Who destroyed the Australian wine industry? …and the culprit is….

I have not been reading the Daily Wine News for a couple of days. After coming home last night, I browsed through the accumulated news. And, Eureka, I found for the first time someone who points his finger in the direction of the big corporate producers.

So far the tenor of most critics has been that there is just too much wine around (surplus of 20-40 million cases of wine each year) and that mostly greedy investors, money trusts and lifestyle (hobby) vintners, loaded with money made in construction or as medical doctors are the ones to blame. They are the ones who single handedly destroyed the wine sector; they produced the “wine lake”, and planted unsustainable hectares of new vineyards. The remedy was also clear: the small ones have to go. Instead wine production had better be left to the professionals (i.e. the corporates).

In comes Brian Croser, the founder and former owner of Adelaide Hills based Petaluma winery, with his view of the problem. He believes that the 2,000-odd Australian vintners are the originators of first-class Australian wine and have been the creators of the outstanding international image of their produce. The large companies, the corporates, have benefited from this positive image and “sailed on it”. However they mainly produce commodity wines of inferior quality which they dump on world markets, thereby destroying the reputation of fine Australian wines.

Whether this is true or not is certainly debatable. Everyone who extended their plantings in the hope of a larger marketshare is somehow to blame. However, finally we can hear another tune, not heard before and the public conversation has not only become more colourful but also more pluralistic, which is good for everyone.

If we have to pull out 40,000 ha of grape vines, they should come from various sources. If one of the four big companies would go and leave the sector, a lot could be gained for the remaining producers. Alternatively, small producers could pull out. What would be better for the country? this is a question not easily answered.

We will see small, medium as well as big companies leaving the industry. Many small family businesses will have their niche and will thrive regardless of the downturn of the sector. Others will close down, especially fruit producers who are at the end of the value chain (actually they are at the start of it). Also some of the investor and dividend driven schemes will come to an end. Vineyards and wineries will be hard to sell for some time to come. The big corporates will clean up their portfolios, they might de-invest in wine production and move into other segments of the beverage industry. Lower average profits in wine making will make other investments relatively more profitable. The wine sector will remain unattactive for young professionals for a while until the pendulum swings back, and the cycle of boom and bust will start all over again.

We at Two Hills Vineyard came too late to the party, and were caught out, so to say. I guess, we will go into hibernation and see what the prospects are in a couple of years time. I hope we can afford this strategy and that it will pay off some day when we can reduce costs and better market our produce. I remain optimistic and we will hang in there. Cheers to Two Hills wines!

Two Hills Vineyard, Glenburn

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