In Vino Veritas

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-By John Boley

The Winemakers Federation of Australia (WFA) exists solely to advance and protect the interests of Australia’s winemakers and represent its members on relevant national and international issues. It is an independent, not-for-profit organisation funded voluntarily by wine businesses that understand the value of a united and coordinated approach to dealing with industry issues and are willing to help make that a reality.

They range greatly in size, history and geographical location but have shared objectives and a common purpose. Between them they produce more than 90 per cent of Australia’s wine. WFA is the one national body that can speak on the industry’s behalf, be accountable for its actions and develop and promote strategies that warrant support. In the current environment, says the association, there is a particular focus on taxation, advertising, alcohol’s role in society and industry planning.

So is the association doing its job? Yes, chief executive Stephen Strachan told me, but “there are many challenges in front of us as an industry. It’s our job to put the light on the hill about where the industry’s future lies and work through all the relevant industry-wide issues. The industry does have major issues but in terms of confronting them and dealing with them I think we are we are rolling up our sleeves and getting on with it.”

Overproduction and responsible consumption of alcohol are what Stephen regards as joint top issues right now. There was an impression in a recent WFA press release of a note of exasperation creeping into his tone when commenting on the DrinkWise campaign. “Claims… by Deakin University researchers that the DrinkWise organisation is just a PR tactic are laughable and do a great disservice to the academic community,” said the release. “The sole ‘research’ involved appears to be reading submissions about preventative health issues in which, not surprisingly, those who fund DrinkWise (alcohol producers) talk about that fact and what the organisation is trying to do.”

Stephen confirms that “there is a very concentrated and orchestrated campaign coming from sectors of the community who are looking for widespread and dramatic reform in terms of how alcohol is marketed and sold. We are in direct conflict with them. They are very well resourced and getting a lot of media attention and while we concur with some of what is being said in relation to the problems associated with alcohol abuse, we certainly don’t concur with their solutions which are very much targeted at putting prices up, banning advertising, health warning labels and the like. It’s an issue we have been aware of for a long time and we have a fight on our hands.”

Is there some danger of losing patience with the more extreme campaigners who display an unhealthy degree of zealotry? “I put my hand up to that. We are exasperated, incredibly frustrated because we have government and community dollars being used to mount a campaign against the alcohol sector, which is their [campaigners’] right but there are parts [of the campaign] we believe are dishonest.” The portrayal of the relationship between alcohol consumption and cancer was “what tipped the balance for us. We thought that was an outright dishonest campaign and the media in and around it was dishonest.”

If the wine industry mounted a similar campaign to promote the beneficial effects of [moderate] drinking, says Stephen, “we would have been crucified, yet they are quite capable of saying that alcohol, tobacco and asbestos are all in the same category when it comes to cancer, which is just nonsense.”

Why crucified? “Because there is an anti-alcohol lobby out there who take a view that anything we do is not aimed around responsible consumption but at selling more alcohol, which we dispute. We generally leave those kinds of argument to the academic community – not that we are afraid of saying it, but the industry is being portrayed as being all bad all of the time which of course we don’t accept. We have a view that this needs to be addressed but it’s not going to be addressed by coming out and talking about the positive effects of alcohol consumption.”

Nanny state then? No, says Stephen. “Government has not responded to this sort of stuff yet, although they are tinkering round the edges. This is a campaign that is not being run by government and I suspect they are as frustrated with it as we are.”

The ferocity of elements of the ‘anti’ lobby is ironic considering that one of WFA’s main aims is to reduce production nationwide. Stephen acknowledges that overproduction remains rife. Figures from state-run Wine Australia show total production of some 1.125 billion litres in 2009-10, down from the peak of 1.42 billion in 2004-5 but still more than four times the output 30 years earlier. “Oversupply is confounding our ability to move through and demonstrate our ability to be sustainable – because you discount and discounts undermine brands – both at a category level and at individual brand level. That’s been happening but there is a lot of reform going on that is turning things around.

“We have an overcapacity to the tune of at least 20 per cent; a couple of years ago we put out a statement saying we thought there was a significant proportion of our industry that was unviable and never would be viable.” WFA succeeded in making growers and producers aware of “the challenges that lay ahead of them. Reduction is happening, though pretty slowly. We are seeing vineyards removed and lower levels of production so the message is gradually getting through, but not fast enough.”

Last year’s production came to around 1.6 million tonnes compared to recent ability to turn out more than two million. Optimum output level? Stephen points to around 1.2-1.4 million tonnes as something the industry could accept as sustainable but “even that is determined by exchange rate fluctuations.”

Oversupply (not only in Australia, remember) breeds price cutting and restricts the national brand image. A couple of years ago Hugh Johnson, one of the world’s top writers on wine, talked of Australia’s output having an image of “cheap-and-cheerful, sunshine-in-a-bottle wines, casting a shadow over the diversity of better, characterful single-estate wines. It is a shadow that Australia must dispel.” Stephen does not dispute the premise. “We would be keen to see every commercial operator, with a premium wine brand story to tell, get out there and tell it and that’s what they are doing.” Australia can do both – premium and commercial – “just as France can do both”. The Wine Australia marketing programme called A-Plus has two key areas, one being ‘regional heroes’ promoting regions and wines with a distinct regional flavour and the other being the ‘landmark’ programme promoting the top end of Australian wine. But oversupply continues to put very cheap Australian wine into the marketplace. “If we were ruling the world we would stop that but we can’t so our objective is to try and work through the oversupply as fast as possible.”

Winery tourism has become a plank of WFA’s offer. The association wants to make the link between “a region’s community and its wine and food and also its other offerings,” central to the thinking of the regions but also to other stakeholders such as Tourism Australia.

“We believe we have to make sure the product we are putting into the market is up to international best practice and get tourism bodies to recognise the potential for wine and culinary tourism and start supporting its marketing.” It’s a long term agenda. “In a decade’s time we will still see room for improvement.” But looking at what is available in places like Margaret River or the Yarra Valley, for example, “there is a lot of good stuff out there but Australia is still not seen as a wine and culinary tourism destination.”

It would be a “great outcome” if that impression were turned around in the next ten years. France got there eventually, he says, and “we have the potential to get there if we keep a focus on it. The prize is worth pursuing because it’s entirely consistent with our objective of promoting our fine, top-end wines.” While Australians find it currently attractive to travel abroad (and figures published days before we spoke showed the number of overseas trips taken by Australians has outstripped international arrivals by more than 1.5 million for the first time), this would be a good time to consider a tour of a wine region or two domestically.

WFA has taken a lead for the industry in trying to establish environmental credentials for domestic producers, notably through Entwine Australia, a voluntary certification scheme comparable with those of other environmentally aware wine producing nations. “Australia has a good track record in terms of environmental performance but you have to get out and measure it and accept it can always be done better. The feedback we get is that the whole issue of environmental performance really hasn’t resonated significantly yet with consumers and where it does, they look to the ‘gatekeepers’, retailers, to provide them with assurances.”

So for example, in the UK, says Stephen, consumers will entrust Tesco to ensure the products it sells have the appropriate environmental credentials, rather than examining the products themselves. WFA has to ensure there is dialogue with the retailers; it “foresaw some time ago that retailers would be asking those questions” and developed Entwine to avoid a situation where individual retailers might come up with a raft of differing environmental criteria and instead offer a credible ‘standard’ to which members could conform.

Despite these challenges, Stephen is full of confidence that the industry can survive and prosper in difficult world markets and take advantage of the emergence of new wine-consuming areas. China in particular shows enormous potential as a new and discerning upper-middle class with a thirst for good wine (some of it now supplied by fast-learning domestic industry) and quality Australian-grown products are finding favour – as they have done worldwide.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

June 19, 2018, 10:46 AM AEST