A better grade of quaffer of industrially produced swill?

A couple of months ago I wrote a short Journal article called “Times Change” http://www.winestar.com.au/180702re.html and since writing that Journal I have been mulling over what I wrote and the more I looked it the more I realised the subject needed a lot more than 600 words.

Recently a Melbourne wine merchant sent out an email with the following tasting commentary “The 2001 Penfolds Koonunga Hill display the Rosemount influence on the winemaking. There is no doubt that these are big blends made for the global market, and might we say brilliantly put together. State of the art winemaking is employed, with the use of micro aeration and new oak chips to produce a wine that is very affordable and very drinkable every day.”

Not so long ago, Koonunga Hill was a wine that could be confidently cellared in the short term and the wine would be better for it. It was also made in a more traditional method. Now we have a situation where we call a wine “brilliantly put together” because of the use of micro aeration and the use of oak chips.”

These comments are not necessarily restricted Penfolds and Rosemount. They may well apply to a number of other manufacturers. (I have only used them as I have facts and figures available to support this article.) Notice the deliberate use of the word “manufacturers” and not winemakers, because these are more manufacturing techniques than quality winemaking.

If you want to drink wine that about as much character and soul as Coke or Pepsi then I am sure you will regard these “advances” and influences as positive. However if you actually want your wine not to taste like mass produced industrial swill that is ready to be consumed five minutes after bottling takes place, then you may well regard this sort of process as a retrograde step with rapid advancement to the rear.

So how have we got to this point? There are two reasons. The first is that we live in an age of instant gratification, the I want it and I want it NOW mentality! However some things are worth waiting for. How long did it take Michael Angelo to paint the Sistine Chapel? In today’s environment it would be spray pained by two dozen graffiti artists to save time and money. Would it still be considered a work of art?? Some people would say yes, the graffiti looks good. But guess what, its still graffiti even if some people are deluded enough to call it art.

The second reason is believe it or not, people want to buy this stuff. Both Lindemans and Rosemount are now effectively 5 million case brands, and Southcorp has a publicly stated objective to grow the Penfolds brand from 1.8 million cases in 2001 to 5 million cases within 5 years.

So how is that going to happen? The first question is where is the wine going to come from? In the case of Southcorp there are two answers. The first is that some existing brands will disappear in a cloud of dust never to be seen again. Tollana to name just one will go which is a pity because it was good wine and great value. The other source is from new vines. Any winemaker worth their salt will tell you that all things being equal they would rather work with grapes from older vines than from new vines, but as these wines are going to manufactured I guess that’s not a great concern.

How are they going to manufacturer these wines and make them so drinkable on release? There are a number of techniques and without wishing to get technical I will briefly explain a few of these manufacturing tricks. The first is micro oxygenation. This process has a few distinct advantages. Instead of having to mature the wine in expensive oak barrels for ages, the wine is placed in huge stainless steel vats with a load of cheap and inexpensive oak chips. The oak chips impart some low quality oak characters to the wine and whilst this is going on, small amounts of oxygen is infused and dissolved into the wine in carefully controlled amounts. This is meant to mimic what happened when wine is aged in smaller oak barrels. If you believe the supporters of this process, it is miraculous and will do everything except make your bed for you.

There are also other processes and tricks like rotor fermentation, pumping up the wine with the use of added tannins at the time of ferment, then gently oxidising the wine and then heavily fining the wine at the end. There is also the 4.5 – 5 grams of residual sugar that makes the tannins seem softer and makes the wine more approachable.

By being able to source grapes from all round Australia, mix up absolutely huge blends and produce the wine using all sorts of industrial manufacturing techniques, the resulting wines can be manipulated to the point there is little vintage variation between the wines.

 In a presentation given by Mr Neil Hadley (Global Brand Director dor Penfolds) under the heading of “Winemaking Philosophy” Neil stated, “Penfolds reputation is built on consistency of style and quality with minimal vintage variation.”

The objectives have been stated, consistency and quality with minimal vintage variation. Coke and Pepsi are consistent in style and quality too, so it’s just a matter of where the large corporate companies draw the line.

In the same presentation I mentioned earlier, Mr Keith Lambert CEO of Southcorp stated, that by June 2003 Southcorp intends to carry half the stock it did two years previously. Reduction of inventory is an admirable business objective but in this case it will have far reaching impact on the customers.

This objective can only be achieved in a couple of ways. The abolition of certain slow moving brands will help but will not have a huge impact on that objective. The biggest gain will come from a large contraction in the time it takes from grape picking to finished product on the retailers shelves.

In the past, wine was released from the producers to the retailers with some bottle age. Over the last decade this age factor has declined considerably. Southcorp must reduce it even further if it is to reach its inventory objectives. At the top end, the wines will be released with less bottle age, but at the lower end it will mean that the wines will actually have to be manufactured faster, hence the need for the industrial manufacturing practices using oak chips and micro oxygenation etc.

Earlier in this article it stated that Southcorp has a publicly stated objective to grow the Penfolds brand from 1.8 million cases in 2001 to 5 million cases within 5 years, The following information from Southcorp outlines how they intend to achieve that objective.

Step one was to segment the Penfolds wines into three segments. At the bottom end there is the “premium commercial” wines, above them in price is the Bin or Reserve wines and at top end the icon brands. The strategy is to grow the “premium commercial wines” by leveraging off the icon brand name of Penfolds.

The next step is to upgraded the bottle (wine packaging) into a premium proprietary bottle.  The low end wines will also be redefined by varietal, strengthening the Koonunga Hill and Rawsons Retreat ranges; and according to Southcorp “improve the quality of these wines.”

(At this point, its important to note that “improving the quality” of Koonunga Hill involves using oak chip and the other mass production techniques earlier.)

So the big question is why is Southcorp doing this and why is it so important to not only them but to all the other major companies in the market. In the case of Southcorp, the answer lies in the following numbers. Lindemans’ average price per case is $A63, Rosemount's average price per case is $A88 whilst Penfolds’ average price per case is $A115, so you can appreciate the phenomenal value of this single brand to Southcorp’s business if they can leverage it to reach the 5 million case objective.

In some ways it looks like there is a worldwide race to become the first “MacPlonk” and there are a number of major players all trying to win the multi millions of dollars in profit that will be the prize. The wine market is now indeed global. The income produced in the local Australian market as a percentage of total turnover is reducing daily for the top few companies so many of them are caring less and less about their Australian customer base. The world is a big place and the export opportunities huge. Markets for wine in countries like China and India have not even started to really come online. In the US only a tiny percentage of people drink wine on a regular basis so the opportunity there is also huge if the popularity of wine increases in that market.

Now ask yourself, where do most people start their wine drinking experience? With first growth Bordeaux, bag in a box wine, or inexpensive mass production wines. Not many are lucky enough to start at the top end; most start at the bottom end of the quality rung, I know I did. Once they get past the bag in a box stuff, most move onto inexpensive bottled wine, and that’s where the greatest market opportunity lies for all the major wine producers. And that’s why there is a huge push to try and capture this market segment and become worldwide players.

The profit opportunity for the winner of the worldwide “McPlonk race is humongous.

Who will win? Frankly I don’t know and I don’t care. I also don’t eat at the Golden Arches either. Its much more fun (and worth the wait) to try pot luck at a greasy spoon and have a real hamburger made to order with the inclusions and topping I like; even though its may be inconsistent and you get the occasional inedible burger. You also frequently get some bloody great burgers as well.

Finally, personally I am very thankful for the myriad of small producers that turn out high quality wines that are not mass manufactured using industrial techniques, however the millions of wine drinkers that enjoy consistency of style will no doubt think the “McPlonk” brand is the best thing since the invention of “two all beef…..”

Cheers

Ric