Southcorp Wines, the owner of brands like Penfolds, Lindemans, Wynns and Seaview, has announced a $A405 million expenditure over the next five years to double its red wine production. There isn’t about to be twice as much Grange or Bin 707, but chief executive Bruce Kemp says that given sensible site selection, once the vines mature sufficiently there’s no reason why there can’t be more Southcorp red made for the over $20 market. Most of the increase in production will be directed towards wines priced between $A7.99-16.99. ‘Every red brand in our portfolio is in short supply’, claims Kemp, who expects the global shortage of red to continue for another decade. ‘We’re just so short of the market opportunities around the world.’ Southcorp expects most of the increase in production to be taken by markets in Australia, north America, the UK, northern Europe and Asia. Southcorp’s approach is to monitor the quality coming off its new vineyards, expecting that as the vines mature, their fruit will be allocated from lesser brands in its folio to the more expensive. Most of its brands are long-established and multi-regional and there are no immediate plans to introduce more of them. It works a little like this: one of the company’s major new developments is at Robe, in South Australia’s south-east, not that far from Coonawarra. 1997 marked its first crop and the 80 tonne yield was blended into the accessibly-priced Penfolds Koonunga Hill. It’s Kemp’s belief that as it matures, this vineyard will meet the quality demands of higher-priced Penfolds wines such as Bins 28, 128, 389 and 407. With over 30% by value of the Australian market, Southcorp is the country’s largest wine company and one of the top ten in the world. It already claims to be the largest maker of premium red on Planet Earth. It will spend $A145 million directly on vineyard and winery expansion, the most significant investment ever in Australian wine history, while another $45-50 million is earmarked simply to buy enough oak cooperage necessary for the storage and maturation of its increased production. Kemp doesn’t want Southcorp to be entirely wiped out in a single vintage, so they’re distributing the $50 million in new plantings across four states and a dozen regions. It’s also reducing risk by planting 60% of the new vineyards to shiraz, the Australian red now in greatest global demand. Cabernet sauvignon and merlot will round off the bulk of the new plantings, although Kemp doesn’t expect to muscle in too heavily on the US merlot market. From the $95 million earmarked for winery expansion, Kemp says the company’s red wine headquarters at Nuriootpa will be expanded by 40%, a new barrel hall will be constructed at Wynns Coonawarra and the wineries of Coldstream Hills (Yarra Valley) and Devil’s Lair (Margaret River) will be extended. Kemp’s optimism is understandable, since with the increase in Australian red wine popularity, Southcorp’s sales have increased by 65% over the last five years and profits have doubled, reaching more than $A100 million before interest and tax in 1996/97. Southcorp’s Australian Red Wine Holdings: South Australia Wineries Nuriootpa Barossa Valley Wynns Coonawarra Estate Coonawarra Rouge Homme Coonawarra Waikerie Riverlands Vineyards Barossa Valley Clare Valley Robe Markaranka McLaren Vale Victoria Wineries Karadoc Mildura Great Western Western Victoria Coldstream Hills Yarra Valley Vineyards: Great Western Cullulleraine Drumborg Yarra Valley Glenlofty New South Wales Wineries Tulloch’s Hunter Valley Yenda Griffith Barooga Murray River Tumbarumba Southern Highlands Vineyards: Barooga Murray River Western Australia Winery and Vineyards: Devil’s Lair Margaret River
