Poor quality Aussie exports predicted after wet harvest

A warning of low-priced and poor-quality Australian wine exports has been issued after 2011’s rain-soaked and high-volume harvest.

Speaking to the drinks business for this month’s lead interview, new CEO of Treasury Wine Estate’s, David Dearie, said he was concerned at the shipment of “extremely cheap” and “poor quality” Australian wines, mainly to the UK and Asia.

This year’s 1.62 million ton total harvest in Australia was higher than 2010’s 1.5m tons primarily due to wet conditions swelling yields.

Dearie spoke of the production and export of low-quality wines that could damage Australia’s image in international markets.

While he admitted that most of the rain-diluted and mould-damaged grapes will be used to make concentrate, he said: “We are also seeing wine produced that is not good quality”.

“We’ve been rejecting grapes because of mould but others are saying, ‘we’ll take these off your hands’ and these grapes should not be turned into wine,” he stated.

On the other hand, Dearie added that such a situation could favour Australia’s well-known wine labels. “This is when the power of brands comes in, because people know that the quality is there,” he said.

Turning to his own business, he told db that he was convinced of the potential in Treasury’s existing portfolio, suggesting that five-year targets – which he will set out later this month when the new company releases its annual results – will be met with the current stable of wines, which include names such as Beringer, Penfolds, Lindeman’s, Wolf Blass, Rosemount, and Wynns.

For more on Treasury Wine Estates and David Dearie, see the August edition of the drinks business.

14 Responses to “Poor quality Aussie exports predicted after wet harvest”

  1. Sean says:

    Yeah, thanks Dave, maybe its time you get your own little patch sorted out before having a go at the rest of the producers. Talk about a long history of corporate incompetence and bungling. Treasury, and its history, would be a great case study on what not to do.

  2. Crash says:

    Don’t you just love it when the protagonists of the ills that ail the wine industry preach” tut tuts” from the pulpits of leadership [keep slinging and you might just avoid having it slung back at you]. Although TWE should not be singled out for there are many other players doing the same things that have driven the wine exports into an unsustainable downward spiral, these guys are nonetheless pimping the wine industry and treating growers like crack whores. Oh-love the photo of the flooded vineyard, how did you find one that looks like a Citrus Grove?

  3. Jonathan says:

    Is Dave talking about some of the wine that comes out of his own stable, masquerading as so called `premium ‘brands`’?

  4. Steve Knight says:

    This from a so called “Industry Leader” who makes bald and unsubstantiated comments to push his own brand barrow, at a time when most of the industry is working hard to improve our export position and maximise $/litre return.

    Dearie is obviously not a part of the industry I know and support, and Drinks Business needs a good kick in the pants for publishing such unsubstantiated crap.

    How much damage can this do? Well I picked the article up from a USA industry clipping service, so it is well and truly “out there”.

    Good on ya David Dearie, you should be appointed “Sales Prevention Manager” by Wine Australia.

  5. Kate Giles says:

    Thank you ever so much, David, for denigrating the entire year’s work of countless producers and growers for no apparent reason. Whether this is purely in the interests of promoting the ‘value’ or TWE wines over others in the global market, or a horrendously one-sided skew to Vintage 11 in unclear, however, as a producer and grower, I would like to put forward a counterpoint.

    Many of the wines produced this vintage are stunning. As in any vintage, there are highs and lows, and perhaps the water and mould factor will have some impact, but to write off the majority of production is unethical and incorrect. There are always people making wines that perhaps would not mete critical acclaim – but this occurs every year. Allow the caveat emptor rule to apply as always, and those wines that are faulty should in theory not make it through export approval. Should the wines make it to market, they will either fail, or find a niche, whether it be your own preferred style or not.

    As this article is gathering speed amongst the global wine trade however, I would ask that you perhaps think about the impact of your words before you press publish. We are in the business of building our markets and your misguided and uninformed words may well have a negative impact on us all, TWE included.

    My 11 wines are looking pretty good. I hope many others are too, because the reputation of Australian Wine is not the preserve of one company, but of the nation’s producers.

  6. Patrick Schmitt says:

    the drinks business has not been the only magazine to publish concerns about the quality of the 2011 Australian harvest – http://www.winebusiness.com/blog/?go=getBlogEntry&dataId=90636 – and Dearie does mention, as noted above, that most of the damaged grapes are being used to make concentrate. We are grateful for the comments and will follow up this story with a further one to reflect the views above. In the meantime, I have uploaded a full interview with Dearie here – http://www.thedrinksbusiness.com/2011/08/standing-alone/ – should that be of interest.

  7. Steve Knight says:

    Patrick,
    The damage is done. You did not back any of the statements made by Dearie with sound fact, You took some bald statements made by Dearie to bolster his brands at face value, which is very poor journalism at best, and at worst, well what do you think of your article??

    The comment about concentrate is well worth noting. Why is your headline then not: MOST POOR QUALITY GRAPES GO TO CONCENTRATE AFTER DEVESTATING RAINS IN AUSTRALIA. ??
    If anyone needs a good kick in the bum it is you for your sensationalist journalistice style. Now that what you published is out there the hurt is done.

    What you write and publish can have consequences for thousands of livelihoods. But I don’t suppose that matters to you as long as you get your 2 seconds of headline.

    You, far more than Dearie, are a (comment edited).

  8. Steve Knight says:

    Would you like to respond Patrick?

    • admin says:

      Dear Steve, Patrick is now away on business. He will respond to your comment and other opposing views when he returns.
      Thank you, db web admin

  9. Steve Knight says:

    How very convenient. I do not have an opposing view, I just think that he has grossly sensationalised a pretty tacky comment from an industry person who should know better.

    Patrick himself has said that the comment about grapes going to concentrate is important, so why the crazy and hurtfull headline?

  10. Jerry says:

    David Dearie comments are correct – there is millions of litres on the bulk market that are not worth bottling but will end up in a bulk shipment somewhere further eroding the status of Australian wine. We should be talking anout the real issues in the wine industy and wine quality from 2011 is one of them. TWE didnt pick thousand of tonnes of fruit due to mould, botrytis etc yet most of the fruit was sold to other companies. I do agree though that the headline is sensationalist and negative and cetainly not required.

  11. clinton lucas says:

    I agree with all of you, I just lost 10 mins of my life reading about a corporate tool bag.
    I have nothing other to add!!

  12. Patrick says:

    Sorry for the delay responding, I have been away without access to the internet.
    In relation to the initial story and subsequent views I would like to add that I believe the news story rightly centred on the warning that poor quality grapes were going into making wine for export – even if many of the mould-damaged grapes were used for concentrate – because it is the production of poor quality wines that was Dearie’s primary concern: such products are bad for the wine trade’s reputation as well as Australia’s international image as a producer.
    I would also like to add that David Dearie has over 20 years experience in the drinks trade and, as CEO of Treasury Wine Estates, is in charge of one of Australia’s largest producers. Having expressed his concern about poor quality Australian wines appearing on international markets, it is our job to report it, as well as provide a forum for others to comment.

  13. Justin Knock says:

    Anyone who can read and who has been paying any attention to the Australian 2010/11 growing season would know that record rainfalls fell in virtually all grape growing regions. Generous spring rainfall helped mould establish within bunches before closure, and regular, heavy falls throughout summer and early autumn meant disease pressure remained high. Dilution meant grape sugars struggled to accumulate above 13 Baume, and several degrees lower in many cases.
    Doubtless there are vineyards in all regions that have produced some beautiful and fashionably elegant wines, especially Clare/Eden Riesling, some Chardonnay’s from the West, Yarra and Tasmania, Hunter Sem and some vibrant and fresh reds in McLaren Vale and the odd Pinot out of Victoria, and alcohols are going to be much, much lower than previous years so these strengths and benefits should also be part of the discussion, however you’d have to be some kind of fool to think that this is the rule rather than the exception or that by somehow refusing to acknowledge and discuss the 2011 vintage openly that the international press would fail to know about it. Transparency on production is both an Australian virtue and affliction but it gives foundation to a winemaker’s credibility.

    James Halliday, amongst other commentators, was video interviewed recently and indicated around 300,000T of the Australian harvest should not have been picked having been turned into either concentrate or very, very low quality bulk wine. Stephen Strachan, CEO of the Winemakers Federation of Australia, said similar things months ago. Why not take them both to task as well? If your basic maths holds up then that still leaves around 1.3M tonnes or more than 80% of the harvest in good shape.

    Dearie’s comments are merely a focal point for what industry insiders have been saying for several months, and directly challenge the kinds of words that have been coming from certain buyers in the UK multiple grocers recently suggesting that branded wine no longer offers good value and that supermarket own label brands are just as good in quality and offer better value for money. In a year like 2011 these words will ring hollow. The internal standards branded winemakers apply to their wines in Australia are higher than one might think. Strong Australian brands are a co-factor in a healthy Australian industry and it is right to call out the bottom-feeding opportunists who hoped to pick up mould-riddled grapes for $50/tonne and process it into laccase-riddled, musty tasting wine in the hope of flipping it into the international bulk market to disappear into some faceless own-label blend. This practice is more deceiving to consumers in the end.
    There is an enormous challenge being faced by all branded wine producers globally and that is the major global retailers are less and less interested in brands – they’d rather cut out the branded middlemen and take wine directly from producers for own label products. Less income and even less profit for producers and a downward quality spiral for consumers. Brands have standards, whether you agree with those standards or not, and they offer people the chance to continue to drink decent, affordable wine of integrity.

    The UK landscape is changing so fast as people’s disposable income is further eroded- before you know it major retailers won’t even be interested in wine – you’ll see more interest from them in selling wine based products with abv’s below 5.5% to avoid paying duty thus allowing them to stay at 3 for £10, and 2 for £8 price points. And it will allow them to turn the other way to government regulators and claim they are addressing binge drinking by encouraging the sale of lower alcohol products. That’s a situation worth nipping in the bud.

    Wine Australia must run a tighter rule than ever over bulk exports or Australia’s image is up for tarnishing and consumers will lose out. I’d rather see this poor bottom 10% of Australian production disappear down the drain than a wine-lovers throat.
    Bring on 2012.

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