Making grapes to feed the wine boom

The wine-export boom is being fed by a rush of investment in vineyards and wine-making and storage equipment. Nobody can say with certainty how much money the industry’s attracting, but we’re talking hundreds of millions of dollars a year.

Securing access to good grapes appears the crucial factor driving a spate of vineyard acquisitions and planting by big companies. Southcorp Wines, Orlando-Wyndham, and Mildara Blass have all recently announced major vineyard investments. They’ve been joined now by BRL Hardy’s securing access to 5000-6000 tonnes of high-quality grapes a year through the purchase of existing vineyards and planting of new land.

They’re buying, developing, or acquiring an interest in 400 hectares of vineyards during 1994/95. One hundred hectares are at Pemberton, south-western Western Australia. That’s a joint venture involving 60 hectares of established vineyard, with the remainder to be planted in 1994 and 1995.

What tells us more about the direction of viticulture in Australia in the 1990s, is that the remaining 300 hectares are all on the great limestone plain in South Australia’s south east.

The plain, a series of stranded limestone beaches, lagoons, and dunes stretching east-west from near the Victorian border to the coast and south-north from below Mount Gambier almost to Bordertown, embraces not just the large vineyards of Coonawarra and Padthaway, but a growing number of plantings outside of these established areas.

BRL Hardy’s new vineyard interests include 100 hectares in Coonawarra and 70 in Padthaway, lifting their total Padthaway holdings to over 400 hectares. But their biggest new planting on the limestone plain is a 160 hectare block at Jessie, between Coonawarra and Naracoorte.

I’ve not seen the proposed site, but Hardys say it’s prime terra rossa (a geological term for soil composed of weathered limestone) of the sort that accounts for Coonawarra’s and Padthaway’s best wines. The Hardy plantings join the even larger new ones of Mildara-Blass and the well-established Koppamurra vineyard in the undulating hills north east of Coonawarra.

I spent a day driving and walking through this area last year with Vic Patrick, Mildara Blass’s viticulturist. He was excited at the potential and totally confident that his 400 odd hectares being planted would produce exceptional fruit. He sees no reason why quality won’t equal or exceed that of Coonawarra.

What we’re seeing now is a search for good terra rossa plots outside of increasingly expensive Coonawarra and Padthaway. Thus, there are significant vineyards now not just in the strip between Coonawarra and Naracoorte, but at Mt Benson, near Robe on the coast, at St Marys, on an old dune 15 kilometres west of Coonawarra, at Lucindale half way between Naracoorte and Robe, near Bordertown on the very edge of the limestone plain, and small plantings near Mount Gambier.

Given the solid wine making infrastructure in the region and the exceptionally good quality of grapes coming from it, it’s easy to foresee new planting springing up wherever terra rossa soils coincide with a ready supply of suitable underground water (the rainfall pattern does not allow commercial grape growing).

If I had to bet, I’d say this will be by far the most significant viticultural region in Australia by 2000, if it isn’t already.

And the plantings won’t be done only by larger companies. Smaller operators need grapes, too. And not just in the south-east but throughout southern Australia farmers are looking at grapes as a cash crop offering potentially bigger returns than traditional activities, especially where long-term contracts can be negotiated with wine makers ahead of vineyard establishment.

Ken Helm (Helm’s Wines, Murrumbateman) tells me farmers in the Yass area have been approached by wine companies offering ten year grape contracts. Alister Purbrick, of Chateau Tahbilk on the Goulburn River in Victoria, says he’s developed one large vineyard under just such an arrangement and, given reasonable yields, the whole project should be paid for and profitable before the contract comes up for renewal. Encouraging words for would-be grape growers.

As the supply of grapes grows, demand for winemaking equipment and storage tanks grows, too. Thus the capital demands of the rapidly-growing industry multiply. Next week we’ll have a look at how one little company’s taking up the opportunity and challenge of servicing rapidly-growing export orders.

February 27th, 1994

Domestic sales are ticking over steadily, exports orders are flooding in, additional grapes have been found to meet surging demand, but what does the small maker do when the winery’s bursting at the seams? Where are the grapes and juice to be crushed, drained, pressed, fermented and stored?

The solutions are all expensive and need to be addressed now, this vintage. The urgency to cope with export demand and an increasing grape supply, explain an enormous rush of investment in winery equipment throughout Australia. And for smaller wineries brave enough to have a crack at the export market, the problem can be in raising sufficient capital to fund expansion.

You could do a Petaluma and offer a public float as Brian Croser did successfully last year. Or, as Alister Purbrick, Geoff Merrill and Joe Difabio have done just in time for the 1994 vintage, pool resources to come up with a facility capable of processing 1000 tonnes of grapes (about 70,000 dozen bottles of wine) a year.

Merrill and Purbrick were friends at Roseworthy Agricultural College in the mid to late seventies. I remember them as brash young graduate wine makers visiting Canberra’s National Wine Show Canberra sixteen years ago. It was party time then, and they switched with ease from drinking formidable quantities of beer at the ‘Wicked Lady’ in Belconnen to sipping the sublime Bernkastler Doktor Riesling Beerenauslese 1976 at the largesse of David and Richard Farmer.

But all parties end and Alister went to work as wine maker under his grandfather, Eric, at the Purbrick family’s Chateau Tahbilk (1200 hectares on a lovely anabranch of the Goulburn River in central Victoria). Geoff became wine maker at Chateau Reynella, then owned by Rothmans, and stayed on when Thomas Hardy and Son acquired the company a few years later.

Alister took over as Managing Director of Tahbilk in 1980 while grandfather Eric stayed on as Chairman until his death in 1991. Under Alister, Tahbilk acquired an interest in the nearby Longleat winery in 1983 and also developed a new range, Dalfarras, with his wife Rosa.

Meanwhile Geoff Merrill kept producing unique grenache-based roses and brilliant vintage ports at Chateau Reynella, and played a major wine making role at Hardys through the eighties.

At the time Hardys allowed wine makers to develop their own wine making interests. It was in this period that Geoff developed his Stratmer, Mount Hurtle, and Geoff Merrill wine labels. He finally left Hardys and moved into the lavishly refitted Mount Hurtle Winery on the southern fringe of Adelaide’s suburbs, just up the road from Hardys Reynella Winery.

The winery struggled in the early years before the export boom but Geoff gained a toe hold for his brands in the local market. The wine industry may look prosperous today, but things were different then and Geoff was delighted to see his silent partner bought out by his old friend Alister Purbrick in 1991.

Geoff developed a successful budget-priced brand, Cockatoo Ridge on the local market and began taking quite large orders from the U.K. for the Mount Hurtle brand. In 1993 he struck the big time (for a small outfit) with a single order from Sainsburys for 10,000 cases of a new light, dry grenache shiraz blend. The British loved it.

By now both Tahbilk and Mount Hurtle wineries were bursting at the seams. As well, mount Hurtle had fermentation and storage facilities only – all the crushing, draining, and pressing (and much of the fermentation) being done under contract down the road at Hardys.

This worked well enough (at a cost) early in vintage, but late in the season as grapes from Hardys broad acres at Padthaway rolled in, finding a spare tank for Merill and Purbrick became a problem.

With Mount Hurtle hemmed in by suburbs, Merrill and Purbrick worked out a deal with Joe Difabio, wine maker at Mount Hurtle. Joe’s family moved to McLaren Vale in the 1960s and now owns about 40 hectares of vineyards.

Joe has built a large winery building behind his family’s McLaren Flat vineyard and is leasing it to Mount Hurtle. Alister and Geoff are furnishing the winery with all the latest equipment… sufficient to process and store the wine from 1000 tonnes of grapes and with ample room to expand. Total investment to date is around $1 million.

In this way the capital cost and risk has been spread, Geoff and Alister feel more secure in access to the Difabio family’s grapes, and the Difabio family can share in the profits if the venture succeeds.

While it all sounds like a fairy tale ending, the fact is, it’s only a beginning and all predicated on continued export growth. Good luck to them.