“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)





22 October 2015


Penfolds Chief Winemaker Peter Gago presents Grange at the 2012 Wine Spectator New World Wine Experience at the Marriot in LA ... such promotion has boosted exports of luxury wine ... photo by Milton Wordley from A year in the life of Grange

Top numbers at top end 2014-15
premium exports booming while cheapies tumble like Oz dollar
While a lot of them were too busy sacrificing shoeleather on the sales and marketing trail, exporters of premium Australian wine had good reason to be pouring expensive fizzy stuff over the weekend.

Friday's release by Wine Australia of its Export Report September 2015 shows   the strongest rate of growth since the peak of October 2007.

In the 12 months to September 30, the value of exports rose 8 per cent to A$1.96 billion.

The average value of exports above A$7.50/litre went up 7 per cent to a record A$15.45/litre. The higher you go through the price structure, the better it looks: wine above A$50/litre rose 54 per cent to a record A$133 million.

This is only 0.2 per cent of total exports by volume, but the report shows it's worth 7 per cent of total value.

Which is a hint at the converse situation at the bottom of the market. More of that later.

Wine Australia Chief Executive Officer Andreas Clark said "We’re seeing the strongest rates of growth in our premium price segments. Wines above A$10 per litre grew in value 28 per cent to A$426 million, a record for this segment.

"Wines in the A$20-$50 segment increased 13 per cent to A$88 million ... The average value of bottled exports also increased 4 per cent to A$5 per litre."

Penfolds chief winemaker Peter Gago spends about eight months of his year travelling to promote wines at these levels in the international marketplace; one can't help wondering what percentage of that extreme top end growth is his work.

"I've just done Stockholm, Paris, Dusseldorf, Hamburg, Frankfurt and London," he reported Friday from Shanghai, where he conducted the international launch of the 2015 release Penfolds top end, all the way up to the Grange. 400 VIP guests attended from all around the world.

Since then, he's presented the wines to the top 25 US sommeliers at a lavish Wine & Spirit magazine dinner and tasting in San Francisco.

But as usual, his relentless energy and focus is always on the next target:

"Good to hear the hard work's starting to show results," he said, "especially at this premium end. We keep at it. On Thursday I'll present a 50 minute Penfolds Masterclass, tasting Australian wines of age and stature as part of the The Wine Spectator New York Wine Experience Grand Tastings … that's sold out ... we're just chipping away … "

Chipping away? That'll be 1,000 tasters who've paid US$2,195 each.

King hitters at Wirra Wirra: vineyard doctor Anton Groffen, chief winemaker Paul Smith and managing director Andrew Kay ... best export year yet ... photo Phjlip White

Also doing the shoeleather, filling passports and chipping away are the likes of  Sam Temme, international sales manager at Wirra Wirra.

"This positive news is what everyone in the industry has been waiting for and working so hard to achieve," he said. "We need to focus on export markets and continue to increase our share in the premium side."

Sam was "just touching base" after a fortnight in Japan, South Korea and China and another three weeks in Canada and the USA. He pointed out that his boss,  Wirra Wirra managing director Andrew Kay is on his way back from a successful trip to Hong Kong and China and winemaker Paul Smith was just back from the USA.

The Wirra team's delighted at the effect the recent trade agreements are having.

"China seems to have stabilised," Sam said. "After a few tough years following the austerity measures brought in by their government. Now with the Free Trade Agreement kicking in we should see some nice growth ... the agreements in South Korea and Japan are a major boost to Australian wine exporters and we've appointed new export partners in these markets. Our traditional markets are also seeing solid increases - this is the strongest year yet for Wirra Wirra export."

Sam also referred to the low Aussie dollar. It's no accident that its lowest points in recent years coincide with good export numbers. Unfortunately, these slumps in the value of our currency have been a bit too rare for winemakers in the last decade. Orders placed during the '06 plunge must bear the great responsibility for that October '07 export peak. Now our dollar's down again, export's up.

Here we hit the wall that separates the premium Australian wine business from the bulk and bargain bin end: the whirlpool that sucks all the way down to ruin, as best recently manifest by the Winemakers Federation report that showed that 92 per cent of production in the irrigated warm inland areas - Australia's biggest vineyard - is unprofitable.

Bulk exports fell another four per cent in value in the Wine Australia report.

"Clearly it’s still early days," Andreas Clarke said, "and the improvement we’ve seen in exports in the last 12 months hasn’t yet flowed through to the grape growing community at large but there are pockets of growers who reported improved prices in vintage 2015 and we hope to see this trend continue next vintage."

There's pretzel logic to unravel in the Japan figures: since the removal of tariffs under the Japan-Australia Economic Partnership Agreement the value of wine exports rose 14 per cent to A$35 million while our bulk wine exports there increased by 388 per cent!

Asia is the heart of the top-end growth: wine exports by value grew 31 per cent to a record A$644 million, the report says. China's up 47 per cent in value "to a record A$313 million driven by demand for wines in the higher price points with exports to China above A$10 now worth A$116 million."

South Australian Minister for Agriculture (and Tourism) Leon Bignell couldn't hide his delight. He's an avid proponent of value-adding: concentrating first and foremost on producing and selling the very best we can achieve.

"Our government's been working hard with premium South Australian wineries in the China and Hong Kong markets. It's terrific to see our strategies paying off with huge growth: if you add China and Hong Kong together it's now our biggest market."

At the other end of the quality ladder, the UK remains our biggest market by volume - up 2 per cent - while value slumped 2 per cent. In spite of a last-minute resurgence, the USA also fell 4 per cent in value. Traditionally, these are our biggest discount markets.

Minister Bignell's comment on this value-vs-volume see-saw is rather pithy but pointed: "There is considerable work to be done to retell the story of Australia's premium wine" he said.

"Yellowtail has, for the past few years, defined the Australian wine offering to the American consumer. The SA government has a firm strategy to help wineries to sell premium wine into the US - with a strong focus on Texas."

As I pointed out here in September, Yellowtail, for years regarded as a glittering triumph of export savvy, comes largely from our highly-irrigated, unfashionably hot inland regions. But to follow the big rivers upstream from their estuary, Langhorne Creek, commonly regarded as a premium region, has been selling 77 per cent of its crop at a loss.

The Winemakers' Federation of Australia 2015 Vintage Report goes on to list a 92 per cent loss in South Australia's Riverland; 88 per cent loss in the Murray-Darling-Swan Hill area, and in the Riverina, home of Yellowtail winery, a 97 per cent loss.

These telling reports coincide with last Friday's Vineyards Census 2014–15, released by the Australian Bureau of Statistics. This reports an increase in yields across the Riverland and Murray Darling/Swan Hill regions. In Riverina, yields have increased by 32 per cent compared with 2012.

This in turn coincides with an overall decline in plantings of 4,521 hectares across the basin. I can smell a helluva lot of river water being squirted around somewhere to achieve this miracle.

As one wise Riverland mate told me recently "Everybody here's asking what the next alternative variety is. I say it's the one you've already got growing, but with half as much irrigation."

And that, to me, seems to be the key. Internationally, wine lovers are obviously preferring wines which don't require nearly so much irrigation. The fact that this all swings on an Aussie dollar that many consider undervalued should temper our celebrations.

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