Reports of Oz Wines’ Demise are Exaggerated

on 16 March, 2016

David Williams Author and Columnist for UK National newspaper, The Observer.

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Like many wine drinkers of my generation, I cut my teeth on Australian wine. That makes it sound painful. In fact, it was the suave texture of my favourite Rosemount Shiraz that marked it out in the early 1990s, at a time when the rough-house tannins and wild acidity of the cheaper end of European wine really did taste like (and in some cases actually was) a health hazard.

However faint, there’s always a background note of nostalgia when I drink Australian wine today. And if that makes it sound like something that belongs in the past, well you suspect there may have been a few long, dark nights over the past few years when the Australians themselves have wondered if that might be the case.

Certainly, there was a wistful air about much of the reaction to the death of Bob Oatley, aged 87, earlier this year. For many commentators, the billionaire founder of Rosemount was emblematic of a more straightforward era in Australian wine, a period when the industry was carrying all before it, causing a crisis of confidence in France as it muscled its way to the top of the sales charts.

That it was Oatley’s sale of the Rosemount brand for AUS$1.5bn back in 2001 that precipitated the first in a series of crises for Southcorp from which its successive incarnations (and Australian wine in general) have struggled to recover ever since, only added to the sense of the golden times being far in the past.

As a report published last year by the Australian Winemakers’ Federation pointed out, the past five years have seen the strong Australian dollar combining with a long-term structural oversupply to put the squeeze on profitability in Australian wine. With exports flatlining as major markets turned to cheaper alternatives, and prices in the domestic market depressed by a combination of cheaper imported wines and the aggressive tactics of dominant retailers Coles and Woolworths, the AWF report suggested the very existence of Aussie wine was in question: as much as 92% of wine production in warm inland regions such as the Hunter Valley and the engine room of Aussie production, the Riverland, is currently ‘unprofitable’.

As significant as these problems continue to be for Australia’s wine industry, reports of its demise have been greatly exaggerated. Indeed, according to the recently published Australian Wine Export Report, wine exports were very much back in 2015, rising to their highest point since 2007.

All Australia’s top 15 export markets were on the rise, but it’s the distribution of growth between them that shows how it is adapting to new realities. China, up 66% in value, is on course to overtake the UK (up a mere 0.2%) as Australia’s number one export market this year, while, in terms of price points, wines above AUS$10 FOB are showing strongest growth.

These figures would have come as no surprise to Oatley, whose post-Rosemount business, Robert Oatley Vineyards, was quick to see the potential of China and made a point of having a web page in Chinese, enabling drinkers from the country to buy its wines direct. It was all part of a philosophy that now looks like a roadmap for the future of Australian wine, a legacy passed down by a key figure of its remarkable recent past.

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