Chris Shanahan: Jayco founder buys Mitchelton winery

Mitchelton Tower — Mitchelton tower, cellar, cellar door and restaurant

On August 17 Kirin Brewing Company’s Australian arm, Lion, completed the sale of Mitchelton Winery to Gerry and Andrew Ryan. The sale brings the winery back under private control after 18 years of corporate ownership – Petaluma Group from 1994, then Lion Nathan (now Lion) from 2001.

Mitchelton’s the winery that never quite fitted in – proving problematic to successive owners from its establishment in 1969. A common factor in the periodic ownership changes was the extravagant scale of its elaborate brick and concrete underground cellars and the cellar door, restaurant and 55-metre observation tower.

These landmark facilities present capital and business demands over and above those of maintaining a 115-hectare vineyard and its annual crush and wine production.

Managing director of Fine Wine Partners, Lion’s wine division, Chris Baddock, says Lion was interested in the brand, but not the site. Even owning vineyards, he added, fits poorly from a brewer’s accounting perspective.

But the brand and site being inseparable, Lion disposed of the Mitchelton brand, cellars, cellar door, restaurant observation tower and vineyards – but retained Mitchelton’s popular Preece brand.

Baddock says Fine Wine Partners (a blend of the former Petaluma Wine Group and distribution business, Tucker and Company) will continue Australia-wide distribution of Mitchelton.

When Melbourne’s Ross Shelmerdine planted the first vines at Mitchelton in 1969, riesling joined cuttings of marsanne, from neighbouring Tahbilk, as a key white variety.

Colin Preece, a distinguished table and sparkling wine maker of the fifties and sixties at Seppelt’s Great Western, selected the Mitchelton vineyard site in the late sixties after an extensive search through southeastern Australia on behalf of the Shelmerdine family.

Ross Shelmerdine’s son, Stephen Shelmerdine wrote to me: “Such was Colin’s vision and enthusiasm for riesling that extensive plantings were made in 1970 and 1971, well before the white wine boom. Colin believed that the specific micro climate of the vineyards – surrounded on three sides by the deep, very cold, constant-height Goulburn River, a site very conducive to autumn fogs, providing suitable conditions for botrytis cinerea – would put Mitchelton in a very strong position to demonstrate the quality of riesling in Victoria.”. Preece’s judgement proved spot on, although he did not live to see it vindicated.

Instead, Don Lewis, a young man selected and trained by Preece, made Mitchelton’s first riesling during the massive floods of 1974. In an interview some years back, Lewis couldn’t recall the quality of the wine. But he well remembered the multiple gold-medal-winning1975 Mitchelton riesling.

But in tough times for the wine industry producers battled for margin in a glutted market. The going proved particularly tough at Mitchelton as the owners struggled to fund an extravagant and still mind-boggling underground concrete and brick cellar and landmark observation tower.

During a period in receivership, Mitchelton sold most of its riesling as grapes or bulk wine. Most of the 1976, for example, went as grapes to Brown Brothers. However, Brian Croser, then lecturing in wine making at Riverina College of Advanced Education, Wagga, purchased a small portion of the crop.

Using a discarded Maralinga rocket fuel tank as a fermenter, he turned Mitchelton’s 1976 grapes into the first Petaluma riesling. By this time Croser was an accomplished riesling maker, having put Hardys Siegersdorf on wine shelves and restaurant lists all over Australia. Stephen Shelmerdine once told me Malcolm Fraser loved the inaugural Petaluma riesling and secured a quantity for the Lodge.

In1978 Mitchelton’s financial trauma ended, for the time being, when, for an undisclosed sum, believed to be just a fraction of the building cost, Melbourne’s Valmorbida family acquired the winery, tower and Mitchelton brand. The Shelmerdinesf retained the vineyards.

In the same year, the 1978 riesling won a trophy at the Adelaide wine show, contributing greatly to its commercial success and making Mitchelton’s flagship wine. And it went on to win gold medals for successive vintages for over twenty years. It now sells as Mitchelton Blackwood Park Riesling.

Mitchelton subsequently built a following for its other wines, notably shiraz and marsanne-roussanne-viognier white blend and its blended Preece range.

But even under Valmorbida family ownership, then Petaluma from 1994 and Lion from 2001, the cellar door, restaurant, observation tower complex were never fully exploited, and appear to have been a drag on the wine business.

The latest ownership change, however, promises to address this. The Ryan family (founders of Jayco caravans and GreenEDGE cycling team) are building a 60-room hotel on the site, renovating the cellar door and restaurant and adding conference and function facilities.

With its proximity to Melbourne and the Hume Highway, you’d have to give this side of the business – the part that’s troubled Mitchelton’s previous owners – every chance of success. But the hospitality business is largely separate from grape growing and winemaking. Ironically, therefore, the real challenge for the Ryans may prove to be the capital-hungry wine business – a peculiar beast that in Australia has been fed generously by external investors over the decades, only to turn and bite the hand of its feeder.