Australian wine: the way forward

| 30 October, 2017

“What’s the difference between an English wine merchant and a terrorist?” says Australian Vintage’s award-winning winemaker, Peter Hall. “You can negotiate with a terrorist.”

British buyers have long fought for low prices on Australian wine and a number of producers Down Under have in turn enjoyed enormous volume growth. It remains by far the largest country of origin on UK shelves, the size of France and Spain combined, and it has returned to growth over the summer, but the average price point still stands at just £5.23 (Nielsen, year to July 2017).

That is unsustainable for retailers and producers alike in the wake of duty increases and exchange rate pressures, so Wine Australia is on a mission to educate the British public about the country’s ability to compete at higher price points, its regional diversity and its willingness to challenge the sunshine-in-a-glass stereotype with wines that are elegant and complex yet still offer great value for money.

To do so it has to negotiate with British wine merchants, who are the gatekeepers of the market it is trying to win over. While Australia and its behemoth brands, from Hardys and Jacob’s Creek to McGuigan and Yellow Tail, dominate in multiple grocers and c-stores, it has not fared so well among independent wine merchants who hand-sell quality wines to discerning customers, so it has turned its attention to them. And they seem impressed. So impressed, in fact, that they have, literally, been singing its praises.

When wine buyer Colin Thorne led a group of eminent indies in a raucous chant of “oh San-gi-o-ves-e, oh San-gi-o-ves-e”, to the tune of The White Stripes’ Seven Nation Army as their minibus hurtled through the King Valley earlier this month, the driver could have been forgiven for shaking his head, rolling his eyes and muttering about Brits abroad.

But instead of bridging the gap between the wine trade and football hooliganism in one fell swoop, they were expressing their joy at the aforementioned regional diversity, wallowing in the excellence of the Italian varietals produced by Pizzini, Dal Zotto and Chrismont, and the bus driver was loving it, joining in with the exuberant singing to his heart’s content.

ITALIAN INFLUENCE

The King Valley is one of the less heralded regions Down Under but it is one of the most unique. It was settled by Italian immigrants and retains a huge Italian influence: the people look Italian, wear Italian designer labels, cook Italian food and grow Italian grapes. You could easily be forgiven for thinking you are in Italy, until one opens his mouth and says: “A wallaby got under a wombat hole and ripped through my vineyard.” Apart from perhaps the Adelaide Hills – which is a smorgasbord of different styles, varietals and characters – each region has pretty much established what it is best at and presents a clear and simple message to the world: the Hunter has Semillon and Shiraz, the King Valley has its Italian varietals, the Yarra has Chardonnay and Pinot, Barossa has Shiraz and Chardonnay, McLaren Vale is showing everyone how stunning Grenache can be, Coonawarra has Cabernet, Tasmania is producing superb Pinot and sparkling wine, and so on.

There is still experimentation and dynamism, but the different regions’ leading lights are all pulling in the same direction and working collegiately to increase the general quality of the wine and the clarity of their marketing messages.

Even high volume companies like Australian Vintage are at it. It does not simply produce high-volume, fruit-forward, cheap and cheerful wines, as Hall keeps winning medals and trophies for his exquisite Hunter Valley Semillons, and the same critical success is apparent for high-end offerings from the likes of Treasury Wine Estates and Accolade. Across the board Australian wines are becoming more restrained and less reliant on oak or overblown, jammy flavours as winemakers discover the confidence to let the fruit shine through in an elegant and complex fashion.

“The more commercial side of things, wine that could just as easily be from South America, is being given the flick and we now have wines that are much more about region, place and the synergy between the winemaker and the soil,” says Dave Lehmann, son of the famous Peter and owner of David Franz Wines in Barossa.

“We really as a country, and as the Barossa region, need to get away from the whole sunshine-in-a-glass reputation. People are turning away from wines that are big and bruising and there are young, enthusiastic, brave winemakers forging their own paths. Even the big wineries are chasing newer styles and not just who can get the best oak or the ripest fruit.”

Adrian Sparks, winemaker at Hunter Valley’s Mount Pleasant, named as James Halliday’s 2017 Winery of the Year, adds: “We have pulled back the use of oak in the last few years, we’re picking earlier and we have become more respectful of the vineyard as a whole, doing more individual block pickings of old vines and highlighting them. In the early 2000s we were using 50-60% new oak, small format, and now we are down to 20%, larger format, respecting the fruit and showing the characteristics of the vineyard.”

They are emblematic of winemakers across the country that talk a good game and whose wines live up to it. Independents are perfectly poised to capitalise on the improvements Australia has made in the higher tiers in recent years and they fully intend to.

Thorne, buyer for London chain Vagabond, says: “I knew Australia was good quality, but it’s great to see a range of climatic conditions and taste some high-quality stuff. We import directly from Australia and I have got a few new things I want to bring in from Australia. It’s all about proving to people that this is a place where really good wines come from.”

Ruth Yates, owner of Cheshire-based chain Corks Out, has long been converted to the cause but intends to ramp up the number of Aussie wines on her shelves, where the average price of still wine is £25. “People are changing their views on Australia because they thought about big oaky Chardonnay and didn’t consider it to be elegant or delicate in any way. They saw it as a big, hot region that just produces one style, with overblown fruit, and that has changed a lot.

“The Australians have changed a lot in the last decade, by really seeking out those cooler regions. Consumers can still find big, full-bodied Aussie wines, but it’s nice that there are a lot more areas that are bringing in a European style. Western Australia has been known for that for a while, but it’s really great to see other areas producing good quality wines that give Burgundy a run for their money in Pinot and Chardonnay. I am really impressed. Australia forms a very big part of our portfolio now. After Champagne it’s the biggest part. It’s the biggest still wine category, ahead of France. Australia will carry on growing. It is still a sleeping giant.

“They have much more still to do. I’ve been to Australia three times now and it’s like watching a child grow up. It gets more and more advanced and it’s fantastic how well they’ve done, and the potential is huge. They’ve got everything: great topography, the terroir, the climate, the diversity between the regions, the grape varieties they can grow and a lot of great winemakers.”

But it is not just indies that are interested in devoting more attention to premium Australia. Freddy Bulmer, buyer for the Wine Society’s 110,000 active members, says: “We are putting a lot of work into Australia. We are always on the hunt for interesting new things, keeping an eye out for opportunities. It’s a matter of trying to tell the story and explain that Australia has reinvented itself and that it’s not just about over-the-top, oaky Chardonnay any more.

“There is still a perception of that in the UK. For an engaged wine consumer – and we are lucky enough to have a number of them buying from us – there is so much going on in the world of wine at the moment, and so many stories from so many regions globally, and so much excitement, that you have to really shout extremely loud to get heard, and Australia is doing that because the quality is excellent. It’s a matter of us being persistent and telling the story of Australian wine.

“I have seen some really exciting new producers that have stories to tell, and that can help us boost sales of Australian wines. We have been increasing gradually over the past few years, which is really positive, but there’s always more work to do, so we just have to understand the best outlets for Australian wine. If the quality is there now at those more expensive prices it’s up to us to focus more on our fine wine list rather than our everyday wine list, and give Australia a bit more attention in that.”

The Wine Society sells a lot of Australian wine, but under-trades compared to multiple retailers because it has not found the suitable quality at the sub-£7 price points that drive volume. “The majority of Australian wine sales are driven by cheap, cheap wines, and we don’t do anything at those price points,” says Bulmer. “We are committed to doing quality.”

But he says there is plenty to be excited about at the higher price points and Ana Sapungiu MW, buyer for Oddbins, adds: “I will be visiting Australia soon and my goal is to find that middle ground. I will be looking for a balance between jumping straight from entry-level up to the top. Once we fill that middle space we will be able to sell more at the top end.”

THE BREXIT CHALLENGE

Brexit is a concern for many indies as the subsequent hit to exchange rates has rendered many interesting wines unsuitable for them commercially. “I am frustrated that thanks to the idiots that voted for Brexit we are less able to afford these wonderful wines than we were 18 months ago,” says Simon Taylor, owner of Stone, Vine & Sun in Winchester. “However, there isn’t a large differential between people making very ordinary wines and very good wines, so if you work hard enough there are lots of super wines that will work very well in the UK market.”

Phil Innes, who set up thriving Birmingham retailer Loki after working at Oddbins and Thresher, believes the sort of shoppers that seek out indies are astute enough to appreciate the impact currency has on price. “Giant Steps [from the Yarra Valley] has jumped up by £7 a bottle since Brexit, from £21.99 to £28.99, but sales haven’t dropped off,” he says. “It’s still a really popular wine. Prices have been hit pretty hard, but customers haven’t balked at paying increased prices. A couple of people have asked why it has gone up, but you say the exchange rate and people are intelligent enough to realise that is the reason and continue to buy it.”

The price of icon wines like Henschke’s Hill of Grace has also shot up in recent years. “We have pigeonholed ourselves into making single vineyard wines,” says sixth generation winemaker Johann Henschke. “In 2014 we had 30% of the average yield, which is just tiny. We think it’s a fair price for the quality. There have been price rises over a long period of time. My grandfather’s customers send us receipts from the 1970s saying it was $1, but the price rises.”

Smaller, iconic producers like Henschke and Grange can afford to put prices up, because demand constantly outweighs supply, but the challenge for many UK retailers is finding wines that bridge the gap between the mainstream brands and the top wines.

“Australia personifies the challenges faced by the industry,” says Berry Bros chief executive Dan Jago. “In the wine industry in the UK we see growth in value wines at one end and fine wine at the top and it is the bit in the middle which is finding it hard. When we [the UK] moved to an EDLP agenda a lot of suppliers of Australian wine sat in the middle ground. So we need to all work out what happens to that bit in the middle and it was historically Australia’s heartland.”

Stewart Travers, buyer for Cambridge Wine Merchants, is going after wines in the £15-30 bracket and has found plenty to get excited about. “I am really happy with the wines we have, they show really well, but I would love to ship some more high-end stuff. The growers are very passionate and good for the world of wine. It’s very dynamic and exciting.”

Another challenge for indies is a logistical one as it is not easy to ship pallets over from the other side of the world, but working together can overcome that hurdle. “It’s all deep sea, so independents probably have to work together to ensure they can get the right small batches from whatever terroir you are looking at,” says John Chapman, operations director at the Oxford Wine Company. “In Europe it’s easy, but in Australia you have to bring over enough volume, or work with other merchants doing the same thing. There are now 750 independents in the UK and if we can improve the distribution channels and the market opens up and we get more smaller Australian wineries into the UK that will be great.”

Matt Hennings, owner of four-strong Sussex chain and wholesaler Hennings Wine Merchants, adds: “We are never going to sell pallets of these wines because of the price points, but there are enough wines that are suitable for independents. You have to remember our average selling price is between £8 and £12 and we are never going to sell loads of wines retailing between £16 and £30, but there is enough here to jazz up our range. We will increase our range, but in a controlled fashion.

“Australia is becoming more relevant. It’s a very competitive space that Australian wines occupy and with a very traditional business like ours with a leaning towards European wines it has to earn its keep, and I see no reason why it shouldn’t.”

OBCURE GRAPES START TO FLY

A term you will hear bandied about a lot in Australia is “emerging varieties”, which refers to pretty much anything that is not French in origin. The nation’s pioneering spirit is embodied by the huge wealth of different grapes that winemakers are experimenting with, from Assyrtiko to Durif, and there has been great growth in some of the lesser-heralded grapes, albeit from a small base. Australian Touriga Nacional, for example, is up 575% in the UK, Sangiovese has grown 396%, Fiano has climbed 273% and Vermentino is up 185%, according to Wine Australia.

Each region has pretty much nailed down which main varieties it is good at, and has devoted the majority of the land under vine to them, but there are other grapes that are being given a lot of attention by some of the younger winemakers.

Simon Taylor, of Winchester-based Stone, Vine & Sun, gets straight to the point with his assessment of the movement.

“I was not loving the alternative varietals, because I sell Vermentino from the Languedoc for £8.99 that is much better than what I was offered in Australia,” he says.

“Ditto some of the other emerging varietals. However, there is a clear future for red Italian varietals in Australia, in particular Nebbiolo. In the cooler regions Nebbiolo fits beautifully and will work very well alongside Pinot Noir as a top quality Australian varietal of the future. I think Tempranillo is a dead end, in the sense that it is just simple strawberry fruit.

“What won’t work well in the UK market is very ordinary examples of, say, Fiano or Gruner Veltliner, that might work for buyers in Sydney and Melbourne but aren’t suitable for the UK market at those price points.

“Its strengths are high-quality Pinot Noir, Chardonnay and Shiraz, and the wines, particularly in the Yarra and the Adelaide Hills and the Grenache in the McLaren Vale, are Australia’s assets and our customers will respond to them very well.”

Other buyers echo Taylor’s appreciation of the Nebbiolo and Sangiovese being produced Down Under, but admit they are a difficult sell to UK wine drinkers. Freddy Bulmer, buyer at The Wine Society, says: “It’s difficult to get the consumer to understand why they should buy Sangiovese or Vermentino from Australia – Italian varieties that aren’t as established in Australia as Chardonnay and Pinot Noir are – rather than Italy, where you can get that sort of thing for £9 instead of £29. There is a way to go. But some of the Sangiovese we tasted – from Pizzini, for example – was absolutely stunning. A £35 Sangiovese from them is genuinely world class, and the tannins are different to a Chianti, giving it a nice point of difference.”

Ruth Yates, owner of Corks Out in Cheshire, is extremely positive about the appeal of less well known varietals coming out of Australia. “We have seriously seen a lot of interest there,” she says. “We find it a real struggle to sell Touriga Nacional from Portugal, but we’ve not had an issue selling it from Australia. It’s the same with Fiano and Vermentino from Italy, and Tempranillo from Spain. Consumers see Rioja and Chianti as brands, but do they really understand Tempranillo or Sangiovese? When they are looking to buy those grape varieties they are not sure about them, but they are comfortable with Australia and get a massive amount of reassurance from that, and we have been selling more and more of the Australian varietals because of that. They are willing to experiment a bit more.”

Simon Thorpe, managing director of Negociants UK, points to Jim Barry’s Assyrtiko or Chaffey Bros Dufte Punkt, a blend of Riesling, Gewurztraminer and Kerner, as strong examples of innovation coming out of Australia. “Innovation could be in new varietals or emerging regions, or in winemaking excellence, or the fact that all wines under the Yalumba brand are now vegan and vegetarian friendly,” he says. “Australia has for many years been at the forefront of quality wines at large volume, but this is now joined by quality and diversity across many producers and regions.

“It’s easy to point to new varietals or regions growing in importance, but actually I think there is real interest to be found in the advancements and creativity in the established players in the market.

“For example there has been a revolution in styles of wines from an established region such as the Barossa – a transition to more elegant wines with no loss of a sense of place.

“You could easily argue the same for Margaret River, McLaren Vale or Clare Valley. I’d urge anyone who hasn’t tasted broadly across the Australian wine category recently to dive in with no prejudice and an open mind and see what they discover.”

NEW WORLD RIVALRIES

South African Master of Wine Greg Sherwood, buyer for London indie Handford Wines, believes it is difficult for Australia to compete with his homeland because it lacks the diversity and unique selling points South Africa boasts.

But John Chapman at the Oxford Wine Company says: “It is on the same page as South Africa and the message is easier because the tradition of importing into the UK leaves a stronger basis to build on and they can extrapolate from the classic Barossa Shiraz or the refined Mornington Pinot. With South Africa it’s all a bit Wild West. In Australia they have all that funky new age stuff but it’s built on a foundation of quality.”

Loki’s Phil Innes adds: “South Africa for me still offers the best value for money out of all the countries, but Australia still gives you a really good bang for your buck, because there is high quality and great value across the board. They are not necessarily the cheapest any more, but that doesn’t mean people aren’t getting good value. They are just paying for a really great, well-made product.”

SUPPLIER VIEW

"Australia remains the biggest wine country of origin in the UK, with Jacob’s Creek showing strong growth, up 17.4%. The value growth in Australia is being driven by the increase of super premium wines, as consumers look to drink less but higher quality wines. In order to maintain the recent growth there is a real need to continue to innovate with new products such as our recently launched Jacob’s Creek Le Petit Rosé, to drive further interest and attract a younger shopper to the category. We think there is an opportunity for independent operators to attract new drinkers and add excitement back into the category with innovative launches such as Jacob’s Creek Le Petit Rosé and Double Barrel Matured. Although the Australian category has experienced decline, there is growth in the premium end of the category. On top of that, we believe that more can be done to engage shoppers within the last 3ft of the wine fixture. Showcasing the quality of wines that Australia offers will help get shoppers to experience the journey, starting with in-store engagement as a first point of action. In addition, offering responsible sampling opportunities in-store will help drive basket spend and we find that it is an effective method to engage consumers and provide them with the confidence to try something new.”

Vicky Hoey, head of marketing at Jacob’s Creek

"Across the board the Australian industry seeks continual improvements, whether that be in understanding the interaction of terroirs and grapes, clonal selections or embracing the most modern philosophy in winemaking. The past is being used to inform future planning – it’s exciting. There is innovation both in new, boutique wineries and in the larger more established operations. That could be in new varietals or emerging regions, or in winemaking excellence. Good and recognisable brands are doing an excellent job. It’s reassuring for the slightly less engaged consumer to know that a bottle of Oxford Landing Sauvignon Blanc delivers consistent value for money across all channels. [But] Australia, without ignoring its core capability, definitely needs to sell more wine above £8 into both on and off trade. [Growing sales] is mainly a question of continuing to focus on those things that deliver a great proposition to the consumer: namely good wine at good prices with an interesting, authentic and engaging story.”

Simon Thorpe MW, managing director, Negociants UK

Which regions impress the wine buyers?

“The Yarra is commercially very viable for finding good quality wines.”

John Chapman, Oxford Wine Company

“Yarra and Adelaide Hills are areas we need to look at. In the Yarra there are people making a much fuller and more voluptuous Pinot, and some making a lighter Pinot.”

Matt Hennings, Hennings Wine

“King Valley was somewhere I had no expectations of and I was really taken aback by the quality they have. What they are getting from vines of four years of age, some even younger, just shows they have a really bright future. I am really impressed with the Yarra. I love the pioneering spirit there. It is Pinot Noir and Chardonnay, which some people are bored with, but they have a really distinct message about what they do, and they do it really well and in a really great style. You have the old established guys doing things really well, but the exciting thing for me are the younger ones throwing out the traditional way of doing things, like Mac Forbes and Timo Mayer; they were really good. Barossa has a slightly confusing message, but I was really impressed with the Eden Valley Barossa wines. They had a real freshness about them.”

Phil Innes, Loki

“Yarra is a real eye opener. There are some really good, innovative winemakers coming through that are not afraid to do their own thing. They are experimenting and that’s the way it should be. The Australians are more innovative now than they have ever been, and I put that down to new winemakers coming on board. There’s a lot going for Australia, especially regions like King Valley and Canberra, that have a cooler climate. Canberra is really great for Riesling.”

Ruth Yates, Corks Out

“Yarra is really, really interesting. The Chardonnays and Pinots are a really nice expression of the region. Canberra is an interesting region. They have the conditions, but will take a couple more generations to get established.”

Freddy Bulmer, The Wine Society

"The places with the best identities are Yarra and the Adelaide Hills, where they are focused. Strathbogie has huge potential. I am sure in the next 20 years we will see some really good wines from there.”

Stewart Travers, Cambridge Wine Merchants