Newsletter January 2010
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Back to a Glut in the Wine IndustryCall it what you like, oversupply, surplus, glut. There are too many grapes and too much cheap wine being made in Australia.
The situation is familiar and we might be tempted to think that it is a cycle. But there is an underlying trend. The over ambitious expansion of the industry of the nineties and the early noughties is a long term problem which was masked through the middle and end of last decade by a couple of vintages being severely reduced by frost, drought and smoke damage.
New vineyards were planted often on a large scale with tax incentives rather than realistic markets in mind. Many of these vineyards are now in full production. From now on 'normal' years will be an oversupply. Australian wines are facing much stiffer competition in our overseas markets, and the trend in exchange rates is not helping. Domestic consumption, even if it increased substantially will have little impact.
Grapegrowers who sell wine to big companies have been feeling the pinch for a few years now. It is hard to see the situation improving for them. Small and medium sized wineries and vineyards will find it harder to sell their wines at current prices and many won't have the capacity to compete with aggressive discounting by supermarkets and the big end of town.
Tax changes are also in the wind for wine. At present wine is taxed on a percentage of the wholesale price ('WET' tax), plus the GST which is also price based. The WET tax is rebated for smaller wineries. A proposal before the Government is for all alcoholic drinks to be taxed on a volumetric basis, according to the percentage of alcohol. The main effect will be that cheaper wines (less than $12 per bottle say) will rise sharply in price. More expensive wines - Grange, Hill of Grace etc will be taxed at a much cheaper rate than as at present.
Is there any good news? Well, consumers will see wine at cheaper prices for a while at least. Most of the existing wineries will struggle through and we will still have a diverse range of wines made by small and medium producers, but this will be cold comfort for those who need to leave the industry.
Are there any bright spots? I think there is still a huge potential for selling more wine to the under 25 market, especially with products like moscato which will can some spillover from the 'alcopops' crowd. Once these young people start drinking wine their tastes will change and they will start to develop curiosity about white and red wine.
We will need some smarter marketing of our wine overseas. The First Families of Wine initiative has the potential to change the perception of Australian wine in our overseas markets. The emergence of China and India as markets in our region represent an opportunity, although China, which already produces more wine than Australia poses a long term threat as a competitor.
Vinodiversity in ItalyWell I'm not there yet. But I hope to get to the world's most vinodiverse winegrowing country later this year. In the meantime I'm brushing up on my knowledge of Italian wine. So I thought I'd share some of it with you - the knowledge, not the wine.
I've written a short Italian Wine Quiz. It's free to enter and, best of all, there are no prizes for you to stress about, just do it for fun.
I've started a section on Vinodiversity devoted to Italian wines and regions, still a work in progress, but I have a few regions described - Tuscany, Liguria, and Piedmonte. I'll give you an update next month, but perhaps you can help.
On the Best Italian Wines page you can have your say, or take a look at the collective wisdom of other Vinodiversity readers on Italian wines.
Federation Square Regional Wine Showcase
The monthly showcase series begins with the Mornington Peninsula on Wednesday and Thursday 3 and 4 February. Vinodiversity will be there. Come and have a chat.
You can see theWine Showcases 2010 Program here
Vinodiversity's Hotel Booking Service
Going away? You might like to check out this hotel booking service.
What's so good about it? Well, it amalgamates the online offers from a number of different booking services and allows you to choose the best deal at the best hotel
So do yourself a favour
Use www.vinodiversity.com/hotels to book your trip.
You'll save time and money,I'll get a small commission from the agent's booking fee.
Write it down now vinodiversity.com/hotels
Tim Althus makes a point of selling the people behind the wines as well as the wines. This is the exact opposite of other online wine stores who are little more than virtual supermarkets for surplus stock and clean skins.
Secret Vines usually have two 6 packs available, at $99 and $159, both contain some lovely wines that you are unlikely to find anywhere else. They also have specials from a number of small wineries.
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