Dan Berger, one of the most of the respected independent wine critics in the United States addressed the New South Wales Wine Press Club on August 9 and made some fascinating comments. According to the media release, some of his remarks were “provocative” and whilst I don't agree with everything he says, much of what he says is basic common sense, and incidentally similar comments have been made on TORBWine by both myself and readers; hopefully with this high exposure lecture the powers-that-be will finally start taking notice. The entire lecture can be found here.

Dan commenced by addressing the current surplus and in a provocative statement, specifically aimed at the way the Australian media portrays the effects of the current glut on growers saying, “This surplus of wine may be real, but the meaning of it, and how it is being viewed, is anything but. And the current “crisis” of excess wine is a classic example of Chicken Little hollering that the sky is falling combined with that of the boy who cried wolf, as well as a number of other Mother Goose tales.

Purely and simply, this is a case of the typical boom/bust cycle that has a way of inevitably repeating itself in many financial endeavours, but mainly in agricultural sectors.”

Boom-bust cycles are a feature of the Australian wine industry and have occurred a number of times, but that does not mean that the plight of long-term growers who are hurting badly is anything but real, and describing their hardship and difficulties as “Mother Goose tales” is insensitive and demeaning.

Later, Berger goes on to state, “One key element here is that Australian wine still commands a lot of respect with American buyers, and notably at higher price points. As an American wine journalist, as well as a wine lover and wine critic with a strong opinion on many issues, I can tell you that, in general, the higher you go on the price scale for Australian wines, the more quality you get. I cannot say the same for French, California, or Italian wines.”

This is an excellent point. Whilst the comment related to the quality versus the price point analogy is a generality, certainly based on my experience with French and Australian wine, it is generally true.

Dan immediately follows with, “At the highest price levels in those wines, a huge part of the price you are asked to pay is a function of what I call the Red Ferrari Syndrome. No one buys a bright red Ferrari and parks it in the garage. You display it in front of your house.”

So true! But why do people do it? Besides the obvious "because they can," much of it can be, in polite terms put down to "a conspicuous display of wealth", or to put it in wine terms, “urinal bragging rights”. At the very top end it is not necessarily to have the best product, just that it has an awesome reputation. In some ways, I have just answered the question that Dan then poses.

“So I ask the question: which came first, the high score or the high price? Rather than answer that directly, let’s look at some of the issues surrounding quality with a series of questions, each of which you can answer for yourselves. Is Grange the greatest of all red wines made in Australia? Why is Australian Grenache so under-appreciated? And, why are a couple of Australian Grenaches so highly praised when other clearly better Grenaches are ignored? Could it have something to do with the prices being charged for them?”

This is a very interesting and complex set of questions and has no easy answer. Based on its track record, the wines ability to age, and above all consistency over time, Grange is Australia's greatest red wine. Does that mean that it is the best wine made every vintage? The answer is obviously no.

Why Australian Grenache has been so under-appreciated is easy to answer. For a long time most of it was NutraSweet lolly water and it is only been comparatively recently that a limited number of high-quality Grenache wines have started being released. The next question: why some Grenache are highly praised, when better wines are ignored, could apply to a number of different varieties. Grenache as a single varietal wine has been almost completely overlooked in Australia until very recently. Even then, much of the increase in local popularity has come about by piggybacking off its success in the US market. As a varietal, much of its general success in the US market is due to the wines inherent sweetness.

In terms of why some Australian Grenache command big prices in the US, whilst other wines which are possibly better don't, the answer to this question can be summed up in three simple words, "high Parker ratings." Clarendon Hills is a classic example. The wines were moderately priced until they received the high Parker points and then the price went stratospheric.

Consumption of high-priced Grenache in Australia is extremely low; the majority of the expensive brands are exported to the US. Until extremely recently, there were almost no high-priced Grenache available in Australia; the vast majority of them still sell for below A$30 (US$22.50). About 18 months ago Torbreck came out with “Les Amis” which retails for A$187.50 and most of the very limited production goes to Asia and to America. Much of this wine is probably purchased by those who desire “the urinal bragging rights” or just wish to buy the most expensive “known label” they can, thinking the higher the price the better the quality, when most educated/smart wine lovers know that is not the case.

Dan then moves back to the oversupply situation and goes on to detail part of a conversation with Peter Gago. “He (Gago) said as far as he is concerned, there is a shortage of many different wine grapes. He said, for example, that for top-rate Chardonnay, he sees a shortage of cooler-climate fruit. There is a shortage of quality Sauvignon Blanc. And a shortage of a number of other grapes as well. Yes, Penfolds, Hardys, Fosters and other large companies make a lot of wines that sell in the commodity sectors. But they also make high-end wines and these are wines that must compete with the world-class, pricey iconic wines that sell for ludicrous sums to those buyers who do not taste them, but who rely on 100-point scores from U.S. wine critics for their buying guidelines. And despite the glut of wine that affects commodity wines worldwide, the major Australian wine companies still must get their hands on super-quality grapes to make their higher-end wines that sell at the upper echelons of price.”

Yes, there may be a shortage of some white wine varieties but that does not lessen the size of the glut, but let’s concentrate on the shortage of top quality red grapes. Those grapes are in high demand, especially the valuable and rare, low yield, old vine material. It comes as no surprise the large companies are finding it increasingly difficult sourcing top quality grapes, and they only have themselves to blame. Those who love Australian wine have heard countless cases of new wineries that have sprouted up over the last decade, that are long-established growers, that for a number of reasons have started producing their own wine, when their contracts with the major corporate companies expired. Where do you think the old vine material that goes into wines like Torbreck, Kaesler, Kalleske and countless other well-respected brands came from? It wasn't all that long ago that all these top quality grapes were being sold to the majors, but not any more. Blind Freddy could see this coming years ago and in 2004 I finally wrote an article called “Screw Thy Neighbour and Screw Thyself” which details much of the reasons why the large companies are now finding themselves in this position.

Further, on the glut, Dan said, “For one thing, we know for sure that some growers may well be hurt by the current wine glut, but that soon, perhaps within a year, wine sales and strategies to reduce the surplus will once again have wine back into some sort of equilibrium.”

Dan must know something I don’t, because from all the reports I have seen, including official industry forecasts, it will take some years before the surplus is absorbed and production returns to equilibrium. As far as the “strategies” that Dan has mentioned are concerned, I would be interested to know what they are; they must be dynamite if they can work that quickly.

For some time on TORBWine there have been a number of articles dealing with the problems facing producers of premium Australian wine exporting to the US. Many excellent points have been made by the people who have provided the detail that allowed the compilation of the stories, but one of the most poignant is that Australia’s premium wine marketing strategy needs a drastic overhaul; and the pathological addiction and over-reliance on the 100 point system was guaranteed to come back and haunt the industry.

It looks like Dan is in 100% agreement. He said, “But no American wine consumers will get the word about the uniqueness, and the great values, of these wines until a campaign is mounted to explain to the American consumer that there is a distinctive difference between a wine designated as South Eastern Australia and those designated Victoria, or Orange, or Mudgee, or Limestone Coast.

The deck is stacked against your wines in terms of the U.S. reviewers who use 100-point scoring “systems.” Such a limited device works against uniqueness and regional distinctiveness. I realize that some of you in this room use 100-point scores in your reviews. I was told two decades ago that it was inevitable, that the consumer likes them and wants them.

One key factor: improper use of 100-point scores leads to one-dimensional wines dominating the upper end. The result is that nuanced, distinctive so-called food wines are shoved down the list, sending the most inappropriate of messages to the consumer. The result is that anything not blockbusterish, hedonistic and laden with all sorts of non-wine elements (such as oak) are banned to purgatory.”

Oh, how true it is! The industry (both locally and overseas) is hooked on the “quick fix” of points marketing and the chickens have come home to roost for premium Australian wines. The industry needs to get over this addiction and going “cold turkey” will be painful, but not getting over this addiction will be even more painful in the long run.

Dan suggests that they back away from using numerical scores and concentrate on the results of our wine competitions. From my perspective, while this is a better alternative, it’s a methadone addiction versus a heroin addiction. There is a better way and Dan does suggest it when he suggests that the industry “empower the consumer with factual data.”

Finally Dan said, “We also owe the consumer more of a story about the wines we’re recommending. Is there something unique about the vineyard site or growing area, a new wine making procedure, or something else that sets this wine apart? If so, we should say so, not just some vague comment about this being a great wine to serve on Boxing Day or when they’re playing the AFL Championship game.”

Significant changes need to be the way premium Australia producers market their wines. For the middle and top end of the industry is to be successful in the long term, educating overseas consumers about Australia’s wine regions must become a major priority.

Consumers who buy premium French Cabernet or American Shiraz know about these regions and their sub regions. Unfortunately, generally speaking, they are not as knowledgeable about Australia, with many seeing it as one big region called “South East Australia.” How many US consumers know that Tasmania even makes wine, or that there is a region called the Yarra Valley?

This sort of education cannot be carried out by the individual wineries; it requires a coordinated approach by all involved. An Australia wide strategy which is supported by the regional organisations and individual wineries working together is the only way it will be successful.

United the premium Australian industry can survive and prosper, but if everyone continues to act as individuals and completely do “their own thing” then the premium segment will not be anywhere near as successful as it should be. Time for individual wineries to stop worrying about themselves and start working out how they can work together as a whole; that way everyone has a better chance of being a winner. Wouldn’t it be wonderful in the US market, if the wineries in Clare saw its greatest competitor as the wineries in McLaren Vale, instead of having to worry about wineries from every other country as well as every other Australian winery?

Feel free to submit your comments!

Copyright © Ric Einstein 2006