The first of many chickens coming home to roost?

Walk into any bottle shop, even the ones that don’t sell many Ultra Premiums and it’s a fair bet that you will be able to find Wynns John Riddoch and Michael available. In many cases, older vintages (like the 94 for example) at the current release price. The reasons for this are simple.

There was a fair amount of this wine produced. At a RRP of $99 sales were somewhat slow (to say the least) and had been for years. Originally it was allocated to retailers and if they didn’t take their whole supply every year they may find they didn’t get any the next year. Despite the possible restrictions, many bottle shops finally jacked up and stopped buying it. Many retailers still have stock of back vintages, or have sold off the inventory at cost, or in some cases at a loss.

It is reputed that at the current rate of sales, Southcorp had enough stock of John Riddoch and Michael to last them for 12 years. That’s a fairly sizeable problem in anyone’s language.

As many of you may know, in the last few days Southcorp dropped the price of Wynns John Riddoch and Michael from a RRP of $99 to $55. That’s dramatic in anyone’s language.

Now I don’t know what you think about John Riddoch, but in my experience, in the good vintages this as just about as good as Cabernet Sauvignon gets in Australia. Indeed, it is a benchmark wine with a good track record. The 90’s and 91’s that I have been drinking over the last few years always impress and the 98 in time should also be a winner. When you think about the massive price drop in that context, it makes it seem an even more dramatic move.

What were Southcorp’s alternatives? Why not export it all, the Americans seem to be prepared to pay huge amounts to buy Oz wines? In reality, export was not an answer as Oz Cabernet is not “flavour of the month” in the US like our Shiraz. And that leads me to the next point.

Even now, many of the hard to get Australian wines that people were clamouring for a year ago in the US are now sitting on the shelves gathering dust. The hype of the 98 vintage has passed. Retail recession has hit wine retailing fairly hard. The events of September 11 have shocked the US economy to its bootstraps. Finally, many Australian wines are no longer seen as “good value” and the consumers of these wines have moved on to other brands; or in some cases even wines from other countries.

Over the next few years some of these negative factors (like the poor state of the US retailing) will go away, but the wine glut and world wide oversupply will get worse. “Cult” wines like any fashion accessory will come and go, but who wants to pay a small fortune for last years model? Not many people!

I am willing to bet that this drop by Southcorp on Wynns John Riddoch and Michael is just the first of many to come on Australian Premium and Ultra Premium wines over the next few years, both here and overseas. Many may not be as dramatic, but they will happen. The full impact may be seen more in the US than in Australia. No one is exempt, if it can happen to Southcorp, it can happen to BRL Hardy and even the likes of Run Rig.

Keep drinking

Ric ©

Copyright © Ric Einstein 2003