2008 a memorable wine year for Australia

Predictions are generally wrong, sometimes dramatically so, as 2008 proved for the wine industry. An expected end to the wine glut was stymied by two unrelated forces – a bumper grape crop and a dramatic decline in exports.

The bumper crop caught the industry by surprise, prompting a press release from the Winemakers Federation of Australia. The 1.83 million crop, they said, ‘was almost double some early predictions’.

Veteran commentator, James Halliday, attributed Foster’s write down in the value of its bulk wine stocks to the large harvest, adding that it had left ‘all the major companies floating in a sea of excess chardonnay’.

Meanwhile exports had been hammered by our strong dollar and a mood swing in our major markets as the credit crisis bit. After a decade and a half of steadily rising volumes, Australia’s year on year exports to August 2008 declined by 103 million litres.

At the same time domestic sales of Australian wine declined by about 21 million litres. And on the back of a strong dollar, imports reached an historic high of 53.3 million litres (representing 11.1 per cent of domestic sales) in the year to June 2008.

Presumably the collapse of our dollar in the second half of the year might restrain imports and boost exports – although there’s no sign of the latter in export approvals for the year to October. They were down by 113 million litres on the previous year.

However, there’s anecdotal evidence of a turnaround, albeit tempered by tough economic conditions in the UK and USA, our two biggest export markets. Word is that British supermarkets in particular are looking to squeeze extra profit from the situation while meeting local demand for ever lower wine prices.

Turmoil in our local industry, particularly in the actions of two of our biggest producers, Foster’s and Constellation Wines Australia (CWAU), seem to be driving a hurricane of rumours in 2008, including several predicting either the demise of wine casks or the exit of some major producers from the segment.

But, as they say, rumours of their death are greatly exaggerated. Wine casks are too important to die. In the year to June 2008, they accounted for 48 per cent of locally made wine consumed in Australia – 37 per cent of the red and rosé total and 54 per cent of whites.

The rumours grew partly from a report by Citigroup Analysts predicting that two major producers, including CWAU, were giving up on casks. But on 13 November, John Grant, President of CWAU, issued a press release denying the report.

Grant said that casks were a ‘significant component’ of CWAU’s business and that his company had ‘no intention of withdrawing from the category’.

However, a source from one of our two major retail chains told me that CWAU was ‘not actively promoting casks’ and that this would lead inevitably to a decline in volumes.

This same source predicted that another major producer really would exit the market next year – but that privately owned De Bortoli, already a major soft-pack player, would probably seize the opportunity to expand. The cask will live.

The rumours about CWAU reflect its dramatic shift in focus from beverage wines, to regional specialisation, driven by its new boss John Grant and sanctioned, no doubt, by the American owners.

The strategy dovetails with Australia’s new official export thrust – moving from a simple ‘Brand Australia’ to a focus on our specialised wine regions. It’ll be a long haul, because the world seems barely aware of names like Coonawarra, Barossa or Margaret River.

But the regional push is where value lies for producers and where drinkers will find the best quality. Fortunately for Australia, the regional theme is no artifice. We have the regions. We have the specialties. And we have the quality. It’s a story that’s been told by our many small, regional producers but not so well by our larger makers.

2008 might therefore be remembered as the year when one of our largest producers, American owned, finally decided that its greatest Australian asset in the long run was the tremendous suite of regional vineyards and brands it owns in Tasmania, Victoria, South Australia and Western Australia – and not its cheaper, cross-regional blends.

A growing regional focus by big makers can only help small makers. Small makers are invariably regional specialists and most of them focus on the Australian market. Their numbers more than doubled in the ten years to 2008, a period in which we’ve seen new quality heights achieved.

2008 goes down in my tasting notes as a year when quality peaked for small makers – a year of highlights, featuring wonderful bubblies, chardonnays, pinot noirs, shirazes, cabernets, semillons and many exotic, new-to-Australia varieties.

It’s also been a year where in mature regions, most notably the Barossa, restless, passionate makers subdivided regional boundaries to individual vineyards and to little plots within vineyards – much as Burgundy’s vignerons have done for a thousand years – to give us the most subtle expressions of shiraz, grenache and mourvedre.

This regional subdivision will be the future for fine wine in Australia. It can be glimpsed now in the better retail stores and it’s reflected even in multi-regional blends that draw on regional specialties to bolster blander components. But to savour all the shades of delight, you need to visit the makers, even virtually, and taste the uniqueness of Canberra shiraz, Mornington pinot noir, Macedon bubbly, Tasmanian chardonnay, Barossa shiraz grenache mourvedre blends, Hunter semillon, Clare riesling, Margaret River or Coonawarra cabernet and dozens of other very fine drops.

Copyright © Chris Shanahan 2008

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