Chris Shanahan: Farmer finds independent retail niche

David Farmer — former Canberra wine merchant, in town last week to launch his new Barossa-based business, Glug — believes traditional liquor retailing has gone forever to Coles and Woolworths.
Even after the current margin-sapping wine glut clears, consolidation among producers and retailers virtually ensures a changing landscape.

For independent retailers that means finding a niche that doesn’t go head to head with the superior buying and selling power of the supermarket chains.

And for small winemakers it means finding outlets to complement cellar door sales. For no retailer, no matter how large (or small), can represent the thousands of labels now available from Australia’s 2000 wineries.

What we’re sure to see in the future, then, is not just bricks and mortar independents, but continuing growth in internet-based wine clubs, wine retailers and internet-based cellar-door extensions.

Farmer’s new creation takes into account thirty years’ retailing experience– from 1975 to 1994 as Farmer Bros, with stores plus mail order; from 1994 to 1996 with Cellarmaster Wines, Australia’s largest wine direct marketer; from 1996 to 2003 in partnership with Theo Karedis of Sydney based Theo’s Liquor Markets; and from 2003 to 2005 as marketing consultant to Coles Myer after its purchase of Theo’s.

What those years taught David is that even the keenest wine drinkers and collectors buy mainly in the $6 to $15 a bottle price range. They might enjoy the odd $50 or $100 bottle, but that’s not the daily tipple.
And especially through exposure to wine clubs he saw that the closer to the source the better you’ll buy.

Cellarmaster had demonstrated during the grape gluts of the eighties how profitable it was to buy direct from growers, make wine and put their own label on it. Who needed a middleman?

But Farmer had also enjoyed the pleasures of what he calls ‘the country wines’ of France – simple, tasty and generally inexpensive wines distinctive of a particular grape variety and region.

Transplant that notion to Australia and you have regional varietals – like Barossa shiraz, Clare riesling or Coonawarra cabernet.

With some of this in mind, Farmer established Glug close to the source – in an office within the Veritas Winery on the western edge of Tanunda in the Barossa Valley.

With a vigneron’s licence and the comparatively low overheads of a virtual shop, glug.com.au now offers the first of its own regional wines as well as selections from outstanding small makers – many of whom also make wine for the glug label.

Farmer says each wine will be made and sold to the slogan “from this vineyard, grown by this farmer and made by this winemaker in this winery”.

The close relationship with key growers (including former treasurer John Dawkins) — and winemakers of the calibre of Rolf Binder, Christa Binder-Deans, Trevor Drayton, Kym Teusner, Steve Hoff, Colin Forbes, Robin Day and Wayne Dutschke – means not only increased exposure for these makers, but what looks like being a flow of modestly priced regional specialties for consumers.

While David Farmer – aided by brother Richard – believes that glug occupies a special niche and will appeal to many drinkers, he also believes that success of the concept will take many years.

Looked at in the context of the battle of the retail giants, it strikes me as a highly original approach to wine selling with strong consumer appeal. And it’s unlikely to register at all on the competitor radar screens at Coles and Woolies.