It is unusual to start at the end of a story and work backwards but in this case it makes sense. Two events in the past couple of weeks have brought this story to a head; it’s a very complex and involved situation that has many tentacles and the journey can and will meander down many paths, so various aspects will be explored in different stories over time. Here are the two items that brought it to a head.

The situation that Carol is talking about is not uncommon. If I think back to my trip to South Australia in 2000, I was absolutely gob-smacked by the sea of new planting that had taken place over the previous decade (total area planted has doubled from approx. 80,000 ha in 1995 to 164,181 ha in 2004, but new vineyard planting rates have nearly halved since 2000, down to 5,819 ha in 2004)[1]. According to the latest statistics the 2004 Vintage tonnage was 1,065,879 red grapes, which is a 38% increase on the previous vintage alone; no wonder there is a glut of young red wine. Total tonnage was 1.86 million tonnes last year and that means wine production has doubled in about 8 years; incredible growth!!

The massive growth has led to a number of problems. First and foremost, this production needs to be sold somewhere. Those growers with existing contracts are the lucky ones, but in many cases even they are not getting off scot-free. Many of the larger wineries are paying far less for grapes than they have in previous years. Many growers without contracts are finding it extremely difficult to sell their produce.

There are now close to 2,000 wineries in Australia. The top 25 wineries represent approximately 90% of all production which means there are about 1975 wineries fighting for about 10% of the market. The country has done extremely well with its successful export efforts but that in itself is not enough to absorb the increased production. Some of this new product needs to be consumed locally. To add to the small winery's woes, the ever increasing dominance of the Australian retail wine sector by the two grocers, Coles Myer and Woolworths makes local market penetration even more difficult. Therefore from the growers’ perspective, there is an oversupply of grapes combined with a super competitive retail situation that is made worse by limited retail outlet availability.

Many of the growers who are unable to sell their grapes for what they considered to be a reasonable price, and who do not wish to see them ploughed into the ground are starting to make their own wine. On the surface, this may sound like a reasonable proposition; unfortunately in many cases it is just throwing good money after bad.

Secondly, recently, my mate Tom, who owns the Moss Vale Hotel, invited me to try a dozen samples he had been given from suppliers. One was a $25 West Australian Pinot (that was eminently drinkable) and the rest retail between $13 and $20. Excluding the Pinot, nine of the wines were made by producers who I've never heard of; one was a new low-end label made by a producer who I had heard of, and the final bottle was made by a successful South Australian producer under a different, virtually anonymous label.

Working through these wines was hard work. In reality, most of them were shocking. They exhibited a multitude of faults including: a combination of under ripe and overripe fruit, under-fruited to the point of being unbalanced, green tannins, exhibiting harsh tannins and just plain boring.

These wines are fighting for their life for shelf space. Without shelf space (and/or strong CD/Mail order sales), these brands cannot survive. Unfortunately, none of these brands were worthy of shelf space. The reality of the situation for these brands is that consumers will walk into a bottle shop and see wines like Peter Lehmann Shiraz or Cabernet, O'Leary Walker, Annie's Lane, Richmond Grove, Tatachilla, d’Arenberg, Leasingham and Wirra Wirra that are both familiar and safe. Whilst it is good to try new things, and without trying new things you never get to discover new and enjoyable wine, if anyone had paid good money for the wines we tried in this mixed dozen, they would have been mightily disappointed.

Growing grapes and making wine is not good enough; the wine has to be able to compete against well-known brands. It has been said a million times before, good wine is made in the vineyard; and no matter how hard people try, if they grow crappy grapes they will wind up with crappy wine. Unfortunately far too many of the new growers are growing very ordinary grapes and unless their viticulture of improves substantially, in the foreseeable future they will find it almost impossible to sell their grapes, let alone sell them at a worthwhile price.

Sadly, I was recently informed that one grower who was in this position (grower who could not sell grapes and had them made to wine under his own label) took his own life when the wine did not sell. So the ramifications for many small growers can indeed be serious. The current oversupply is but one in a number of problems facing both growers and the industry. Over coming weeks and months I will be examining other aspects of this situation.