Champagne Henriot back in Australia

The Henriot and Hasko families have partnered to form a new company, Bootleggers, to distribute Champagne Henriot.

Peter Hasko (former GM Coca-Cola Amatil) and son Ben (Former Sommelier at Rockpool on George, Sydney and Vue de Monde, Melbourne) were inspired by meetings with the Henriot family and tasting their unique, hand crafted Champagnes.

The pair wanted to collect together a range of equally special wines, made by equally passionate and talented winemakers, and with this in mind they created distribution company Bootleggers and signed Champagne Henriot as their first brand.

Hasko said, “The Bootleggers name is less about prohibition and more about a band of men and women who always went the extra mile to get the right drinks to the right people!”

Champagne Henriot export director Anne Deraisme said, “Previous vintages of Champagne Henriot have been in Australia before and we have had a great response to them. However, this is the first time our full range of wines will be available under one roof and we couldn’t be happier with our partnership with Bootleggers, and the quality of service and level of dedication to our wines that the Hasko family provides us.” 

Since Bootleggers was conceived, Peter and Ben have travelled to major and remote wine regions throughout the world to source the best wines and spirits that aren’t currently available in Australia.

Other brands now, or soon to be, available through Bootleggers are Kiralyudvar (Tokaji Hungry), Dal Forno Romano (Veneto Italy), Kante (Carso Italy), Aphros Wines (Vinho Verde Portugal), Barbara Fores (Terra Alta Spain), Raul Perez (Bierzo Spain).

 

Health organisations call for soft drink tax

The Rethink Sugary Drink campaign is urging Australia to follow in the footsteps of Berkley, and adopt a similar tactic to Berkeley’s tax on sugary drinks.

With sugary drinks and weight-related health problems closely linked, experts from the Cancer Council, Diabetes Australia and the Heart Foundation say the new tax is a victory for the health of Americans.

An investigation into a tax on sugar-sweetened beverages or sugar-sweetened soft drinks in Australia is one of the five key recommendations of the Rethink Sugary Drink campaign.

“Australia is among the top 10 countries for per capita consumption of soft drinks. Research shows that a retail price increase of around 20 per cent would be the most effective in reducing the consumption of these sugar-laden drinks,” Mr Sinclair says.

“With Australia's obesity epidemic showing no signs of slowing down, we encourage Australian governments to take note of the move in the US and investigate a similar tax to encourage Australians to limit their sugar-sweetened beverages consumption.”

Key recommendations to tackle consumption of sugar-sweetened beverages:

  1. A social marketing campaign, supported by Australian governments, to highlight the health impacts of sugar-sweetened beverages consumption and encourage people to reduce their consumption levels.
  2. An investigation by the Federal Department of Treasury and Finance into tax options to increase the price of sugar-sweetened beverages or sugar-sweetened soft drinks, with the aim of changing purchasing habits and achieving healthier diets.
  3. Comprehensive restrictions by Australian governments to reduce children’s exposure to marketing of sugar-sweetened beverages, including through schools and children’s sports, events and activities.
  4. Comprehensive restrictions by state governments on the sale of sugar-sweetened beverages in all schools (primary and secondary), and encouraging restriction at places frequented by children, such as activity centres and at children’s sports and events (with adequate resources to ensure effective implementation, monitoring and evaluation).
  5. An investigation by state and local governments into the steps that may be taken to reduce the availability of sugar-sweetened beverages in workplaces, government institutions, health care settings and other public places.

The Rethink Sugary Drink campaign is a coalition of partnership between Cancer Council Australia, Diabetes Australia and Heart Foundation (Victoria), and is aiming to raise awareness of the amount of sugar in sugar-sweetened beverages and encourage Australians to reduce their consumption.

 

Explosive beer presents bottling challenge

The latest Little Creatures Single Batch, a traditional saison, will only be available on tap after it presented unforseen issues once bottled.

As part of The Single Batch program from Little Creatures, brewers push the boundaries in beer, creating new styles and flavours.

After intense testing of the next Single Batch Saison pint bottles, the brewery found that the C02 levels were likely to exceed the amount that is suitable to the product packaging standards, “at some unknown point in time.”

According to GoodFood, head brewer Russell Gosling discovered the problem when he tested the brew after bottling and discovered the yeast could still "kick on" under the right conditions and temperature, generating more gas than the bottles were designed to handle.

“Someone could sling a carton in the back of the car, it sits there at 30 degrees for a day or two and then… kaboom. We've got potential hand grenades.”

“The problem is we have no control on what happens to the beer after it leaves out warehouse,” he said.

Accordingly, Little Creatures made the decision to not release the Saison pint bottles to market and all bottled stock had to be destroyed.

The Saison beer will still be available on tap in craft beer outlets nationwide. 

 

ARC Australian food processing training centre to open today

The ARC training centre for the Australian food processing industry in the 21st Century (ARCFPTC) will be officially launched today,  4 November at the University of Sydney.

 

The centre is designed to help Australian food manufacturing companies stay globally competitive, and was awarded $3 million in funding over a three year period from the Australian Research Council via its Industrial Transformation Research Program.

 

Key objectives of the centre are to develop cost effective processes and produce high value products such as nutriceuticals with health benefits for the prevention and treatment of chronic and acute diseases. 

 

Professor Fariba Dehghani, from the School of Chemical and Biomolecular Engineering and co-director of the new centre, says that ARCEPTC has been designed to boost the nation’s food technology and manufacturing capacity, and will boost the Australian industry’s capacity to successfully compete in the global market.

 

"The new centre aims to boost the Australian industry's capacity to compete in a global market, particularly in the production of nutraceuticals for pharmaceuticals, dietary supplements, or food ingredients," says Dehghani.

 

"The centre will design cost-effective and sustainable processes for producing these types of products with a view to minimising waste while enhancing efficiency and reducing energy consumption." 

 

The centre will provide a multidisciplinary research environment including fourteen researchers across the engineering, agriculture, science and medicine disciplines, together with international collaborators, and ten food and biotechnology industry partners. 

 

ARC CEO, Professor Aidan Byrne said that the centre will work with Australian businesses to develop more advanced manufacturing techniques in order to reduce costs and increase energy efficiency.

 

“This particular ARC Industrial Transformation Training Centre has an important focus and it covers a key research sector identified in the Australian Government’s recent Industry Innovation and Competitiveness Agenda—food and agribusiness. This centre will educate a new generation of engineers and scientists and foster the capacity of Australian Food industries to further develop advanced technologies in manufacturing and product improvement,” says Byrne.

 

“Another key objective of this centre is to work with industry partners to develop improved processes for the production of nutraceuticals—such as nutrients and dietary supplements—for the promotion of health and well-being.

 

“These high-value products have the potential to significantly increase Australian exports in agribusiness.”

 

The funding of the Centre has been supplemented by its ten industry partners through cash and in-kind contributions.

 

Partners in the Centre include Agricure Pty Ltd, Lang Technologies Pty Ltd, AB Mauri Technology and Development Pty Ltd, Peanut Company of Australia, Ecopha, Marine Biotechnology Australia Pty Ltd, Batlow Premium Juices, PharmaCare  Laboratories Pty Ltd, Perfection Fresh Australia Pty Ltd and Stahmann Farms Enterprises Pty Ltd.

 

Price of food and non-alcoholic beverages grows

The Australian Bureau of Statistics (ABS) has revealed that over the September quarter, the price of food and non-alcoholic beverages has risen by 1.2 percent.

The ABS released the Consumer Price Index (CPI), which measures quarterly changes in the price of a ‘basket’ of goods and services.

Out of the 11 groups measured, the food and non-alcoholic beverages group experienced the most growth.

The CPI said the main contributor to the rise in the group for the September quarter 2014 was fruit (+14.7 percent). The rise was partially offset by a fall in bread (-3.0 percent).

Over the twelve months to the September quarter 2014, the food and non-alcoholic beverages group rose 3.5 percent. The main contributors to the rise were fruit (+19.2 percent), vegetables (+10.0 percent), restaurant meals (+2.2 percent) and takeaway and fast foods (+1.9 percent). The rise was partially offset by a fall in breakfast cereals (-6.0 percent).

In seasonally adjusted terms, the food and non-alcoholic beverages group rose 0.9 percent in the September quarter 2014. The main contributor to the rise was fruit (+9.3 percent).

 

Nestle expands Milo factory in Vietnam

Nestlé Vietnam has announced a $42m expansion of its Milo chocolate malt beverage factory in Southeast Vietnam.

The expansion will double the production capacity of the Binh An facility, a move designed to allow Nestle to meet growing consumer demand for Milo and for other ready-to-drink (RTD) products.

The investment is part of Nestlé Vietnam’s strategy to strengthen its presence in the growing nutritional beverage sector in the country.

Wayne England, Chairman and CEO of Nestlé Indochina, said the investment was a reflection of Nestlé’s confidence “about the opportunities in Vietnam due to its young and dynamic population, expanding consumer market, and favourable business environment. We have a long-term vision and a firm belief in the potential of the country.”

The Binh An expansion will also cater to new RTD products that will eventually be launched in the Vietnam market.

The company’s focus on the liquid beverages category follows its 2011 acquisition of Gannon’s milk and beverage processing facility in Dong Nai, which boosted Nestlé Vietnam’s presence in Vietnam’s beverage market.

Nestlé operates five factories in Vietnam with around 2,000 employees.

 

Cheeky Rascal releases small batch ciders

Cider brand, Cheeky Rascal, has launched small batches of a seasonal series of ciders, designed to pair with popular street food in Melbourne.

Varietals include strawberry, lychee and apple which is intended for pairing with Vietnamese food; and nashi cider for Japanese cuisine. Other flavours include apple, lime, mint and chilli (Mexican), plum, ginger and pear (Chinese), and blood orange, lemoncello and pear (Italian).

Rebello CEO Ruth Gallace said street food’s ability to paying homage to its heritage reflects Cheeky Rascal’s own philosophy, where traditional Italian winemaking techniques are used.

“Cider and craft beer have emerged as a surprising category in complementing street food and the two movements are really coming together.  Authentic eateries are now seeing how they are really adding to the flavour and experience, and are excited about the concept of having a cider to specifically pair with their food,” she said.

The seasonal series will kick off with Cheeky Rascal ‘Mexican’ and ‘Italian’ in liquor outlets nationwide, and ‘Vietnamese’ in some localised eateries from next month.

Rebello was the Best of the Best winner at this year's Food Magazine Awards. To see a full list of winners, click here.
 

Bar set low for a ‘do no harm’ China-Australia FTA

Recent public comments of senior Australian government ministers suggest they are increasingly confident a free trade agreement with China will be concluded by the end of the year.

For its part, Beijing has also offered hints an agreement will be reached within the same time frame. The speculation is a grand signing will take place in mid-November when Chinese President Xi Jinping will be in Brisbane for the G20 meeting.

Given that governments from both countries have staked their credibility on such a schedule, it is more likely than not pen will be put to paper next month.

But the significance of an Australia-China FTA is at least as much about diplomacy as it is about economics. The reality is that the Australia-China economic relationship does not really need an FTA to flourish. Agreements on all access in various sectors are concluded constantly without need for it to be part of a grander sounding FTA. Meaning the excitement behind the likely conclusion of an agreement will exceed the actual significance of such an agreement.

Bored into agreement

Let’s begin with what an FTA actually is. Rather than comprehensive economic agreements covering broad aspects of one’s economy, they tend to end up as rather piecemeal agreements covering specific sub-sectors that negotiators chose to target. Additionally, rather than expressing a broad meeting of minds, philosophies and policies between two economies, they contain extremely detailed provisions.

For example, there might be something about “processed dried stone-fruit” attracting a lower tariff than “semi-processed dried stone-fruit” with appendixes indicating what “processed” and “semi-processed” means, what constitutes a “stone-fruit”, what proportion of the product has to have dried fruit in its ingredients for it to be classified as “dried fruit”, and which stone-fruit are excluded from the provisions etc. It is no wonder that trade negotiators tend to admit the side that becomes bored first tends to lose.

Moreover, when one signs an FTA, especially with China, they tend to be treated as much as political and diplomatic agreements as well as economic ones. In this context, the Tony Abbott government has understood the “me too” mentality in Northeast Asia and played intra-Northeast Asian jealousies well. With Australia having signed FTAs with Japan and Korea, China pushed its own negotiators to fast-track an agreement with Australia.

Foreign investment thresholds

However, since Beijing needs the FTA for political and diplomatic purposes, it will want the appearance of a breakthrough in China-Australia relations. This will come in the form of China insisting that no Foreign Investment Review Board (FIRB) process is required for Chinese investment into Australia under one billion dollars, whether this be investment by Chinese state-owned-enterprises (SOEs) or private firms.

Such a threshold has been applied to Japan and South Korea under Australia’s FTAs with those countries. As China wants the FTA to demonstrate that it too has a special economic partnership with Australia, even if there are strategic and political differences, Beijing will insist on being treated the same as other Northeast Asian neighbours in this context.

For Australia’s part, this was always only really a political sticking point that Canberra will likely relent on. As surveys such as the annual Lowy Institute Poll demonstrate, there is widespread public suspicion of Chinese foreign direct investment (FDI), most of it being undertaken by state-owned enterprises, even if the reasons for such suspicions are not well formed or articulated. In opposition, Abbott appeared to share some of these fears. But in government, his tone seems to have changed. After all, FDI entering into Australia still has to play by Australian rules and follow Australian laws and regulations.

The reality is that the vast majority of Chinese FDI applications into Australia have been approved over the past decade, despite some high profile knock-backs. All indications are the Abbott government will accommodate Beijing’s insistence to raise the threshold to one billion dollars knowing that almost all Chinese FDI applications would have passed the FIRB test in any event. Besides, Canberra will be happy to reduce this hurdle for Chinese firms since FIRB is only an advisory body, albeit an influential one, and the relevant minister can still knock back FDI applications on national security or other grounds.

In return, Australia will receive better access to the Chinese domestic market for our diary and agricultural goods, but this would have occurred in any event without an FTA since provincial governments in various Chinese markets have been agitating for high quality imports in these sector and would have formally and informally made it possible for Australian firms to more easily access those provincial markets.

When it comes to Australian access to the services markets such as legal and financial, we are likely to receive some concessions. But the real barriers to entry in these Chinese markets are local ones at the regulatory and social levels, and an FTA will not reduce these barriers.

The bottom line is that both countries want an FTA for diplomatic reasons. The major, headline concessions that both sides will offer carry few costs to the conceding country, would have occurred in any event, or were already happening in practice. If the acceptable standard is that an FTA should “do no harm” at the very minimum, then that low threshold will be met in November.

The Conversation

John Lee does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

 

Victorian Shiraz wins wine show

Victoria’s Blue Pyrenees Estate Vineyard has won Best Wine of Show for the 2014 Australian Cool Climate Wine Show with its 2012 Blue Pyrenees Estate Shiraz.

Wine Show manager, Virginia Rawling said the Blue Pyrenees Shiraz is produced from parcels of fruit grown on low-yielding exposed vines, creating a wine of intense flavours, naturally soft tannin and the classic rich Shiraz structure.

“The judges tasted more than 600 wines before announcing the five winners from four states,” Rawling said

“The percentage of medals awarded for the show this year is a record which reflects the quality of the wines submitted for judging.”

The awards were announced at a presentation function at Murrumbateman Winery.

Winners for 2014

Best Wine of Show, Best Red Wine of Show and Best Shiraz of Show

2012 Blue Pyrenees Shiraz (Avoca VIC)

Best White Wine of Show

McWilliams Tumbarumba 842 Chardonnay (Hanwood NSW)

Best Riesling of Show

2014 Logan Weemala Riesling Orange (Mudgee NSW)

Best Cabernet Sauvignon

2012 Brand’s Laira Blockers Coonawarra Canbernet Sauvignon (Hanwood NSW)

Best Pinot Noir

2013 Home Hill Kelly’s Reserve Pinot Noir (Ranelagh, TAS)

Best Claret Style of Show

2012 Ferngrove Symbols Cabernet Merlot (Frankland River WA)

 

Bundaberg releases three new flavours

Bundaberg Brewed Drinks, has launched three new brewed beverages: Bundaberg Apple Cider, Bundaberg Traditional Lemonade and Bundaberg Pineapple & Coconut.

The popularity of alcoholic apple cider, particularly amongst younger Australians, is one reason behind the introduction of Bundaberg Apple Cider. Bundaberg Apple Cider is non-alcoholic and is brewed for up to three days. Bundaberg Apple Cider features Royal Gala and Granny Smith apples from Australia’s Goulburn Valley.

A huge and growing trend for “retro” and nostalgia amongst Australian consumers is a key driver behind the launch of Bundaberg Traditional Lemonade. The beverage uses real Queensland Eureka lemons and is brewed for over three days.

Bundaberg Pineapple & Coconut is the third new beverage to be launched by the company this summer. The flavour combination is designed to be an alternative to alcoholic beverages, or used as a mixer with spirits.

“World-wide, there is a growing consumer trend or “thirst” if you like, for more authentic and unique “adult premium” style beverages.  Younger consumers in particular, are craving beverages which use quality natural ingredients with a unique and refreshing taste, as distinct from a standard soft drink,” chief executive, John McLean said.  

“We are excited by the opportunities the new beverages will provide our valued retail partners, in terms of building genuine incremental sales and profits. We look forward to working together to ensure our new craft brewed beverages enjoy a similar level of popularity experienced by all Bundaberg Brewed Drinks”. 

The new flavours will be supported by TV advertising, Radio, Magazine, POS combined with online and social media campaigns.

 

NZ recall after plastic found in sausages

New Zealand sausage maker Premier Beehive recalled four types of sausage from NZ shops after plastic was found in them by an Auckland consumer.

Stuff.co.nz reports that the affected products were various types of pork sausages. The pork arrived at the company’s plant in Carterton on the North Island, wrapped in plastic. Some of this remained stuck to the meat and was minced along with the meat.

"We immediately went into investigation mode once we received the complaint from the customer this week and I'm pleased to say we haven't had any more. We thought it was in the best interests of the customers and the brand," Premier Beehive Managing director John Kippenberger said.

He added that the affected products have been removed from shelves and the company hopes to have new products available in stores by Wednesday next week.

As the National Business Review reports, Premier Beehive has bought a property in Palmerston North which it intends to use as its national distribution centre.

It paid nearly $5 million for the 2.1 ha property, which was previously owned and operated by Foodstuffs. It includes a large cold store building.

Wine producer adopts carbon neutral cork

Azienda Agricola Ciccio Zaccagnini has become the first wine producer importing into Australia to adopt wholesale use of the Nomacorc carbon neutral Select Bio closure.

The closures are 100% recyclable and renewable, and are made from plant-based polymers derived from sugar cane.

“Essentially, it is an engineered cork that is also bio-based, and is an almost perfect solution for closing wine,” said Marcello Zaccagnini, owner of Azienda Zaccagnini.

 “We wanted a closure for our wines that pushed us further towards becoming carbon neutral, that let the wine breathe, and still allowed for the charm of cork extraction,” says Zaccagnini. “But most importantly, as a producer of three million bottles a year, we wanted to eliminate cork taint problems that could affect the quality of up to 10% of our stock.”

In order to find a sustainable closure that met the company’s needs, Zaccagnini winemaker Concenzio Marulli launched a research project in collaboration with Antonella Bosso from the Centro di Ricerca per l'Enologia1 in Asti. Over a period of 18 months, they studied the evolution of wine with different kinds of closures: natural cork, screw cap, and Nomacorc.

Marulli said “Quite simply, we saw the best results with Nomacorc. The ability to choose from one of three styles of Select Bio closures – each with different oxygen ingress levels – gives us the power to fine-tune the consistent delivery of the right amount of oxygen to our wines.”

 

Henkell launches new look

Henkell Trocken Sparkling Wine NV has launched a new look in the first change to the brand since 2009.

This is the first change to the brand since 2009 and has the objective of creating relevancy for the Champagne for the traditional special occasions as well as casual get-togethers and spontaneous celebrations.

Both the Henkell Trocken Sparkling Wine NV 750ml and 200ml piccolo bottles will boast the new look which includes a slimmer bottle silhouette, developed for Henkell and inspired by the classic Champagne bottle; new structured crown cap with palpable embossing; new neck ribbon with elegant embossing of the Henkell lettering and hot foil stamping and blind embossing; new neck foil with a fleur-de-lis; and new label with high-quality finish, hot foil stamping and blind embossing and emphasised fleur-de-lis.

Henkell export director Klaus Kuerten said, “The new look gives the brand a stylish and vibrant design while at the same time lending it even more international appeal and inspiring a taste for sparkling wine enjoyment and special moments”.

 

Beelgara Wines head to China

Wine Insights has granted Manassen Foods Australia the right to exclusively market, promote and sell Beelgara Wines in China.

In the lead up to the signing of the agreement, Wine Insights worked with Manassen Foods and their parent Bright Food Group for over twelve months to develop a range of Beelgara Wines for Chinese consumers.

Managing director of Wine Insights, Peter Toohey, said “we believe this collaborative approach will underpin the brand’s success in one of the world’s largest growing wine markets. It is our intention to work closely with the Bright Food Group to build the Beelgara brand into one of the top five Australian wines sold in China over the next three years.”

Under the terms of the agreement, Beelgara will sell directly to Bright Food in China, with Bright Food taking the Beelgara wines to market through its distribution business, ‘Joymax’ and Manassen Foods will market and promote the brand through multiple distribution channels.

Geoff Erby CEO with Bright Food Group Holdings, Manassen said “consistent with Manassen’s track record in successfully expanding imported citrus markets in China, it is a natural progression for us to now focus on supplying the burgeoning Chinese wine market. With the weight of the Bright Food Group underwriting our push to promote Beelgara wines, we are confident that the brand will have immediate sales traction.”

 

Fonterra on track to boosting food safety

The Independent Inquiry Committee which reviewed the circumstances surrounding Fonterra’s whey protein concentrate recall last year, has said it’s satisfied with Fonterra’s progress on recommended improvements.

The Committee completed a nine-month checkpoint on Fonterra’s progress which itself was one of the Committee’s recommendations.

Committee chair Sir Ralph Norris said the Co-operative’s leadership had taken responsible measures to distil the Inquiry’s recommendations into a significant programme of work.

“The Committee was unanimous in its view that Fonterra management has brought a clear focus to rectifying the areas of weakness identified last year during the Inquiry.

“It was particularly pleasing to see evidence of the holistic and disciplined approach being taken to implementing changes that will further strengthen the Co-operative,” Norris said.

Fonterra’s progress to date includes:

  • 75% completion of audits of Fonterra-owned plants globally and where necessary, maintenance or improvements are underway
  • Protocol is in place for engagement of external scientific and diagnostic resources including appropriate engagement of experts
  • Food Safety and Quality is written in to all senior management employment contracts
  • Establishment of a fully functioning Incident Management Team
  • Creation of a Food Safety and Quality Council
  • The appointment of Greg McCullough as Head of Food Safety and Quality
  • Implementation of a quality hotline

The Committee will reconvene next year to consider a final report from Fonterra, outlining progress on initiatives and how each of the Inquiry report recommendations have been addressed.

 

Private equity looms over Australia’s wine industry

It is sometimes said that at least investors in vineyards can drink their losses. Indeed, it’s been a rocky few years for the Australian wine industry. External pressures have been challenging and much of the industry is in a deep malaise. This is most true for smaller producers, and even more especially true for those at the bottom of the industry’s value chain – the growers of non-premium wine grapes.

The pressure was ramped up in May’s with a bid from private equity firm Kohlberg Kravis Roberts for Treasury Wines Estate (TWE) – the owner of the renowned Penfolds – at $4.70 per share. Joined this week by fellow New York-based hedge fund Rhône Capital, the offer was upped to $5.20. In the absence of something better, or the bidders getting cold feet, the offer looks likely to succeed.

Foster’s foray

Times were not always so tough for small producers. Throughout the 1990s, both wine production and export prices grew steadily, marking a renaissance for an industry long seen, at home and abroad, as trailing the traditional wine growing regions of Europe in terms of quality and efficiency.

Steeped in the history of the South Australian wine industry, Penfolds led the growing recognition of quality Australian wine with Grange (once Grange Hermitage), generally considered one of the world’s great reds – with a price tag to match.

In hindsight its acquisition by Foster’s in 2005 was a disaster, more so for Foster’s than the Oatley family, who cashed out their stake acquired when they rolled their Rosemount business into Southcorp Wines previously.

Foster’s takeover was driven by the view that the beer industry was mature and lacking in growth, and thus Foster’s management wanted something more exciting. They certainly found this through the acquisition of wine producers.

Beer and wine – what could possibly go wrong?

As it turned out, just about everything went wrong! Beer and spirits are essentially industrial products, while wine is deeply rooted in agriculture. External factors beyond the control of the company did not help – including a soaring Australian dollar, drought, powerful retail buyers and a production glut producing intense competition from other “new world” producers for sales.

Foster’s spun off the various wine businesses that it had assiduously acquired into TWE in 2011. Independent of Foster’s, TWE did well for a time, before falling foul of the buying power of Australia’s retail duopoly of Coles/Wesfarmers and Woolworths in late 2013 and 2014. This was especially true in the vital lead-up to Christmas 2013, when sales slumped and profit projections were downgraded.

What next for Australia’s wine industry?

What the Treasury Wines buyout means for the remainder of the Australian wine industry is an important question. KKR and Rhône clearly see an opportunity to cut costs and build profits before selling the business off in a few years. Likely casualties in such a scenario will be the less profitable labels that produce low margin, low priced wine. This process was already underway at TWE, but will likely accelerate under the new ownership.

For many grape growing communities, this process may spell disaster. Already struggling with prices that barely cover the cost of picking, a smaller industry more focused on premium wine will likely see a mass exodus of producers within SA’s Riverland, Victoria’s Murray Valley and the NSW Riverina.

The upside for the bidders will be building the penetration of their major labels, especially Grange and the remainder of its ‘icon and luxury brands’ into Asia, and especially China.

China’s love affair with (premium) wine

China’s love affair with imported premium wine is symptomatic of wider trends. An escalation of both import volumes and average prices per bottle to China have been driven by gift giving and extravagant hospitality. KKR and Rhône see this trend as likely to continue, in spite of the mooted austerity drive of top Communist party officials.

Chinese consumers of wine are generally within its upper economic echelons, and for them consumption of imported wine is as much about status symbolism as the product itself. Thus, for Australian wine producers hoping to replicate Penfolds’ success, the challenge will be to get the right balance between price, volumes and market image.

This won’t be easy. Penfolds has both an established brand story and access to Chinese consumers through its distribution network. For smaller producers, replicating both of these will be a challenge. Groups like Australia’s First Families of Wine are attempting to do just this in a collaborative manner. As private companies, their success is hard to gauge, but their premium products and strong brands should hold them in good stead.

Longer term, the prospect of a hundred million middle-class Chinese drinking imported wine (albeit of the more humble, non-premium variety) regularly is an enticing prospect for Australian exporters. What the last two decades have shown, however, is they will have strong competition. Barriers to increasing supply of such wine from producers in Chile, New Zealand and South Africa are limited. Even if exports in wine volumes in these lower priced products increase, margins will be scant.

In this regard, the future for wine grape growers throughout inland Australia does not look good. Combined with perennial problems of water scarcity and salinity, images from Steinbeck’s Grapes of Wrath come to mind. Managing the social and economic consequences of this for inland wine grape growing regions will be an important challenge.

The Conversation

John Rice is a member of the Australian Labor Party and the National Tertiary Education Union.

Nigel Martin does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

 

Wine industry leaders unite to recover market share

More than 300 wine industry leaders from across Australia are expected in Adelaide this October to progress plans for the industry’s recovery of share and margin in key markets.

They will be attending Outlook 2014: Taking Charge of Our Future organised by the Winemakers’ Federation of Australia (WFA), which will bring winemakers, analysts, exporters, marketers, retailers and politicians together over two days to consider what must be done to lift profitability.

Speakers include International Federation of Wine & Spirits President Jim Finkle (US), Organisation of Vine and Wine Director-General Jean-Marie Aurand (Paris), Australia Small Business Commissioner Mark Brennan, Nielson’s Consumer and Business Intelligence Executive Director Michael Walton, Wine Intelligence Chief Executive Lulie Halstead (UK), ALM CEO Scott Marshall and Ciatti partner and broker Steve Dorfman.

“The strong Australian dollar, rising costs of production and intense global competition continue to challenge our export performance but there are many reasons to remain optimistic,” WFA president, Tony D’Aloisio said.

“We continue to produce a globally competitive product and we have an Action Plan outlining the steps we must take on both the demand and supply side to recover.”

“We are an industry that sees the glass half full. Have we room to grow? Of course we do, and Outlook 2014 is focused on getting our strategies aligned to capitalise on the rise of China and recovery in traditional export markets, as well as domestically,” he said.

“Outlook will be an opportunity to review our progress, consider the latest data and innovation in markets and production, and to align around what further actions are required.

“We have around 50 speakers over two days which makes this an important forum to learn about the latest developments, to meet leading figures in the industry from here and overseas, and to exchange ideas.

“The conference program has deliberately included panel discussions with questions from the floor to ensure we explore issues to their fullest and learn from the significant amount of experience delegates bring.”

WFA Chief Executive Paul Evans said Outlook 2014 would also bestow the inaugural Life Member of the Australian Wine Industry Award and release the 2014 Vintage Report.

“This is shaping up to be industry’s national wine week as industry celebrates achievements with the presentation of this important new award,” Evans said.

The 2014 Maurice O’Shea Award and dinner will also be held on the evening of the opening day of the conference.

For more information on the event, click here.

 

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