to accumulate in these inventory accounts, which could have resulted in material differences between the actual costs for inventory on hand and the costs that should have been released to cost of product sold.''

To show ’em, Grant stood up at Mildura the other day and announced that Australia’s wine surplus is now 40 per cent of combined annual domestic and export sales, and that Constellation would be chopping prices paid for grapes by 30% next vintage – 30% below break-even for growers.

“We've been signalling consistently to them that they need to downsize,” Grant said. “Those growers who are considering exiting the market should do so.”

Grant is the driving wheel behind Constellation’s destruction and subdivision of John Reynell’s 161 year old vineyard at Reynella.

RAZOR WIRE AT REYNELLA: ONCE THAT 161 YEAR OLD VINEYARD OPPOSITE BECOMES A YUPPIE GHETTO, THERE'LL BE A LOT MORE NEED FOR SECURITY AT CONSTELLATION - Photo KATE ELMES

Then comes Fosters.

Choco Johnston, Fosters’ CEO, has been taking flak for appointing foreigners to bale out his blue beer ship, and he’s done it again with his choice of new wine boss. It’s David Dearie, of Brown-Foreman, the huge whisky-gin-tequila company which happens to include Jack Daniels and Finlandia. And some wineries. Of course, Dearie’s come from the wine branch, most recently in western Europe and Africa.

As he walks in, Dearie sees the following Fosters’ vineyards - 4,000 ha of ’em - hit the block: Clare Estate, Roeslers, Matthews Road, Partalunga, Roscor, Tamar, Blewitt Springs, Langhorne Creek-Blass, Lindemans Padthaway, Padthaway Blass – Garretts, Gales & Tolleys, Duck Pond, Schultz, Guthries, Cluny, Robertsons Well, Glenroy, Kirribilli, Denman, Roxburgh, Yarrawa, Cumbandry, Hill of Gold, Mountain Blue, Tumbarumba, Tumblong, Yankabilly, Lake Cullulleraine, Baileys of Glenrowan, Glenlofty and Racecourse. Newcomers might not grasp the list of great brand names that grew from many of these great vineyards. Being a newcomer, Dearie probably won’t worry much either. He’s one who prefers to let others take the risk. Vineyards are like corn.

Can’t stop without giving Amy Russell, of the Winemakers Federation, a go. She thinks Australia’s been a great vineyard environmentalist, but hasn’t told anybody.

"Especially in terms of things like agro chemical management,” she said. “So we've been doing that for several years and we're now just formalising that into a real environmental assurance scheme. We've been providing the same sorts of information to the market, but not badging it as an environmental assurance program."