He wasn’t intending to, but Rick Kinzbrunner has undoubtedly ignited one of the most emotionally-charged controversies yet to erupt in Australian wine. At stake is the allocation of the pitifully small year 2000 release from Giaconda, perhaps the most sought-after of all Australian wine labels today. By shifting the battleground from his mailing list to the Internet, where the wines were put up for sale using a tender process, Kinzbrunner has taken the very same course that I would have done in his place. But in doing so he has unquestionably ruffled the feathers, to put it mildly, of many people who have successfully purchased his wine through the mailing list in previous years. Let’s begin with the facts. Faced not only with unprecedented interest in his wine from buyers in Australia and overseas, Kinzbrunner was also hampered by his smallest release in recent years, only 880 dozen of five separate wines, only 325 of which were of the flagship 1999 Chardonnay. The other wines on offer were the Shiraz 1999 (75 dozen), Pinot Noir 1999 (175 dozen) plus the Cabernet from both 1998 (125 dozen) and 1999 (80 dozen). Finding that he had more than three times the number of people on his mailing list than he had half-dozen cases of wine to sell, Kinzbrunner was spending most of his day fielding phone calls from would-be buyers and previous buyers keen to lock in their slice of the diminishing pie. One of Australia’s most talented grape growers and winemakers found he was doing little of either and that he was beginning to dread the sound of the telephone. It’s no fun at all saying no to people all day. Giaconda’s wines have received limited exposure and distribution in overseas markets. Just as artists might strive for international recognition for their work, especially recognition amongst their peers, it’s very understandable that Rick Kinzbrunner might wish for his wines to be listed on some of the better restaurant lists in Europe, Asia and the US, and to be bought by some of the world’s leading wine collectors. This is how reputations are made, legacies are left and ambitions accomplished in such a rarefied level of winemaking. But you have to get your wine in front of these people first. Imagine you are a highly skilled artist and after a year or two’s work you release a significant piece for sale. You’re not cheap, and you get a good return for your efforts. Your work is scarce and sought after and is usually only bought by dealers in the know whose networks give them first bite at anything you sell. Typically, these dealers buy your work, keep it a few months for the word to get around about the quality of your latest piece, and then release it back to the trade via the auction process. They make a killing, more than double their money. Problem is, they’ve also made about double what you made, and have done absolutely nothing for it. And all they’ve done is to use the system in place to get the real price for your work. Reckon this wouldn’t drive you crazy? Without mentioning names, I’ve spoken to dozens of Australia’s best small winemakers about this very issue and they’re almost 100% against the speculators on their lists who do precisely this. Especially when the speculators recruit others to join sought-after mailing lists where wines are allocated to each buyer. It’s astonishing how much of Australia’s rarest and most sought-after wine ends up in the hands of certain individuals. Anything winemakers do to ease these people out of the equation and out of their profiteering is absolutely fine by me. If a wine is worth $100 per bottle, why shouldn’t the reward go to the people who make it? Winemakers typically re-invest their profits into better vineyards, lower crops, better equipment and oak. I don’t see too many who simply view their skill as a means to upgrade their BMWs. There’s little doubt that the Federal Government’s new tax system has much to do with Giaconda’s new approach, by producing from its hat a powerful incentive for small wineries to sell direct to their customer base. Up to a level of $300,000 wholesale in direct sales, wineries can claim a full rebate of the newly introduced 29% Wine Equalisation Tax. Wineries with cellar door and mailing list sales between $300,000 and $580,000 wholesale will receive up to in $87,500 rebate. So why would a small winery still use an agent or distributor, especially if it already has many times less wine than it could sell? Stir all these factors into the melting pot and you have Kinzbrunner’s conundrum. What simple, easily managed system could possibly handle each of these issues, yet still offer a degree of flexibility to ensure that long-term Giaconda buyers would still have the chance to buy his wine? That’s where the Internet solution steps in. It provides a means of allocating wine which gets Kinzbrunner off the phone and back into the vineyard and winery. It expands his potential market to include overseas buyers, restaurants and retailers. It will make it extremely difficult for the speculators to get hold of Giaconda’s wine at a price that will give them anything near the returns they’ve made in recent years. It removes the distributors from the system, saving Kinzbrunner a fortune as a rebate from the so-called Wine Equalisation Tax. And it also gives him a discretionary say in who gets his wine and at what price. And so we arrive at the core of the controversy. What has clearly upset many previous or would-be buyers of Giaconda wines is the idea that Kinzbrunner would simply put his wines up for auction over the Net. But this hasn’t happened as far as I can tell. Kinzbrunner is himself adamant that it is a tender process, not an auction, and that ‘if good customers offer a sensible price then we’ll give them some wine’. Kinzbrunner is keen to see that habitual buyers of Giaconda wines have every chance to continue to source it. ‘Price will not be the only factor in determining who will or will not be successful in the tenders’, he says. Visitors to the Giaconda website, www.giaconda.com.au, which closed for business on September 30, were able to examine a recent price history of Giaconda’s wine at release, retail and auction to help determine a range for bidding. Only time will tell if prices bid for the new releases surpassed or matched the prices the 1999 release wines are presently fetching at auction. The 1998 Chardonnay, for instance, released via mail order at $55 per bottle, now collects between $100-150 at auction. It’s worth noting that these prices are in Australian dollars, and that serious buyers in the US are more than used to paying over US$100 per bottle for top-notch Californian chardonnay. Early indications are much as I expected: that Giaconda’s lead is likely to encourage a raft of followers. For much the same reasons that Kinzbrunner chose this approach, I would expect dozens of premier wineries to replace their existing sales arrangements with agents and licensed distributors with direct sales strategies in which the Internet will play a pivotal role. As for Giaconda’s likely future involvement with the Internet, Kinzbrunner would appear to be wavering. This year’s release was initially intended as a once-off process, but as it draws to a close, he’s not at all unhappy with the results. So, instead of reverting strictly to traditional mail ordering processes for what he hopes will be substiantially larger releases of wine, I wouldn’t be at all surprised if the Internet continued to play a role in Giaconda’s wine sales. Kinzbrunner is confident that future releases, which will gradually incorporate more fruit from Giaconda’s newer plantings on a second site, should slowly increase in volume towards 2,500 dozen.
