“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)





05 August 2014


Seeing double? That's only the start of it ... who measures the bullshit the men with haircuts and the Flash Harries apply when they market stuff bought cheap on the grey market?

Bulk pros do their job well:
essential experts save growers
but packaging's all propaganda

As in all wine-producing countries, there are numerous wine brokers busy in Australia. Their commodity is bulk wine. These are professional businesses, run by seasoned experts, quite properly operating within the law.

A great deal of the Australian wine business, in both the domestic and international markets, depends upon such skilled merchants.

These businesses move excess wine, made, say, by wineries with more vineyard than they generally need for their home brand.

A good example is when an estate changes hands, and the new owner chooses to sell off wine made from grapes it intends to uproot and perhaps replace, as the fruit doesn't fit its desired product range. Rather than shop around to find another winery which will take this off their hands, many wineries find it easier to make the wine and sell it through an expert intermediate broker.

In times of general industry over-supply of grapes, as Australia has endured for too many years, many struggling growers depend upon these brokers for their basic income. One way or another, they find a winery to process their fruit to make bulk wine, in which case the broker finds a retailer or wholesaler, somewhere on earth, to buy the product, then package it and price it for the punter.

All cats look grey in the dark ... contract processing winery at Langhorne Creek

These merchants also market vast amounts of wine made by big processing wineries which frequently have no significant brand of their own. They depend upon the bulk marketeers.

They are also very handy when drinking fashions change, and varieties once popular suddenly fall from favour. They move stuff.

If you've got a big tank of something that just didn't work out the way you wanted it, they'll flog that too.

Bulk Wine Online, Bulk Wine Broking, Fuse Wine Services, Ciatti Global Wine and Grape Brokers, Austwine Brokers, Wine Network New Zealand, and Winegrapes Australia are just a few such merchants which can easily be found on the internet.

We call this huge bulk business the grey market.

Aficionados may find it interesting to keep an eye on just what these companies have available for sale, and wonder about which labels it eventually carries and what we'll pay.

While this is only one of many bulk merchants, cast an eye over this month's Bulk Wine Register of Mark and Justine Cohen's Malesco, a highly-regarded, but smallish brokerage founded in 1994.

Malesco currently offers a little over 30 million litres of bulk wine for sale. That's a big number, but it's only a tiny percentage of the total national inventory, which stood at 1.78 billion litres at 30 June 2013.

The cheapest parcels are from the appellation the Australian Wine and Brandy Corporation conveniently called South Eastern Australia, which is all the land south-east of a line drawn from Ceduna to Rockhampton. On the Malesco list, this region, the world's biggest, offers 90,000 litres of Chardonnay and 70,000 litres of Colombard at 60 cents per litre. 

This is only one the many merchants' lists, remember.

At the top end, the Barossa offers 19,000 litres of Shiraz and 18,000 litres of Cabernet sauvignon at $12; Coonawarra has 12,000 litres of Cabernet at the same spend, some of which is in oak.

On this list alone, McLaren Vale has about 1.8 million litres of various varieties for the taking. It's not the place to be growing Chardonnay: the region's bottom price is $1.20 per litre for 32,800 litres. Just as silly is the notion of growing Pinot in the Vales. You can snap up 10,500 litres made from that cold-climate grape at $1.45. 

Sensibly, local growers are removing these varieties.

On the other hand, the Vales is, one would think, a very good place to be growing Grenache. Yet you have 60,000 litres of that at the same price: $1.45 per litre. There's also 480,000 litres of McLaren Vale Grenache-based blends like the awfully-named GSM available from $2.70 to $3.30. The world needs no more TLAs!*

McLaren Vale Cabernet tops out at $9.90 per litre (5,500 litres); the top Shiraz is $8.80 (26,000 litres).

Many implications can be drawn from this list. You can view it on the Malesco website, as you can do with many other bulk brokers.

Ever seen a label saying the contents were bought on the grey market?

Beyond grey: what you think you see is not always what it is ... the heads of George Grainger Aldridge (left, of course) and Joe Vallelonga at the Humbug Club, Exeter Hotel, December 2013 ... photo Philip White

As in propaganda, I suggest there are three levels of market quite separate from your local son-of-a-gun winemaker who grows grapes, makes wine and sells it, properly and honestly labelled.

In the propaganda business, white propaganda is the stuff where an obvious source ridicules or attacks its opponents. To the consumer, there is no doubt where this stuff comes from. A good wine analogy was Henley Hermitage, a 'seventies red packaged to look like Penfolds Grange, which, to the consumer, was an obvious piss-take. 

It was called Henley because on Adelaide's blissful beaches, "Henley was one up from Grange."

In spite of its admirable quality, the wine was very obviously NOT made by Penfolds, which was paying $186 per tonne for Grange fruit.

Sorry this image is a bit blurry. While I search for a crisp copy, let me say that label says Grunge Hermitage

Henley Hermitage didn't last long, but it remained a good and powerful joke for awhile. I seem to recall Geoff Merrill and the Fechner brothers having something to do with its creation. In the bad old mid-eighties days of the Vine Pull Scheme, the Fechners, Malcolm Semmler and Bruce Theile would voluntarily prune and maintain priceless old Shiraz vineyards which would otherwise have got the chop so the grower could collect thirty pieces of taxpayer's silver. Henley Hermitage was made from such vineyards in protest at that mindless taxpayer-funded destruction.

Grey propaganda is the sort whose source is unknown. The consumer is not sure who concocted it, or what their desired result may be. But if such propaganda is effective, it will subliminally influence the consumer's thinking in the way the propagandist desires.

Black propaganda is devised by one side to convince the consumer it really came from the other. Well-conceived, and well-packaged and delivered, this can be the most effective and efficient propaganda of all. Sometimes, as in the case of infamous, skilful artisans who produce fake bottles of, say, Penfolds Grange (in China) or Ch√Ęteau Lafite 1787 purporting to come from the cellar of Thomas Jefferson, we see examples of truly black marketing.

These are real ones, but some counterfeit wines look so close to the genuine thing, the unsuspecting punter might just as well be blind ... photo Philip White
By the point of its final sale, most of the wine moved through Australia's grey market usually fits the middle bracket. This greying of fact is not the fault of the grey marketeers, but those who buy it for packaging and resale, many of which we call virtual wineries. These have no winery or vineyards, and often live off the Wine Equalisation Tax rebate, which was set up assist small-scale family businesses with wineries and vineyards of their own.

All this becomes even more intriguing when we consider a huge wine merchant like Woolworths, owners of BWS and Dan Murphy's. Woolies is also Australia's biggest contract wine bottler, so it can very easily keep an eye on what its rivals and potential suppliers produce. Its retail end easily learns how such wines sell.

Similarly, it owns Langtons, our biggest bottled wine auctioneer, a business which ranks the importance of premium Australian wines through its own famous classification on the price they bring at auction. Who knows how easy it is for insiders to push the prices of champion brands through the roof? 

So while Woolworths has a very serious hold on the tertiary market, it also kicks large arse in the primary and secondary sectors.

Woolworths also owns its own winery, the huge Chateau Dorrien in the heart of the Barossa, where it makes wines for Cellarmasters, our biggest and most clever direct mail-order home delivery wine producer. Woolworths has increasingly used this Dorrien winery to make wine for its own stores using fruit it buys direct from growers, cutting bulk brokers out of the game.

But Woolworths has begun buying its own vineyards in the Barossa. It has also bought what we used to call The Derailment, that strange assemblage of old railway carriages Wolf Blass and John Gordon put together in the early 'eighties to make a cheap motel. This will give Woolies space to expand its big winery next door - it had already sought more winemaking facility when it attempted but failed to buy the ailing Constellation Wines' 50 per cent stake in the new Barossa Valley Estates winery at Seppeltsfield/Marananga in 2011.

While the fussy wine drinker may question the way grey market wine is packaged for sale, there's little chance of this overall murk ever clarifying. Even if Woolworths increasingly grows, makes and packages wine for sale through its own shops it seems to fully appreciate the extra respect given wine that looks like it was grown and made by small family wine businesses. Ever seen a mention of Woolworths on the stuff that covers most of the floor in Dan's and BWS?

In the propaganda appellations, would the best metaphor be white, grey or black?

*TLA: three letter acronym



Anonymous said...

Hi Phillip
Care to comment on the Hurley Vineyard pinot next to the La Tache.
Never heard of it before but would definitely appreciate your thoughts on whether these are worth trying out.

Philip White said...

If you type Hurley into the little search box at the top LHS you'll find my most recent review.