Today it’s impossible to pick up an Australian newspaper and not be subject to a health check on Australian wine. Wine business is big news, not only because of the spectacular success of corporate Australian wine in the second half of the late 1990s and early 2000s, but because of the highly publicised difficulties it has since experienced. However I no longer think it’s possible to discuss a single Australian wine industry, for every day it becomes more obvious that there are two. One is a relatively sophisticated and successful outfit dominated by four large players operating at all quality levels. It also encompasses all the high-grade successful small and medium-sized labels who have done their homework and whose wine is in constant demand. It sells more wine overseas than it does domestically and is the envy of the wine-producing world. I refer to it as the legitimate Australian wine industry, and instead of facing an over-supply, it is actually deficient in fruit that satisfies its quality requirements. The other Australian wine industry is the one that people are whinging about. Generally consisting of new entrants to the game, it is typically under-capitalised, under-thought and under-managed. It grows more grapes than it can use, it produces finished wine that nobody wants and it is largely responsible for the over-supply of ordinary fruit and wine that is pulling back prices and profits. It comprises those businesses that were established simply to take advantage of taxation advantages, plus the plethora of wine companies that would not exist today if their founders previously knew what they do now. You might have been a great Queen’s Counsel, and you might yet be a good grape grower, winemaker and marketer, but it doesn’t necessarily follow. Leaving the illegitimate wine industry to fend for itself, I’d like to focus on the issues confronting the rest of the trade. Recent months have highlighted how dependent Australian wine has suddenly become on export, and how exports are themselves dependent to some degree on exchange rates. At time of writing, the Australian dollar has risen by around 20% against its US equivalent, which is too much for producers to bear without increasing prices. While European currencies have also risen against the $US, Australian wines have lost some competitive edge in the US market against European and indeed locally produced US wines, which are constantly being re-invented at cheaper prices in order to compete against them. Australia will again have to rely on its quality and its ability to market its wine. On the other hand, the biggest issues facing Australian wine have absolutely nothing to do with currency exchange, supposed global over-supply (which is actually diminishing), price discounting or domestic taxes on wine, which steadfastly retain their place as world’s worst practice. The big question is the sort of wine industry Australia is going to have in the future, how it can sustain itself and how it can sustain its environment. For the rate-limiting step on Australian wine’s growth is related to production and not marketing. And that rate-limiting step is the availability of water. Australia is the world’s driest continent. Many vineyards have spent much of the last decade operating under drought or drought-like conditions. Large areas of the country’s south-east that are habitually accustomed to having plentiful access to water have only received top-freshening rainfall in recent years that has actually done very little to replenish moisture reserves in soils, or else fill dams that would normally be full to overflowing. We are faced with a dramatic reassessment of its priorities with respect to how our scarce water supplies should be best deployed. The wine industry uses water more efficiently than most agricultural and horticultural industries, but it still has much to do. Furthermore, through direct domestic and overseas sales and indirectly through promotional and tourism-related benefit, wine produces a significantly greater net economic benefit than most competing end-uses of this scarce resource. There are however still two major weaknesses in the wine industry’s approach to water usage. Too much water is still applied to grapevines through archaic and inefficient mechanisms, leading to over-application, massive wastage and subsequent raising of water profiles in soils, causing increased salinity issues. Secondly, right across the entire wine industry, too many vineyards have their yields pumped up through excessive watering, leading to thin, simple and inadequate wines often seriously deficient in quality and character. From the Mornington Peninsula to the Murray Valley there are countless examples of the direct consequences of growers aiming to crop too high and bumping up their yields with excessive watering. Yet last season growers in the drier areas of western Victoria needed to truck in water just so they could spray their vineyards with essential treatments like sulphur. Orlando Wyndham is presently trialing a new technology which could save the Australian wine industry 50-70% of the irrigated water presently used in grape growing. The concept deploys sub-surface irrigation to reduce evaporation and uses a hormonal response to fool the vine into thinking it has received more water than it actually has. The technology has huge potential to reduce water use in Australian horticulture and could lead to an annual saving of 250 gigalitres of water from viticulture alone. While compiling this edition I couldn’t help but become convinced that while the 2001 vintage is generally a significant improvement on 2000, it’s a far cry from top years like 1998, 1996 or 1994. 2001 was the hottest vintage ever recorded in South Australia, but unlike the 2000 season, whose poor quality can fairly and squarely be blamed on the extreme and enduring heat that prevented fruit from reaching genuine physiological ripeness, the issues associated with 2001 have more to do with stress. Many 2001 reds begin very impressively, but fall short at their finish, leaving just oak and tannin. While it’s easy to be seduced by their concentration and often-impressive up-front flavours, oak and other artefact have skillfully been deployed to smooth over their inadequacies. The drought’s effect on wine quality has been an insidious one. Whereas water stress and related salinity-related stress was clearly visible across large areas of the Australian viticultural landscape leading up to the 2003 vintage, it’s now possible to detect the beginnings of stressed influences in wines dating back to 1999, depending where they’re from. I am noticing more frequently the appearance of what I assume to be a chloride-related saline taste in reds, and to a lesser extent in whites. Australian wine needs to take the remaining steps to fully clean up its act and present itself as a model environmental citizen, especially to win the inevitable battle for water resources against industries like cotton and rice. It must pay attention to the entire suite of environmental issues it crosses, especially winery effluent. Every damaging incidence like the recent case in which BRL Hardy was found guilty of breaching environmental guidelines, simply damages its future credibility and ability to negotiate. Thanks largely to the drought, Australia’s reds from 2002 and 2003 will continue to present a mixed bag. There will be highlights, but we are certainly still waiting for another year like 1998 of genuine, typically Australian fruit sweetness and intensity. Australia’s Perfect 1’s 2003 OnWine Wine of the Year Australian Vintage Report 2003 Trends in Australian Wine 2004 Investing in Wine 2004
