US shortfall may solve OZ surplus

Author: Jancis Robinson
Source: Jancis Robinson
Review Date: Feb 2012

The following article is taken from Jancis Robinson’s website:

US shortfall may solve OZ surplus by Jancis Robinson, 13 Feb 2012

La Niña and the succession of cool, rainy summers it has inflicted on much of south-east Australia may be making life extremely difficult for grape growers who in 2011 and 2012 are having to combat unusual conditions in the vineyard. But because it has had the same effect on the vineyards of the west coast of the United States across the Pacific, it could just be responsible for at long last ridding Australia of its persistent wine surplus. 

Partly because of the economic downturn (the GFC, as Australians call it, with the nonchalance of a nation relatively unaffected by it), very few new vineyards have been planted in California and the Pacific Northwest in recent years. Then came the exceptionally grey, wet summer of 2011, which resulted in a particularly small west coast crop and the result is that for the first time in many a long year, the US market is short of wine. 

Cue bulk shipments of the sort of basic Australian wine that has been hanging like an albatross around the neck of the beleaguered Australian wine industry for the last few years as the handful of big Australian retailers have been able to offer distressed parcels of wine at cut-throat prices and more and more growers have left the wine industry altogether. Many an Australian grower has been selling grapes under cost price, just as the wine companies, further along the chain, have been selling below-cost wine. 

Australian wine exports have been severely blighted by the strength of the Australian dollar, but now that American need is desperate, Australian bulk can step into the breach. American wine importers might have looked first to Chile but the Chilean currency is just as strong as the Australian dollar and for the same reasons: the sell-off of national mineral assets. 

With substantial tracts of inland, irrigated vineyard pulled out and supply and demand much better balanced, the Australian wine industry can start to think about the future. ‘If you look at the next five to 10 years the industry will be smaller, higher value, more profitable and more sustainable’, according to Brian Croser, who added portentously, ‘It has to be.’ 

Australia is an expensive place to grow grapes. The average cost of vineyard labour is $25 an hour, compared with $10 in the US and $2.50 in Chile. ‘The conundrum is that truly fine wine relies on lots of manual input, so Australia’s natural slot in the market is for terroir-driven regional wine, but using mechanical methods whenever possible. That puts it a band below truly fine, but means we’re ideally placed to make affordable and reliable fine wine with a sense of terroir.’ 

Croser, twice president of the Winemakers’ Federation of Australia and chairman of Adelaide University’s wine advisory board, is therefore pushing for two major developments. Firstly he believes that Australia is ideally placed to lead the world into effective, high-quality mechanisation of virtually all vineyard operations. In conjunction with a San Diego company that has pioneered the most sophisticated fruit-picking technology, the University of Adelaide and the Australian Wine Research Institute are already engaged in establishing technologies designed to replicate the actions of the most fastidious human picker and pruner. Old World wine producers may seem less likely to adopt such robotically inspired equipment but optical sorting machines are already all the rage in Bordeaux. 

The other research stream that Croser for one would like to see well underway is to establish and describe in detail the scores of different Australian wine terroirs. He admits that it was not long ago that the French T-word struck horror into the breast of most Australian vintners, fearful of having some sort of Appellation Contrôlée regulations foisted upon them. However, he maintains that in the last few years, most of the more outward-looking Australian growers and wine producers have come round to accepting that Australia’s best and better wines are uniquely shaped by their particular environment and freely use the word terroir. ‘What has been missing for a very long time’, says Croser, who maintains that this work should have started a decade ago, ‘is to put some framework round that excitement: a terroir picture of Australia. We need to be able to describe GIs in a consistent way for industry and regional bodies, although of course it’s not a story that can be told quickly or easily.’ 

It was partly to make a start on this project that British wine writer Andrew Jefford took up residency at the University of Adelaide in 2009–10, and his forthcoming book on Australian terroir is keenly awaited. ‘But that is only the beginning. We need to get the Australian Wine Research Institute and the relevant universities involved to give the concept its underlying potency. Gladstones’ latest book should be the inspiration to get on with it.’ 

I have frequently worried that Australia’s wine universities were churning out more graduates than the industry could provide jobs for, but apparently numbers of Australian students have been declining and they are now most likely to come from families already established in the wine business. The number of overseas students has been declining thanks to the strength of the Australian dollar, but there have been particularly healthy numbers of Chilean students recently. 

One major reason why there is a shortage of jobs in the Australian wine industry is the current state of at least two of the three big companies. Accolade (the old Constellation companies such as Hardys) under their new venture-capital owners has been shedding staff, particularly wine-production staff, at a dramatic rate – while Treasury Wine Estates (the old Southcorp) seems to be in constant flux, but not in an incontrovertibly upward direction. Even Pernod Ricard (Orlando), which seems steadier than either of these, is hardly in expansive mode. Its main current purpose seems to be to maintain its margins against the giant retail marauders. 

The companies doing best at the moment are the medium-sized, long-established family-owned companies, particularly Yalumba, whose upmarket import arm has benefited enormously from the fact that the Australian dollar has strengthened from 0.50 to well over 1 US dollar in just five years. For obvious financial reasons, imported wine in general has never been more popular in Australia and many restaurant wine lists have selections every bit as eclectic as their British and American counterparts. (Hobart’s most admired restaurant Garagistes has an all-natural list that is virtually all imports.) And in the mass market, Australians continue to be besotted by New Zealand Sauvignon Blanc, undaunted by some pretty ordinary quality from the recent Marlborough glut. Imports now account for 15% of the Australian market, from 2% only quite recently. 

Australian wine producers are very definitely and quite effectively setting their individual and generic cap at Asia in general and China in particular. Links seem to be close and Australia is the clear number two to France in supplying wine to the massive and growing Chinese market. 

As for the wines themselves, as reported frequently here, the style of the average Australian Chardonnay and Shiraz is almost unrecognisable today when compared with their counterparts five years ago. What one might call the Clonakilla effect on lightening up and – dare I say it? – Frenchifying Shiraz cannot be underestimated. 

But the single most exciting development in Australian wine is the emergence of a new generation of ambitious small producers who are thinking for themselves and following quite different models, sometimes different grape varieties and terroirs, from the established wine industry. Those mentioned in this article are just some of those most likely to return Australian wine to its pre-eminence. 

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