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.

Copyright © Chris Shanahan 2005 & 2007

Australia’s great wine icon, Penfolds Grange, is in no danger of demise. But in my view it does have a quality challenger – albeit in a different style – from within its own cellar.

The challenger goes under the name RWT, originally a prosaic acronym for ‘red wine trial’ – a mid nineties project led by John Duval, Penfolds Chief Winemaker at the time.

With increasing volumes of high-quality shiraz available, Duval sought to make a 100 per cent Barossa red expressing the sweet perfume and voluptuous, juicy, soft richness of the variety, complemented by subtle French oak.

What he envisaged – and made – was the antithesis of the opaque coloured, brooding, slow-evolving power of Grange.

The first RWT – from the generally lacklustre 1997 vintage – made a big impression with its wonderful fragrance and supple, fruity palate. There never had been another Penfolds red like this. In fact, it’s hard to recall any Barossa shiraz of this calibre.

In retrospect we might conclude that Duval — like his mentor and creator of Grange, Max Schubert – successfully transformed a vision into an enduring and distinctive wine style.

Of course, reputations can’t be based on one vintage. But RWT comes from what was an already impeccable pedigree: the unique shiraz from the western and north western fringe of the Barossa Valley – a resource integral to the success of Penfolds reds and highly valued by Schubert and by his successors, Don Ditter, John Duval and now Peter Gago.

Subsequent vintages confirmed the power of Duval’s vision even if the market – expressed through auction prices – lags the opinion of experts.

Several recent encounters with RWT prompted these observations. At dinner before the Barossa Wine Show with fellow judges Huon Hooke and Lester Jesberg, we struggled to name even one truly great Barossa shiraz – until Jesberg suggested RWT 1998.

Ah, yes, we all agreed. That was magnificent. Days later, by fate, the as yet unreleased RWT Shiraz 2004 — with that same heady fragrance and lush, silkiness – romped home as top red of the show.

At a judges’ dinner during the show, a line up of red trophy winners from the 2002 show – including RWT 1998 – highlighted the sheer perfection of this wine. Huon commented that each of the reds could have been better in some way – less alcohol, less oak, less tannin – but not RWT. “There’s not a thing you’d want to change in it”, he said. And he was correct.

The same might be said of the 2004 that topped the show this year and of the current release 2002.

With a retail price of between $120 and $140 a bottle, nobody’s going to call Penfolds RWT cheap. But for a wine of this calibre I’d regard it as undervalued when compared with the other great wines of the world.

This, I believe, makes RWT good value for the collector wanting to get in early and build a sequence of what could be seen a few decades from now as one of the very finest Australian reds.

And if you’ve that in mind, do look at current auction prices. Recent sales — varying between $72 for the 1997 and $94 for the 2002 — represent a significant discount on retail price.

Unlike Grange, RWT doesn’t need 15 plus years in the cellar. It seduces from the day its released but has the depth to age well for a decade or two.

Copyright © Chris Shanahan 2005 & 2007

Wine marketers will tell you that drinkers shop around: serious wine collectors cherry pick at numerous outlets; casual shoppers go where it’s convenient; and bargain hunters scour the press and web before leaving home – or pushing the button.

And wine marketers will also tell you that within the context of the massive liquor retail struggle between Coles Myer (Liquorland, Vintage Cellars, First Choice) and Woolworths (Woolworths Liquor, BWS and Dan Murphy) – it’s one brand – Dan Murphy – that’s doing more than any other to reshape the landscape.

Woolworth’s acquired Dan Murphy – a then Melbourne based large-format liquor retailer, specialising in wine — for several tens of millions of dollars in 1998.

In retrospect, the buying price was a bargain as Woolies acquired not just five stores in Melbourne but a proven and potent business model that had been honed and polished for decades by the original owner, Dan Murphy, with support, in later years, from a partner, Tony Leon.

Rare for a predatory big company, Woolworths resisted any temptation to engulf Dan Murphy with its own culture. Instead, it left Leon to run the business separately from Melbourne (Woolies head office is in Sydney) while providing the resources to spearhead a nation wide expansion.

The rollout from 5 stores in Melbourne in 1998 to 43 nationally in 2005 (two in Canberra with another to come), appears to have bulldozed archrival and former liquor market leader, Coles Myer Liquor Group.

The strategic advantage of having acquired Dan Murphy and exploiting the business model has now become apparent.

In Sydney this week, Tony Leon said that the business – apart from being much larger – still runs substantially at it did under the late Dan Murphy. He said, “It’s not complicated. We’re traders. We buy and sell liquor and that’s what we work on”.

Part of the success, he says, lies in having a long-term view. “When we open a new store we expect it to take three years to perform well”. The principal, he said, was expressed in something Dan Murphy once told him, “Tony, no single advertisement works. But advertising works”.

And if you’ve looked at Dan Murphy’s ads over the years, you’ll have seen that they’re direct and single minded: “Nobody beats Dan Murphy”, they scream. And the outlets back the scream with a raft of specials and a unique in-store experience: prairie-like space bristling with wines, beers and spirits.

Such is the appeal of the offer that a typical store, says Leon, draws customers from within a 20-30 minute travelling distance. Naturally, this has a dramatic effect on competitors within that catchment – including other outlets owned by Woolworths. Nothing in the history of liquor retailing in Australia, I believe, has had such competitive impact.

Indeed Coles Myer responded to the Dan Murphy threat with a look-alike offer – First Choice – now being rolled out nationally, with one outlet already operating at Philip.

But nothing’s ever the final word in retail (or anything else). Local, independents like Jim Murphy, Georges Liquor Stable, Cand Amber and Australian Winebrokers, each in its own way, continues to fight for and earn part of our liquor dollar. As do our dozens of independent, licensed supermarkets catering to the convenience factor.

All of this, in conjunction with a wine surplus, spells a field day for wine drinkers in the immediate future. Longer term, market consolidation could make it difficult for smaller makers to find outlets, thus reducing diversity. However, if demand is there, that could be a profitable niche for future, fast-moving independents.

Copyright © Chris Shanahan 2005 & 2007

Eileen Hardy Shiraz – flagship red of the Hardy Wine Company was introduced in 1973 to celebrate the 80th birthday of family matriarch, Eileen Hardy. That wine, a selection of the best McLaren Vale Shiraz from the 1970 vintage, still drinks well today.

What began as a birthday gift became a company flagship, despite significant style and quality changes across the years. As we saw last week, modern Eileen now brings together all that’s been learned in vineyard and winery in the 35 years since that first vintage.

Individual vineyard plots – mostly in McLaren Vale but including components from Clare, Padthaway and Frankland River — contribute small batches of varying style. These are all fermented separately and matured in French oak barrels separately until chief red-wine maker Paul Lapsley and his boss, Peter Dawson, assemble the final blend.

The current release 2001, for example, comes 88 per cent from McLaren Vale and 9 per cent from Frankland River with a splash from other regions – all matured in a variety of high quality French oak barrels.

It weighs in at a comparatively modest 13.6 per cent alcohol (some of our gun reds hit 14.5 or more) and is clearly a wine to cellar. The colour’s deep but not opaque and the aroma and flavour are built on bright, intense varietal character with a delicious savouriness. The structure is firm, tight and satisfying – a wine to reveal more as it ages for a decade or two.

From past tasting and a fresh look at the 1970 then the nineties vintages last week, I’d say the very early Eileens were wonderful and the eighties vintages lacklustre. During the nineties the style strengthened, especially towards the end of the decade. But in the new century Eileen appears to be settling into a consistent, fine, savoury style – epitomised to me by the glorious but not yet released 2002 vintage. This is jaw-dropping stuff.

The white flagship, Eileen Hardy Chardonnay is a jaw dropper, too. Made by chief white-wine maker, Tom Newton – with support from Peter Dawson – this is blazing new trails.

It’s a wine without boundaries. Newton and Dawson’s search for the best material began in 1986 in Padthaway – the company’s largest chardonnay resource – and widened over time to include Canberra, the Yarra Valley, Adelaide Hills and Tasmania.

Says Dawson, “we look for a good expression of chardonnay with intensity and the inherent structure to support oak fermentation, malolactic fermentation and oak maturation”.

What this means is that if you use the right grapes, a string of potentially intrusive winemaking practices are subsumed by the intense fruit flavour. The result is a beautiful, complex, dry, firmly structured wine capable of extended bottle ageing.

That the ‘right’ fruit is now sourced predominantly from Tasmania was partly an accident. A search for intensely flavoured, delicate chardonnay and pinot noir for sparkling wine, while successful, also revealed promising parcels of table wine material.

The first Tasmanian material was included in Eileen in 1999. So good was it, that in 2000, a particularly warm vintage in many cool regions, the proportion of Tasmanian fruit in the blend shot up to sixty five per cent – the remainder coming from the high, cool Hoddles Creek vineyard in the Yarra Valley.

Subsequent vintages retain a core of Tasmanian material combined with fruit from the Yarra Valley, Tumbarumba and the Adelaide Hills.

The current release 2002 is as good as Australian chardonnays gets.

Copyright © Chris Shanahan 2005 & 2007

This is the story of three jaw-dropping wines – a $90 shiraz, a $13 shiraz and a $40 chardonnay.

The first has been 35 years in the making and the second, 19 years. The third, with only a few vintages in bottle, might be just a shadow of itself without the 35-year endeavour behind the $90 bottle.

The $90 and $40 wines are Eileen Hardy Shiraz and Eileen Hardy Chardonnay, respectively – flagships for the Hardy Wine Company, a division of US based Constellation brands.

Both wines give the lie to the notion – put about by French makers and some critics — that big Aussie companies make nothing but oceans of bland soul-less wine. What rubbish.

The Eileens are superb, small production wines built on a deep and growing intimacy with numerous small vineyard plots.

At a tasting this week, Hardy red-wine maker, Paul Lapsley, explained that in May, after red-wine classifications, the team reviewed the performance of wines from each vineyard and sub-plots within vineyards and from there determined a pruning regime and target yields.

Vineyards likely to produce fruit good enough for Eileen Hardy shiraz had, over the last five years, been converted from mechanical pruning to hand pruning. While expensive, it means individual care of every vine and a higher success rate in creating properly ripe berries – the very core of a wine of this calibre.

Correct pruning is only part of the picture. Lapsley says that it’s important to keep the vines free of excess stress and to avoid overcropping. To achieve this, the Eileen vineyards are mulched to retain ground water while shoot thinning and the removal of unripe fruit help maintain a crop load in balance with the foliage.

If all goes well this produces berries that ripen at modest sugar levels (too much sugar equals too much alcohol in the finished wine) and produce wines with vibrant fruit, not the ‘thick stewiness of over-ripe fruit’.

Typically, says Lapsley,  “the vineyards that produce this quality are 30 to 100 years old. Old vines produce wines that have a sweetness and creaminess on the mid palate – a silkiness”.

The perfect Eileen Hardy Shiraz grape, Paul reckons, weighs about one gram, displays vibrant fruit ripeness and has ripe tannins in the skins and seeds. That’s how finicky this flagship wine business is – aiming to get every berry just right.

Having harvest the right fruit Lapsley’s aim in the winery is to “express that fruit”, to build a savoury element, and to extract the tannins that give structure without harshness.

Each batch is gently crushed to include whole berries and fermented in small open fermenters with the skins floating as a cap on top. The open fermenters mean some desirable alcohol evaporation, with finished wines 1 to 1.5 per cent lower in alcohol than wines from closed vessels.

And the floating cap (as opposed to submerged using boards), according to Paul, allows some oxygen exposure, greater permeability for pumping the juice over and better temperature control.

From the fermenter each batch goes to compatible oak barrels. And the diversity of small parcels used in Eileen means an equal diversity of new used French oak barrels from various top coopers.

And remember, at this stage Eileen is still a collection of unique small batches. The blend comes much later as we’ll see next week.

Hardys Eileen Hardy Chardonnay 2002 $35 to $45
A vertical tasting of Eileen Hardy Chardonnays from the first vintage, 1986, to the unreleased 2004 (see main story) confirmed in my mind that Eileen sits at the top of the pack in Australia. To my palate it hit the pace in 2000 and, since then, it’s made little advances with the 2002 and 2004 being as good as it gets in Australia. And that makes it a bargain given the $100 plus price tags of some of its competitors. Good bottles of 2002 I’d rate as probably the best Aussie chardonnay yet tasted. However, the 2004 gives it a close run and will ultimately be the better buy as it comes screw cap sealed and should not suffer the bottle variation seen under earlier cork-sealed vintages.

Copyright © Chris Shanahan 2005 & 2007