Tesco/Jago Presentation - the Real Story  (12 December)

(The original story, "Tesco man gives our wine exporters an earful" can be found here.)

As a result of the news reports and the ruckus they caused, the Australian Wine Makers Federation in conjunction with the AWBC issued a clarification. It stated:

Misrepresentation creates storm in a wine glass

This week has seen some strong words in the Australian and international media relating to a presentation given by guest speaker Dan Jago, Director, Beers, Wines and Spirits, Tesco Stores UK Ltd, at the Wine Industry Outlook Conference 2007 on Tuesday 27 Nov.

Unfortunately the journalist who began the debate, Maxine Frith of the Sun Herald, was not present at the conference and, lacking the real context of the story she was covering, chose to portray comments she was given after the event in a somewhat sensationalist light.

Most visible, and the catalyst for this week’s controversy, has been the statement Frith attributed to Bruce Tyrrell of Tyrrell’s wines in the Hunter Valley. Tyrrell has responded:

“I didn’t, and wouldn’t, say about Dan Jago what Ms Frith quoted in my name in the Sydney Sun Herald on Sunday 2 Dec.

“I was not able to attend the conference, but on reading Mr Jago’s presentation since, I have to say that I completely agree with his viewpoint. Mr Jago applauded Australia’s regionally specific wines and suggested that we could gain additional ground in the UK market by producing lighter styles – this is exactly what the Hunter Valley has been doing for generations.

“I would like to distance myself from the comments made in the press by Maxine Frith. She has misrepresented me entirely, the views she portrayed are not the views I hold,” said Tyrrell.

This clarification from the Winemakers' Federation raised a lot of questions for me. For a start, whilst it is very specific about stating Tyrrell's position, it did not mention the comments attributed to Rick Burge in the Sun Herald article. I rang Rick to get his thoughts. Burge told me that although he spent about thirty minutes on the phone to the journalist, less than thirty of his words were printed He was also left with the impression that the journalist was "naive" about wine and was digging for dirt.      

The clarification also did not state that Jago did not make the comments attributed to him, just that they were taken out of context. I contacted the WMF to obtain a copy of the speech (text or recording) so I could have a complete picture, but unfortunately all they had was a Power Point slide presentation.

After careful perusal of the presentation slides, I can only conclude the statement looks to be part fact and part "damage control."  How much of each, I don't know, but I am in a position to state a few things for sure.  Firstly, the presentation looks like a gigantic advert for Tesco. I divided up the thirty-six pages of slides into three categories: Neutral, Factual and Tesco. Ten slides were neutral, five were in the factual category and the balance of twenty one was centred on Tesco. If you think my analysis may be unfair, you can look at the slide presentation yourself. (Although there was no mention of the slides being copyright, and no copyright statement on them, Tesco now claims they are the "personal copyright of Dan Jago" and has requested they be removed from this site. I have complied with their request.)   

Before examining the presentation in detail, it is critically important to put the industry in perspective. Australia's wine production is not simply aimed at one market segment. We cover the whole gambit from the bottom to the top. For simplicity's sake, lets say we have two major segments; the bottom end with brands like Yellow Tail, Lindemans (not Coonawarra), Jacobs Creek and a host of others from the biggest producers. These are all high volume brands and are mainly sold in supermarkets. At the premium end (and I don't mean the wines that sell for $12 a bottle that the industry defines as premium,) the majority of the labels tend to come from small producers and are made in relatively small quantities (in comparison to the bottom end wines.)  The Australian wine industry realises it can not be the lowest cost producer and own the bottom end forever. In time China will be able to produce wine for less than Australia (and probably just about everyone else), just like they do with almost every other product. That's a fact of life. It is for this exact reason that much of the industries push has been to try and go upmarket, rather than relying on volume forever. That is why they are promoting regional identities etc. It is important to note this marketing strategy is in direct opposition to the interests of bottom end producers of wine from "South East Australia."  The saving grace is that many of these producers also make premium wines too, or there would be real trouble.            

Now back to the presentation. A few of the slides are key. Slide 10 shows the French have got problems. For example, whilst the sale of French reds is growing by 1% in absolute value, their share of the market is declining at the rate of 1.75%.  The value for New World reds is growing at about 7% per annum.

According to slide 11, Australia is in a good news/bad news position. Value of our red sales is increasing by about 3% but we are losing market share in the red arena by about 0.75%. The amount being spent on Chilean and Argentinan reds has increased by around 10-12% and their increase in market penetration is about 1.75%. That's good news for both those two countries, but they are both coming off a low base. Realistically as Australia is number one, it would be bloody hard to increase our penetration, but at least the value of sales is still increasing. And as Jago warned, we need to be vigilant and make sure that those snapping at out heels don't get to bite. But eventually we will lose a significant share of the bottom end, it is inevitable.        

I should stress at this point, there is no mention of anything on these slides that refer to alcohol levels - yet!

Slide 14 talks about Tesco's new in store signage and slide 15 shows examples of the categories. They are "White" "Red" Champagne and Sparkling" and "Low Alcohol."

It looks like Tesco's are not only being bitten by the politically correct bug; they have installed their own Politically Correct Police at every cash register. The current age for buying alcohol in the UK is 18, the same as in Australia. But these PC clowns have decided that if you look like you are under 21, they will ask you to prove your age. It’s all there on the sign (as shown on slide 15.)

Slide 20 and 21 talks about Tesco setting "Tomorrow's Agenda." And guess what the fifth and final line on their agenda setting exercise is? It's "alcohol"! 

Slide 31 is headed "The Alcohol debate" and states "Alcohol Responsibility includes wine."

Slide 32 shows a picture of Low Alcohol Stella Beer and says, "Same great flavours, less alcohol."  The next line on that slide states, "Customers are looking for fresher flavours from Australia."

In Rick Burge’s own words to me he stated, “Here we have the ludicrous situation where the middleman (supermarket) is dictating tastes to both ends of the market – the producer and the customer. Can you imagine these guys going to fine Cognac producers and saying, we really like your (expensive) Cognac but can you please lower the alcohol from 40% to 32%? Because that is what they are doing to Australian wine producers! That may be acceptable to those producing low-end wines, but it is not acceptable to those producing premium wines. This is about the supermarkets agenda.”

How right Rick Burge is!

After reading this presentation, in my opinion Dan Jago is trying to justify Australia producing lower alcohol wine to suit his/Tesco's "politically correct "agenda of selling lower alcohol across the board, to look like they are being a good corporate citizen. If there is a "problem" with alcohol, low alcohol wine is not, let me repeat that, not the solution and it should not be the retailers who drive the solution. Low alcohol wine will not stop or even reduce problem drinkers. If people want to get drunk, they will get drunk and low alcohol wine will not stop them. There is something called "taking personal responsibility" that is the only way any problem with excessive alcohol consumption can be fixed. Anything else is a band-aid. How you get people to take personal responsibility is the job of the government, education, parenting and other groups. It is not the job of retailers dictating to consumers what they should drink.

Yes Australia has to innovate and try and keep ahead of the pack as Jago suggested, but Jago was using this presentation to push his corporate agenda. It’s not about wine being 13 or 14% alcohol and not being refreshing. If Tesco's want more refreshing wines, there are many wines from the Yarra Valley, Mornington, and Tasmania available. The Australian wine industry does not have to turn itself on its head for Tesco's any more than they have to make wine in the Parker mould.  The industry bodies may have to be wary about what they say about upsetting the largest buyer of Australian wine in the UK, but I am not constrained by commercial interests. 

The supermarkets (especially in Australia) have far too much power already. Letting them set the agenda for both the wine consumer and the wine industry will turn out to be a bloody disaster.       

Feel free to submit your comments!