WINE TAX ISSUE NOT DEAD YET: LISTEN UP!

KNOW THIS FEELING? BEEN THIS CLOSE AND SURVIVED? IF WINE HAS GOT YOU INTO THIS SORT OF TROUBLE, THE ODDS ARE YOU WERE FULL OF HIGHLY IRRIGATED BLADDER PACK PLONK. THIS HALF OF THE AUSTRALIAN WINE INDUSTRY DOES MORE THAN DESTROY THE WATERS AND ENVIRONMENT OF OUR ONLY MAJOR RIVER SYSTEM; IT MAKES PEOPLE KILL EACH OTHER

A Sobering Hour Of Radio ...
Plonk Lobby In The Spotlight ...
Brave ABC Pops Big Questions:

Australian Broadcasting Commission presenter, Kieran Weir, hosted a brave, pertinent and wide-ranging discussion on air this week. The hour-long conversation covered many aspects of public alcoholism, dry zones, health problems, the bladder pack business, alcohol tax, civic drinking laws, spirits, wine, gastroporn and politics.

With producer Petria Ladgrove, Weir assembled a panel of confronting but constructive contributors that included

* David Crosbie from the Alcohol Education and Rehabilitation Centre
* A very brave Alcoholics Anonymous member from Port Pirie
* Karyn Read from the Port Augusta Alcohol Management Group
* The Distilled Spirits Industry Council
* The Federal Member for Grey Rowan Ramsey

and Philip White, the author of DRINKSTER and DRANKSTER, who once again called for an immediate independent inquiry into this whole bloody mess.

No matter whose side you take, this is compelling and challenging listening for anybody in the alcohol business, and all recipients and dealers of its wares, whether casual, or terminally addicted.

ABC PRESENTER AND FILM-MAkER, KIERAN WEIR

And of course it is essential listening for everybody involved in the beleagured wreck of the Australian wine business.

DRINKSTER remains enraged that there was NO public discussion of Treasury boss Ken Henry's proposal to tax all alcohol by excise, and that faceless wine industry operatives got to an intellectually decrepit and punch drunk government to ensure the whole proposal should be quietly shelved.

This discussion must be conducted openly and nationally, and not left to a brave and enlightened regional radio station.

It can no longer be left to faceless lobbyists who squander millions influencing politicians in Canberra.

To hear the program in its entirety, click on either photograph.

AUSSIE PLONKMONGERS LOSE THE PLOT

Ethanol Floggers Flog On ... Oz Pollies Taken For Suckers Again ... Forensic Enquiry May Shake These Dangerous Tendenciesby PHILIP WHITE - a shorter version of this appeared in The Independent Weekly


There is no better metaphor for the Australian wine industry than its National Wine Centre, which has finally become a busy pavilion for weddings. It lies there, ribs poking skyward, its drying gizzards wriggling with brides.

I have no statistical evidence to suggest the success of these marriages is any different to the national average: one in three generally ends in divorce.

It's all tiresomely suburban.

The Wine Centre’s biggest publicity – ever - followed the incident when Rick Phillips went in there and whacked our Premier, Mike Rann, about the face with a rolled-up Winestate magazine.

Phillips pled guilty, while his ex-wife, Michelle Chantelois, who’d been a barmaid in Parliament House, repeatedly claimed she’d maintained a sexual affair with Rann who repeatedly denies this, while publicly apologising for any distress it has caused her or her family.

And now, as if to complete its transformation from National Wine Centre to wedding and celebrity divorce factory this troubled facility is even flogging its wine collection.

Smart observers knew, when $50+ million of taxpayers’ money snuck that corpse into our sacred Botanic Garden a decade back, that this industry, its august councils, and the politicians it seduced, all deserved forensic scrutiny.

Who are these people? The hairdos have gone from Brylcreem combovers to spiky and shooshed, but the mentality is as constant as the suits.

They cannot halt the wine industry holocaust. For their shareholders, they encouraged it to fester, at the expense of our water, our environment and civic amenity, the salinity of our soils and aquifers, our public health, and our economies: national, town-sized, familial and individual.

The glittering refineries they inflicted on our rural vistas frankly reflect the chrome pillows blowing like leaves about aboriginal lands.

They built an industry that - by vast chemo-mono grapeyards - mines the arid Mallee for sugar, which is used to make ethanol, a highly-dangerous depressant and recreational drug. Over half the Australian business depends on this formula, and in bladder packs or cleanskins sells sweetened ethanol - which is three times the strength of your average beer - at about the price of bottled water. Or less.


They built an industry in the Australian desert which depends upon endless supplies of virtually free water, an international clientele with a constantly-intensifying addiction, and a pathetic Aussie dollar.

It also lacks basic gastronomic intelligence, expects the same of its clients, and presumes the absence of any smart competition from other countries.

Like, say the countries adjacent to the Andes, which happen to be full of snow which melts to make irrigation water. These grape regions are populated by peasants who work for almost nothing, and whose laws lack the scant environmental restrictions which somehow survive in Australia.

A telling gauge of how this industry’s authorities are respected is the advent of the Family First Winemakers. As this new coalition of the great wine families – Peter Barry, Hill Smith, Taylors, Tyrrells, Brown Brothers, d’Arenberg, McWilliams et cetera – barges forth to promote the “heart and soul” of the Australian business internationally, they attempt a task which the bodies they were implicit in creating have obviously failed to perform.

Who else gets a gong? Oh yes. On February 7th, Dr. Brian Croser AO (left) made a hissy speech blaming the big companies for mucking everything up. This was reported widely.

The Australian Winemakers Federation Croser established helped shove the Wine Center upon us, only to see it slide two years later, virtually bankrupt, into University of Adelaide hands for $1 a year.

When he was determinedly pushing the Wine Centre into the Garden, I questioned Ian Sutton, then Chief Executive of the Winemakers’ Federation of Australia, Wine Australia Pty. Ltd., Australian Wine Foundation and the Australian Wine and Brandy Producers' Association. I asked about the strangely optimistic business plan, and just how much consulting had been done to get the true feeling of the industry, much of which seemed a tad embarrassed about the whole thing.

"My job's not to consult the wine industry”, Sutton snarled. “My job is to represent the wine industry".

Croser was the University’s deputy chancellor at the time, determinedly pushing his agenda to have what was the fusty old winemaking school at Roseworthy fully absorbed by the glittering Adelaide campus. "Technologising", I heard one boffin describe it at the time.

Big companies? To the tune of hundreds of millions, it was Croser’s Petaluma group that slid through Lion Nathan into the hands of the mighty Japanese Kirin Brewery under the caress of his Petaluma accountant Andrew Cheeseman (right), who now heads the Australian Wine And Brandy Corporation.

Just days after his spray at the Big Guys, Croser made another speech: he’d suddenly discovered that Jacob’s Creek Chardonnay was much better than he’d previously considered.

His initial blast at the big companies would have infuriated people like Phil Laffer of Pernod-Ricard, the French families who own Jacob’s Creek, whose company secretary, Kate Thompson, sits on the board of the Australian Wine And Brandy Corporation. Along with Dr. Tony Jordan, antipodean lieutenant of Louis Vuitton Moet Hennessey.

Croser made the Adelaide Hills wine region. He planted the Piccadilly Valley with Jordan, and set forth preaching his gospel for decades, adding great value to his Petaluma. Over endless lunches at his Bridgewater Mill, he encouraged Dr. Ed Tweddell of Fauldings to invest massively in the hills, by setting up the Nepenthe viticulture company that planted vast swathes of vineyard whose fruit ends up now in Jacobs Creek or the carcass of McGuigan’s Australian Vintage. If Kirin doesn’t want it.

The latest top yarn concerning this lot is the Rabobank report of senior analyst Marc Soccio (left). It says the industry’s crook, although he thinks it’s not so much the buggered Riverlands, but cool places like the Adelaide Hills which are far too slow to uproot.

Like the river grapeyards, too much of this upland planting was committed by the wrong people in the wrong places for all the wrong reasons, like tax advantage, or fashion. Many of these doctors, lawyers, and wealthy retirees who dared, with the persuasion of people like Croser, to compete directly with seasoned generational growers in McLaren Vale and the Barossa, should never have entered the industry.

Tragically, we can't ask my good friend Dr. Ed Tweddell about this, as he committed suicide in 1995 (CORRECTION : 2005; not 1995). His son James, who ran the vineyard development company, now runs a nightclub in Queensland.

Rabobank seems confused about gradings of wine quality. Like the freshly-re-enlightened Croser, it obviously regards Jacobs Creek as premium. You can’t blame them: as Croser and his Petaluma chairman, Len Evans, ran the Australian wine show system for decades, megabulk brands like Jacobs Creek won bounteous bling.

Croser would never enter Petaluma in the wine shows. There are still people who remember his rage when he discovered his marketing manager, Bob McLean, had quietly entered Petaluma red in the Melbourne show. While the Petal was notably failing to win the Jimmy Watson Trophy inside, where Croser vented his feelings, ace Wolf Blass red man, John Glaetzer, was crawling around the bushes out the front, yelling “Where’s the dummy? Where’s the dummy?”

Glaetzer could afford to joke: he’d already won a record three Jimmies, and went on to win a fourth.

Individuals aside, this crazy amalgam of savagely competitive ethanol dealers needs a new sheriff. Those responsible for the current carnage should be forced to withdraw, never to play with such power again.

But the blithe refusal of the Rudd government to accept treasury official Ken Henry’s perfectly logical and fair excise regime for all alcohol taxation is crisp evidence that the ancien regime still rules: its lobbyists have been very hard at work reinforcing the constipating inertia extant. Henry’s proposal would have finally and sensibly rendered most of the unsustainable arid land grapeyards unprofitable, but bolstered the chances of small, premium producers.

The frisson of delight at the dribble now oozing down the big rivers proves there is no change, and no change likely. The same old suits sniff a new wave of dirt cheap Riverland premium. Maybe the piddly prices the National Wine Centre gets for its wine collection will best reflect just how premium all this premium really is.

While they’re saying twenty per cent of the national vineyard must go, it’s time somebody admitted the figure should be more like thirty or forty per cent. In lieu of any smarter method of devising the number, they could follow the success rate of the weddings in their National Wine Centre, loaded with an index locked to the tumbling prices of that premium wine collection.

But with all dread seriousness, the vine pull formula should be based on the number of jobs and dollars each litre of irrigation water creates. In places like Barossa and McLaren Vale, this ratio is normally exponentially ahead of any part of the Murray-Darling Basin, which now seems to extend to include the Limestone Coast. Not to mention the Adelaide Hills.

The glut these industrialists created sees professional growers, some four to six generations strong, suddenly being paid $300 a tonne instead of $3000. You don’t need so much premium fruit at $3000 now that you’ve decided the desert produces premium at $300.

Anybody taking water from the Murray-Darling should be forced to pay real prices for it. A litre of water should have a price. Period. Irrigators should pay a price a helluva lot closer to the amount that an Adelaide resident is expected to pay for what manages to ooze from the mains.

If you’re growing truly premium grapes in a unique place like McLaren Vale, where much of the irrigation water is recycled waste from coastal housing estates, you should be encouraged to remain in the business.

But the percentage of vineyard currently for sale in the Vale simply serves to prove that in the eyes of these industrialists, true quality, continuity and professionalism, let alone the environment, simply do not matter. The casual investor, the shareholder, is king.

The politicians are simply inept in addressing this. The only one to poke his head up with a sensible suggestion was Leon Bignell, the Labor member for Mawson, which includes McLaren Vale. The great Rudd/Wong/Rann triumvirate has failed to convince anybody. Tellingly, against all the pundits’ great wisdoms, after his statement, Bignell actually increased his margin in the recent South Australian election. Much greater egos saw their margins shrivel, and seats disappear.

When the wool business, the miners, or the wheat board makes a mess like this, there’s a very prompt independent enquiry. Heads roll. People are stood up and expected to explain their actions. Heros emerge.

Before Croser comes back to save the wine industry, there should be an independent judicial enquiry.

EXCISE IDEA COULD DESTROY BLADDER BIZ

AN EXCISE WOULD SEE THE PRICE OF EXPENSIVE WINES LIKE THESE TUMBLE WHILE BLADDER PACKS WOULD DOUBLE. photo LEO DAVIS

Rudd Money Man Wants Excise WET Rebate May Dry Up Lobbied Pollies In Abject Panic

by PHILIP WHITE - a shorter version of this story appeared in The Independent Weekly

Treasury wallah Ken Henry has thrown a very tricky handful of marbles under the feet of the wine industry with his recommendation that the current scramble of alcohol taxes be replaced with a simple excise. For seasoning, he’s thrown another handful under the political dries who want to tax kiddylikker - and spirits - to oblivion. With state and federal elections brewing, we’re in for a spat of extreme panic in Pollyville, as the mighty grog lobbies get to their nefarious work.

Henry is a favoured apparatchik of Labour Prime Minster Kevin Rudd, who faces an election soon, in the midst of insurmountable difficulties in attempting to manage the dimishing waters of the Murray Darling Basin. Two Australian states also face elections, six quick weeks from now. One of these, Tasmania, which is sinking in good water, has a premium wine industry but no discount bin plonk production; South Australia produces the most of both types of wine, with much of the business dependent on Murray River water, of which there is none.

Although general political commentators have so far failed to realise the full implications of Henry's proposal, State Labour leaders like South Australia's Mick Rann will soon be forced to announce the attitude they'll take when lobbying their federal counterpart.

WHILE THE TAX WOULD BE A NATIONAL IMPOST, SOUTH AUSTRALIAN PREMIER MICK RAM HAS ONLY DAYS TO MAKE A STAND ON THE EXCISE WHICH HIS FEDERAL COUNTERPARTS ARE CONSIDERING.

Wine is currently taxed on the value of the unit sold, be it bottle or bladder. Under an excise, which is a tax on the total alcohol each unit contains, the cost of a $14 bladder pack would double, to $31.07, while a $30 bottle would fall to $27.53. These KPMG figures would see your favourite boutiques boom, and the Murray-Darling Basin wine industry collapse.

HARD LIQUOR PRICES WILL TUMBLE UNDER THE EXCISE PROPOSAL

Never before has the gap between the polarised wings of the wine business looked wider. But industry bodies, like the Australian Wine And Brandy Corporation, which is partly funded by the taxpayer, are obliged to represent everybody in the business, so will have to protect the bladder boyos, who produce half the wine consumed, if not made, in Australia.

These two ends of the business have always been at war. It was Brian Croser who went to Canberra at the onset of the GST and current messy regime and organised the Wine Equalisation Tax, which offered newly disadvantaged small producers an annual rebate.

This writer argued contentiously at that time that an excise was the only clean, logical manner of taxing alcohol. It was a classic Aries vs. Virgo reposte. Croser came home touting his deal as a great victory for the entire industry. I argued that it was terribly messy, and would only postpone the inevitable collapse of the discount bin business.

WINE AND BRANDY CORPORATION BOSS ANDREW CHEESEMAN WAS BRIAN CROSER'S ACCOUNTANT AT PETALUMA

Croser’s band-aid would simply keep the huge irrigating industrialists on side with the tax-dodging doctors and lawyers with ill-conceived hobby vineyards. No doubt he had discussed this at great length over many Bridgewater Mill lunches with the likes of Alexander Downer, the former Liberal government's Minister of Foreign Affairs. Not to mention folks like Amanda Vanstone (Immigration Minister under the same conservative regime) and Robert Hill (Defence Minister who became Ambassador to the United Nations), who co-owned the relatively tiny Amicus brand with Walter Clappis. These guys had a very heavy pull on John Howard’s wine taxation philosophy.

An open, far-sighted mind might see Henry’s proposal as the perfect opportunity to cleanse the big rivers of the scourge of an industry which is in such gross, nay, grotesque, oversupply to the extent that it’s collapsing anyway. This would release water to the Murray Mouth, and remove the source of much of the grog consumed as an alternative to sniffed petrol in aboriginal communities.

HENRY'S EXCISE WOULD SEE A BLADDER PACK SOAR FROM $14 TO $31, AND THE COLLAPSE OF THE IRRIGATING DISCOUNT WINE BUSINESS, LEAVING A LOT MORE WATER TO RUN DOWN THE MURRAY. GOOLWA IMAGE BELOW BY KATE ELMES.

It would also, according to the Winemakers’ Federation of Australia, result in the loss of 12,000 jobs.

Whilst the cynic might argue that these jobs are going anyway, the idea of the new tax will fill many country electorates with even more fear and depression. The milder sceptic could suggest that the discount wine industry is in permanently deep merde as long as the international wine glut continues, and that any movement which might lead to its dimunition is something healthy which much be addressed.

Apparently Henry has stepped his excise numbers: the brackets would be 3.5 per cent alcohol and below, then up to 5 per cent, 7 per cent, 10 per cent, 15 per cent, and above 22 per cent.

This would also favour the premium wine lover who has spectacularly, internationally, turned away from the sorts of dead-head alcohol bombs we’ve been rotely making in the twelve years since one American critic, Robert Parker Junior, began to tout them. While the wine blog explosion has seen Parker lose some power, the notion of an increased tax on wines above 15 per cent would surely be a strong incentive to Australian winemakers to return to healthier alcohols. Sales of more modestly balanced alcoholic wines should increase internationally.

In the meantime, a relaxing of the stifling tax laws and regulations on distillation could see a great deal of the wine glut converted to industrial alcohol, the income from which could perhaps be devoted to funding the next vine-pull scheme, which seems increasingly imminent, and would be likely to see a permanent cessation of irrigating to produce wines which sell for less than the price of bottled water.

As for the price of alcopops falling from $3.30 per unit to $2.42, well. At the risk of adding complexity to Mr. Henry’s pristine simplicity, perhaps the excise should be extended in the case of premixed drinks to include an extra charge on sugar and other sweeteners when mixed with alcohol. If caffeine was also included in this kiddylikker, another hike could be imposed. Banning such cocktails is futile: anybody can whup down three or four stiff short blacks between sessions in the boozer.

WINE LICENSING: INDIA SHOWS USA THE WAY

WINE IS A BIG DEAL IN INDIA, WITH SALES STEADILY CLIMBING AS GOVERNMENT PROMOTES WINE DRINKING AND LIFTS SALES RESTRICTIONS

India Pulls Its Cork

by PHILIP WHITE

As India gradually discovers wine, its lawmakers seem keen to deregulate restrictive laws and get on with it.

One major step is the move to permit department stores to sell wine.

“We are working towards easing regulation on wine production and consumption in the country. Availability of wine would be the first step in this direction. The government is willing to spread wine culture among people and promote vineyards in the country,” an official in the ministry of food processing, who wished not to be named, told the Economic Times of India on New Year’s Eve.”

“Some states, like Delhi, Maharastra, Karnataka and Punjab have already allowed department stores to sell beer provided they get a liquor licence”, ETI reported. “The ministry of food processing along with the department of commerce are of the view that wine should also be treated like beer, which is different from hard liquor such as whiskey and rum. The Delhi government, too, is likely to allow the sale of wine in local stores soon.

“The two arms of the central government are working on a policy to encourage wine making and its consumption in the country. They are also in favour of having a uniform excise duty regime across the state for wine sector. Excise duty on wines is a state subject and varies from state to state.

“To give impetus to wine production and its promotion, the food processing ministry has also set up a National Wine Board to develop standards and promote domestic wine industry, so that they may stand stiff competition thrown by Australian and French wines. Competition from foreign wines is expected to intensify with the recent reduction in customs duties on wines and spirits.

“The ministry argues that promotion of wine culture will lead to agricultural diversification and employment generation in rural India. With the growing popularity, wine farmers in Maharashtra are shifting from plantation of table grapes to wine grapes, said the official. India’s wine market, which is 1.2 million cases, has been growing at 40% this year compared with 2007.”

Meanwhile, in the USA, where many states already enjoy this privilege (to varying degrees – the laws are arcane), a few recalcitrants are still kicking and screaming.

The New Jersey legislature is considering changing its 47-year-old law designed to prevent monopolization, price-fixing and mob influence of liquor stores and introducing similarly liberal legislation. Liquor store owners are up in arms, saying this will lead to supermarket chains gaining control of the retail liquor business.

Fred Leighton, president of the New Jersey Liquor Store Alliance and owner of Bayway World of Liquor in Elizabeth, argued the legislation would hurt struggling business districts, raise the risk of minors illegally obtaining liquor at busy supermarkets, and lead to price hikes.

The director of the state Division of Alcoholic Beverage Control said the proposal is unnecessary and would make it more difficult to enforce the drinking age.

"When I see a 15-year-old walk into a liquor store, I assume there is a problem," Jerry Fischer, state ABC director, told the committee. "When I see a 15-year-old walk into a supermarket, I can't assume anything. I have very valid concerns."

The bill would change the existing system that limits any corporation or individual to only two retail liquor licenses statewide. It is being pushed by the New Jersey Food Council, the lobbying arm for such supermarket chains as Acme, Stop & Shop, Pathmark, Whole Foods and Quick Chek.

"The existing law is anti-competitive, unfair and riddled with loopholes," said Deana Lykins, a consultant retained by the N.J. Food Council. "It is a protectionist measure for one part of the liquor industry."

In Albany, upstate New York, opponents to a similar liberalisation of liquor laws also say the proposal by Gov. David Paterson to allow the sale of wine in grocery and convenience stores sounds “as ominous as a death knell”.

"It'll put most of us out of business," Michael Scanlan, co-owner of Niskayuna Wines and Liquors, told The Albany Times Union. "They can sell it for cheaper than we can buy it."

The ATU reported that Scanlan co-owns the cozy Nott Street shop with his brother, Peter Scanlan. Their father opened the store nearly four decades ago. Over those years, he claimed, “proposals for expanded wine sales came and went like tides but never came to fruition”.

Many liquor store owners see the move as inevitable, the report continued, partly because the state deficit is so large and the Paterson administration believes it can raise a quick $105 million in franchise fees from stores and pharmacies that now sell beer and are eager to sell wine.

35 states already allow the sale of wine in food stores. Capital Region stores like Price Chopper and Stewart's sell wine in Vermont locations, for example. Proponents say the proposal is a matter of convenience: while there are only 1,700 licensed liquor stores in New York, there are 18,171 outlets that sell beer; why not let those stores sell wine to make the product more widely available?

Many suggest that huge chains like Whole Foods and Trader Joe's avoid the Capital Region and other upstate areas because of this wine sale limitation.

Yet, directly reflecting the Australian situation, liquor store owners say there's no way they can compete with the big chains’ bulk purchasing power, and consequent discounting, comparing themselves “to the hardware stores that tried, and mostly failed, to conquer big-box competition”. And they say the governor's plan is inherently unfair: under state liquor rules, for example, they are allowed just one location while grocery and convenience stores face no such restriction.

Store owners predicted a small number of liquor stores will survive, mostly those that sell expensive niche wines. But many others, they said, will be imperiled if the Paterson proposal passes.

"In Vermont, you can buy wine anywhere," Rutland said. "But try to find a liquor store."

The NewYork Times meanwhile reported “The retail grocers of New York and Brooklyn feel bitter towards the dry goods department stores that have introduced groceries, wines and liquors ... and charge that the department stores are placing before their women customers ‘an unusual temptation to indulge in alcoholic stimulants’ ...

“W. H. Moss, grocer, Washington and Vesey Streets, said “selling wine and liquors in dry goods stores has a demoralising tendency on women. It offers them temptations to buy whiskey which otherwise they would not be likely to encounter. I would not be surprised to learn that dry goods stores were selling coffins.”

But that was the The New York Times of 17 November, 1894. Nothing changes. Maybe I’d move straight to India.