McPlonk versus the boutiques

You may remember last weeks article was about McPlonk Wines and it finishes up saying, “thank heavens for the myriad of small producers that turn out high quality wines that are not mass manufactured using industrial techniques.” This weeks Journal will look at some of the challenges facing these brave souls.

At the last official count, there were 1465 wineries in Australia. Twenty years ago there were about 300 and a mere ten years ago there were less than half the number we have today, that’s an explosive eruption of new wineries in the last decade. Bear in mind over 90% of all new businesses go belly up in first five years and the following numbers will show some frightening additional facts that these new producers will need to face.

The top 4 wineries are responsible for 70% of production; the top twenty producers hold a staggering 95% of the branded wine case output. A simple calculation then shows that you have 1,445 producers producing the final 5% of branded case output. Now you can see how small these producers are in the scheme of things, however the biggest hurdle these guys face is how they are going to be able to sell what they produce so they can stay in business. (My prediction is many will fall by the wayside. Some will be taken over, some will sell their grapes and some will pull their vines and convert the land to other uses, but that’s not what this journal is about.)

One of the best solutions to that challenge is to carve out a market niche for themselves.

About 80% have cellar door operations, but that’s till leaves almost 300 without that facility, and that lack of exposure could speed up their demise. Some have been savvy or lucky enough to be discovered by US importers but even this is not a guaranteed solution. Just ask one small producer in the Barossa area who suddenly found his US agent didn’t like (only) one wine they produced and the agent terminate their arrangement. That producer is now looking for alternative ways to sell their wine and not finding it easy.

So what are the small producers up against? Firstly the Australian market is very crowded and it’s hard to gain acceptance and retail space when most wine buyers have never heard of your wine. Its also worth bearing in mind the larger companies have economies of scale. Most have good distribution systems with either their own reps or agents in place. In many cases their brands are well known, in some cases they are backed by massive advertising campaigns. Many of these brands are on retailer’s shelves already. Even Southcorp are rationalising brands and eliminating a number of well-known labels because they are not returning sufficient profit.

The second biggest challenge facing these new producers is to make wine that people actually will want to drink more than once. Last week I was invited by one of the top (boutique hotel) restaurants in my area to help them select two new wines for their extensive wine list.

The first flight was a line up of 12 Merlots that would all retail for about $15-20. None of the wines came from the top five producers and there would have been no more than two or three from the top twenty producers, so we tasted wines from the primarily very small producers. Now let’s not mice words, six of the wines were crap with some showing appalling faults and of the balance, three were extremely ordinary to say the least. The third best was described as “having almost no flavour but well balanced.” The runner up was described as “ok but boring as bat turd.” The winner was described as “in inoffensive well balanced crowd pleaser.” It came from a small producer and the wine was perfect for their purposes. (They don’t want swill on their wine list.)

The next flight was a line up of 10 Shiraz also in the $15-20 retail price bracket. This line up was slightly better in that whilst six bottles were still basically swill, the top three bottles were all considered reasonable. The winning selected wine was described as “a well balanced wine with good complexity for the price.” It came form one of the micro producers.

On a regular basis Winestar sends me wines to review, many of them from new micro producers. Bert does this in an endeavour to provide you with some interesting discoveries (which are reasonably priced) and have been judged so by an independent party (me). In most instances I try six wines at a time and the wines are tried completely blind, so there is no influence caused by label or price. The amount of seriously bad wine reviewed is not funny. This task is frequently thought of as sorting through a pile of manure to find a diamond.

The truly worrying part is that these wineries actually hope to sell this excrement. It may not be polite to refer to these wines as excrement, but unfortunately that’s exactly what many of them are! Some cask wine is far better; at least most of those don’t have glaring faults, hopelessly green unripe tannins, cheap and nasty varnished oak dominating the wine etc etc.

Yes, our alternatives to McPlonk wine will come from small producers, but these small producers have to produce wines that people are going to enjoy drinking. If they don’t produce reasonable wine there is no point in having a cellar door or appointing an agent because the wine will not sell. As much as I hate to admit it, most people would rather drink McPlonk wine than badly made or faulty boutique wine.

Cheers

Ric