Australian wine: self-inflicted wounds?

Few wine drinkers in Europe have been unaware of the recent 'backlash' against Australian wines. Wine sites and magazines have been warning readers almost weekly; 'It was bound to happen', 'the Australians had it coming', you could hear them say. Then the recession hit, and their demise was palpable.
Australian wines went from being pioneers of cheap but of high quality with sales beyond belief, to the villains of the wine world. The cause, it seems, being just too fruity, too alcoholic and too cheap. Apparently, we don’t want that. So what happened?

In 1990, 65% of wine in Oz came in a box and then they found the European market, which couldn’t get enough of their vibrant, juicy, affordable wines. After years of suffering (and I do mean suffering) dilute, lean and overpriced French wines (yes, I’m not afraid to say it, having spent more than I care to repeat on Cru Bourgeois which was more crude than Cru) their wines were a breath of fresh air. I can’t tell you what it was like to taste a Lindeman’s Bin 65 Chardonnay or a Grant Burge Filsell Shiraz or even a humble Hardy’s Stamp series red after so many disappointments with Château Plonk.

And I wasn’t the only one. In 1996 the Australian wine industry devised their ‘Vision 2025’ whereby they aimed to achieve $4.5bn in export sales within 30 years. They hit their target after seven years. Yes, not 2025, but 2003. Huge tracts of land in areas such as Murray-Darling were converted to growing vines, bringing a total near to 180 000ha (almost twice that of SA).

Companies saw investment potential, takeovers occurred weekly, buy-outs were common, fortunes were made. Companies like Constellation (Hardy’s, Leasingham etc), Fosters (who merged with Southcorp to take Wynn’s, Penfolds, and Wolf Blass etc) and Pernod Ricard (Orlando, Jacobs Creek etc) became global concerns. Others hit gold with new brands, such as Casella who rode on the back of ‘Yellow Tail’ to become Fortune listed companies.

‘Yellow Tail’ is a good example, reaching sales of 8 million cases a year in the USA alone after just a few years. Soon, the top five companies had 50% of all the brands sold and 75% of all exports. Times were good for all in Australian wine. And we in Europe didn’t mind, the wine was good and in some cases, exceptional. Eventually, pundits had to throw out their prejudices and give credit where it was due.

I remember being in Australia and enjoying a Greenock Creek Shiraz in the bungalow lounge of the owners which served as their tasting room. I decided to return a couple days later to purchase as its quality had crept up on me, when I learnt in the paper that Robert Parker had pronounced it a 98+ point wine. Guess what, it was no longer available!

But my disappointment was short lived on return to the UK, for there on every supermarket shelf were the likes of Rosemount’s Balmoral Syrah at £20 (R240), Jim Barry’s The Armagh at £20, Penfold’s St Henri Shiraz £15 (R200) and Mount Pleasant’s Elizabeth Semillon at £8 (R96), as well as cuvees from St Hallett, Peter Lehmann, Rockford, Grosset, Petaluma and Henschke amongst many others. In every supermarket and wine shop you could find the most excellent wines from every wine growing region, and with frequent ‘20% off today only’ deals it was fun to fill your cellar (a bedroom wardrobe) with fabulous wines at terrific prices.

Then came the ‘fruit bomb' backlash and the recession. Suddenly wine prices plummeted for producers as there was too much wine. Overproduction was killing the market. Peter Lehmann called for action, urging to rip up at least 35 000 ha of vines. Australia was producing some 40 million cases a year more than it was selling.

Wine became cheap. Woolworths in Oz were selling wine cheaper than water or Coke. Neilsen reported that producers were seeing 45 cents a litre for some varieties (less than R3), a drop of 50% in 3 years. Australia’s biggest producer, Constellation Wines terminated the contracts of 200 growers in 2008, and 300 more in 2011. Not only was there too much wine, but a soaring dollar and water cuts in key areas saw many doing damage limitation. Exports worldwide fell by 20% in two years.

The results, on a personal level, are shocking. A recent visit to the UK confirmed the demise of Australian wine, at least in availability terms. Gone were the iconic boutique wines, gone were the beautiful Clare Rieslings and Coonawarra Cabernets. No sign of the Hunter Valley Semillons or Barossa Shiraz’s. The Oz shelves were much shorter and contained generic brands and dubious blends from the commercial end of the scale. Most were around £6 (R72) and I failed to find anything above £12 (R144). Daniel Posner of Grapes; The Wine Co. in New York typified many when cutting his Australian wine list from 135 to 70. I think every wine seller in the UK has done something similar. Sales in Europe of wines above $15 (R105) have fallen by 17% (Nielsen). While this might please the average punter looking for something to go with tonight’s Lasagne, it doesn’t please me.

Australia is bouncing back; production is lower (25 000 tons in Clare Valley in 2006, 6 000 tons in 2010) though grubbing up vines is painfully slow and must be causing heartbreak for many. Decanter magazine recently announced that only half of the targeted amount of vines have been removed (down to 160 000ha); but prices are stabilising. A new marketing strategy is emphasising regionality and quality levels. Things may never be the same but such a shakeout and refocusing will aid the industry.

My concern, though, is that the dominance of Australian lower end wines, understandably more sellable in key markets, will see the demise of real quality wines being exported – and thus maybe less produced). It’s hard enough to find top quality Oz wines in SA (try PHd, The Reciprocal Wine Trading Company, Winecellar, the Hess Collection at Glen Carlou, Caroline’s Fine wines in Cape Town) without the ‘top end’ becoming even scarcer.

I, for one, won’t give up. It was a Penfold's Bin 407 1990 Cabernet Sauvignon which first turned me on to wine and as for those who snobbily complain about ‘too much fruit’ (is this possible? – it is crushed grapes for God’s sake) or ‘too much alcohol’ (I thought the key was balance) and not enough elegance in Oz wines, I point to the thousands, probably tens of thousands around the globe who have also been awakened to wine by Australia. We are eternally thankful and I, for one, will never desert you.
A younger author amongst the 150 year old vines of Henschke's Hill of Grace in the Barossa Valley