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How fair are government taxes on wine around the world?

Screen Shot 2014-11-12 at 00.19.37Government tax rates on wine differ significantly between countries and it is difficult and complex to accurately compare them. Different considerations and challenges such as economic, cultural, political and legal determine how taxes are applied. Whether they are fair or unfair depends on your point of view. The wine industry constantly fights to avoid increases in excise duty in order to protect their sales and profits. Producers that rely on local demand call for higher import tariffs in order to protect their domestic wine industry. Alternatively, those relying on exports call for free trade or tax rebates in order to sustain and grow their business. Consumers are principally against any type of tax. Whereas governments rely heavily on tax revenue, yet never seem to be satisfied.

There are huge differences in government taxes. For instance excise duty rates vary from €6 per bottle of wine in Norway to zero in Hong Kong. On the first glance, this significant rate difference seems unfair. Why should consumers pay so much for their favourite tipple in one country while others enjoy much lower pricing? However, comparison of taxes is complicated as the value of rates is based on different cultural, political and economic philosophies of countries. Following a period of alcohol prohibition, Norway’s high taxes are linked with strict restrictions by the government alcohol monopoly Vinmonopolet. Whereas Hong Kong, thanks to its global connectivity has had zero tax since February 2008 with a view to economic dynamism and liberalism.

However, even within the European Union where the majority of members share the same currency and similar economic goals, the excise duties vary so remarkably it can hardly be considered fair. The United Kingdom is one of the highest tax paying countries at £2.05 per bottle in comparison to traditional wine producing country such as France which only charges €0.03 per bottle. So if you buy £5 bottle of wine in the UK (being the average price), 57% is tax and about 28% is retail margin and the liquid is barely 25%, making it poor value for money for consumers. No wonder then that thousands of Brits travel across the channel every year to take advantage of the bargains in Calais.

Governments can receive a significant amount of funding through wine taxes. Some of this revenue is used to offset the cost of crimes and health damage that are related to alcohol abuse. The wine industry in the UK paid over £15 billion in duty and VAT to the government in 2010 yet the Institute of Alcohol Studies claims that alcohol related harm was estimated to cost society (England) £21 billion in the same year. This includes £3.5 billion of NHS cost, £11 billion of alcohol-related crime and £7 billion of lost productivity due to alcohol. This estimate suggests that alcohol consumption brings more financial losses then benefits to the government. However an accurate estimate of the economic cost of alcohol consumption is difficult to calculate due to the number of variables involved.

From the wine industry’s point of view, there is a danger that taxes reach a level where reduced consumption materially impacts sales and profits. In order to avoid this, the UK duty increase was postponed in 2014 (as a result of the Call Time on Duty initiative). It was estimated that action will save the industry £175 – 230 million and protect over 6,000 jobs. On the other hand, the French government (starting from a much lower base) is keen to drastically increase the tax from €0.03 to somewhere between €0.30-0.60 per bottle, estimated to bring an extra €2 billion to the state government.

Taxes vary depending on whether wine is imported or locally produced. For example in Shanghai, tax for imported wines adds 48% to the cost of a bottle compared to domestic wine which only adds 30% to its cost. This protects the local industry. However, in India, the import tax is so high (a whopping 150% of the value of the wine), that a bottle of Jacob’s Creek costs US$40. Imported wines are therefore incredibly expensive and difficult to access for an average consumers. In order to make imported wine more available and pricing more affordable, discussions about reducing the duty to 40% are underway.

In Australia the tax is the same for wines regardless whether they are imported or locally produced. Thanks to the WET rebates, New Zealand wine exports to Australia have increased by 139% since 2005 when it was introduced. This is currently causing a lot of issues for local producers despite its fairness in free trade terms. In order to protect the Australian wine industry and control overseas competition, the Winemakers’ Federation of Australia is calling for Wine Equalisation Tax reform to address this issue. It is believed that the reform could earn the Australian government AU$25 million a year.

The notorious complexity of US taxes have been known to discourage wineries from trading directly to consumers. The original idea to lift restraints of the three-tier system in 37 states (including California) was to help the availability of wines produced by small and less known wineries and to promote selling wine directly to consumers. Whereas federal excise duty tax is fixed according to alcohol level, and for still wine up to 14% abv is charged at $0.21 per bottle of wine, state tax is much more complicated. Each state has its own rules and regulations, each requires different record keeping and payments. This challenging tax regime limits the number of states that wineries are prepared to work with and limits consumers’ choice of wine from other states.

Keeping tax systems simple and consistent may seem to be a good idea from administrative point of view. But when it comes to the link between taxes and the alcohol level of wine, there are some who call for more versatile tax bands. It is no coincidence that the majority of red wines do not reach an alcohol level over 15.5%. For example, in the UK still wines with alcohol between 5.5% and 15.5% are taxed the same. The result is that nearly all wines end up being taxed by the same amount which may be considered unfair. In order to encourage responsible drinking, promote lower alcohol wines and introduce fairer trading, many producers together with the Wine and Spirit Trade Association are therefore proposing a different alcohol tax band between 9% and 12% abv.

Government taxes on wine are so sensitive and impactful that their fairness and subsequent challenges or benefits are being reviewed constantly. Arguably, many governments struggle to balance fairness when applying their taxes. What some producers may view as fair trade others view as a threat to their profits and a limit to their growth. What some view as a restriction of free choice others view as beneficial control of alcohol consumption. However, what is certain is that hardly anyone believes that taxes on wines are fair to them and there will always be groups who lobby for change.

 
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Posted by on November 12, 2014 in Uncategorized

 

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Going back to school with Wine Australia

Screen Shot 2014-10-04 at 15.44.09The idea of offering a one day wine school event in London first came from the talented Yvonne May, head of Wine Australia for UK & Ireland. Sadly her battle with illness cut her inspirational and tireless work short but her legacy championing Australian wine continues.

The aim of this compelling event is to make UK wine professionals aware of the diversity of Australian wines and provide them with up-to-date knowledge about new vineyard and winemaking techniques as well as a concise overview of todays developments, challenges and potential. As we can’t all fly to Australia, this is the next best thing.

So who better to guide us through the day than charismatic and knowledgeable Tim Atkin MW, UK wine journalist and the straight-talking and accomplished Steve Webber, chief winemaker at De Bortoli in Yarra Valley. The tasting flights were organised by Emma Symington, UK events and education manager, who had the tough job of selecting wines that demonstrate best the typicity of the key regions and their distinctive styles.

The challenge for the speakers was not only to captivate the diverse audience but also to summarise the entire Australian story within one day. It would seem that Australia has had a complete personality change so regardless the level of knowledge or experience in the room, there was plenty to learn. And if you have missed it, here are the highlights.

Australia boasts some of the oldest vines in the world (Tahbilk still has ½ hectare of un-grafted pre-phylloxera Shiraz vines from 1860). Despite only 0.025% of the land being planted under vine, you can find any climate and type of soil here. The diversity of wine styles has few limits. The finest quality wines are produced between 30 and 40 South latitude but you may be surprised to know that you can find wineries pretty much anywhere in the country (for example Granite Belt in Queensland). But some of the best wines come from cooler parts of warm climate regions. This is achieved through either higher altitude (Orange, Canberra district, Pyrenees) or going south with proximity to ocean (Yarra Valley, Mornington Peninsula, Tasmania).

Australian wines have come a long way since 1845 when the first bottle was exported to the UK. Then the majority of wines were fortified and it was not until the 1970’s that table wines took over the reign. Thanks to introduction of temperature control, the focus on international varietal styles and an open-minded attitude towards marketing, brand Wine Australia established its reputation in the export market for high quality table wines by the 1980’s.

However, as with best things in life, success did not last forever and today Australia is being challenged by a strong Australian dollar hindering its export markets, an imbalance between demand and supply skewed to over-production, limited water access and risk of droughts (it is impossible to establish new vineyard without irrigation) and the seeming lack of strong big brands as the market diversifies.

According to Steve, reducing the vineyard area to 120 000 ha from the current 150 000 ha would help to reduce the overproduction. Furthermore, in order to maintain sustainable profitable growth for producers, limiting their production to wines that can achieve retail value of at least £7 per bottle is advisable if not essential.

Comparing wines from a decade ago to those made in the last couple of years shows obvious changes implemented in the vineyards and wineries. So when was the last time you had a glass of Australian wine? And if you have to think more then five seconds to answer this then you had better visit your local independent wine shop, right?

Many boutique wineries are focussing on organic and biodynamic farming with notable attention being given to the vineyards. Despite the new technology and possibly because of it, producers find it challenging but inevitable to let go and move towards minimal handling. Spontaneous alcoholic fermentations are slowly replacing or complementing the use of cultured yeasts. Earlier picking and only token use of new oak (more French less American) is being reflected in fresher, more balanced, lower alcohol wines.

Riesling is no longer only produced in cooler higher altitude sites of Eden (500m) and Clare Valley (400-570m). But new ventures have proven successful in Tasmania (Josef Chromy) and Western Australia (Plantagenet in Mount Barker) thanks to their proximity to the cooling ocean breeze. Also Strathbogie Ranges in Victoria with its unique granite soil is starting to be known for its fine Rieslings (Mac Forbes), some fermented in old French casks for richer texture (Fowles Wine). There is a move towards slower alcoholic fermentations especially at the end of the ferment in order to reach balance between acidity and residual sugar. The majority of styles are dry but a few are starting to experiment with residual sugar, Grosset from Clare Valley being one the earliest pioneers (try his Alea with RS 12g/l).

Chardonnay, love it or hate it, is Australia’s best grape according to Tim. First planted in South Australia in 1937, it has transformed from a peachy and buttery spotty teenager to more sophisticated elegant grown-up. The trend now is towards extracting more phenolics and focussing on dryness away from sunshine ripeness. The ability to access more suitable and a wider variety of clone material is improving the quality. The combination of earlier picking, more use of whole bunch press followed by spontaneous ferment and minimal oak treatment (more old than new French) is reflected in crisper, delicate Burgundian styles.

Chardonnay is produced almost everywhere from warm & humid Hunter Valley (Tyrrell’s), high altitude Orange (600m) to cool coastal regions in Yarra Valley (Oakridge Wines), Mornington Peninsula (Kooyong), Tasmania (Derwent Estate), Margaret River (Leeuwin Estate) and Adelaide Hills (Shaw & Smith). However, there are strong differences in opinion on what Australian Chardonnay should taste like. Some are manipulating flavours by purposefully oxidising must, using wild yeasts or experimenting with different vessels whereas others prefer minimal intervention and focus on terroir, letting the wines speak for themselves.

Pinot Noir is everyone’s darling. Numerous winemakers are obsessed with this variety and as a result produce some of the best examples reaching the heights of Cote d’Or. Gone are the days when Pinot Noir was boosted with a small portion of Shiraz. Balance and lower alcohol (sometimes managed by using open tanks which blows off some of the alcohol) is aspired for. The focus is not on creating a particular style but to reflect an individual terroir/vineyard site which is what Pinot Noir does best. Unconventionally, use of whole bunch in order to exaggerate perfume and stalky freshness has a strong following despite being rarely used in Burgundy. Maybe it is all that inspirational and extensive drinking of DRC or Dujac who use 100% whole bunch as a textural component, jokes Steve.

Most Pinot Noir is planted in Yarra Valley (De Bortoli) as it thrives in this relatively free draining clay/silt/limestone soil. However, there are great Pinots made in many areas with cooling influence. From Mornington Peninsula (Ten Minutes by Tractor), Gippsland (Bill Downie), Geelong (Farr), Tasmania (Stefano Lubiana), Southern Fleurieu (Tapanappa).

Semillon used to be called Hunter River Riesling. There is definitely a resemblance to German Riesling with its high acidity, lower alcohol, lemony zestiness and occasional kerosene aromas. Three distinctive styles are produced in Australia. Hunter Valley Semillon (Brokenwood) has low alcohol (10.5% abv) and is dry, fresh and lean thanks to the warm humid climate, very early picking, no MLF and no oak. Their potential to age is timeless (Tyrrell’s). Barossa Valley Semillon (Peter Lehman) is richer but despite being picked early its alcohol resembles classic white wine. Margaret River Semillon (Suckfizzle) has more vibrant character thanks to blending with pungent Sauvignon Blanc. Its style resembles Bordeaux Blanc in many respects thanks to similar gravel and clay soils and French oak barrel ageing. But even Semillon is changing now as the tendency is to make early drinking more instantly approachable wines, possibly to re-capture the interest in these undervalued and possibly misunderstood wines.

Shiraz is the signature varietal of Australia. I feel that to state that there are two styles of Shiraz now produced would not do justice to this exceptional and outperforming grape. The trend is towards producing fresher, peppery, lower alcohol styles using a portion of whole bunch and old French cask than new oak. Suitable climates vary from Yarra Valley – Beechworth (Jamsheed), Pyrenees (Dalwhinnie), Heathcote (Greenstone Vineyard), Canberra (Clonakilla) to traditional regions such as Barossa Valley (Penfolds), Eden Valley (Yalumba), Clare Valley (Taylors Wines), McLaren Vale (Wirra Wirra) and Hunter Valley (Brokenwood). But classic rich, dark fruit-flavoured, full-bodied highly concentrated styles are still around, collecting gold medals and being highly sort after (Torbreck).

Cabernet Sauvignon is the work horse of Australia and after Shiraz and Chardonnay the third most planted. It has been entirely transformed, many examples showing the typicity of bright cassis fruit with bitter sweet spice and fresh tannins. Arguably Coonawarra and Margaret River offer some of the best examples. Coonawarra (Wynns) is a unique region full of contrasting climatic conditions with hot temperature on one side and frequent spring frosts and rain at vintage. Margaret River (Cullen) with its terroir and climate resembling Bordeaux produces remarkable quality Cabernets. Clare Valley’s (Jim Barry) cool nights help to preserve fresh acidity and finesse in Cabernets and despite its relative remoteness it produces newsworthy wines.

Sparkling styles are still rare. Some of the best sparkling wines are produced in Tasmania taking full advantage of its cool climate. Both Jansz and Arras are well-established and distributed in the UK but there are many boutique producers that are waiting to be discovered in order to appear on British shores. The tendency is to produce Champagne style blends of Chardonnay and Pinot Noir but surprisingly Pinot Meunier has not been planted yet in Tasmania.

Sweet wines have been made in Australia since 1982 and De Bortoli Noble One Semillon was one of the first successful brands. What may surprise you is that back in 1920’s botrytised Semillon was also made in a fortified style. These botrytised styles are now aged in new French oak creating a very similar style to Sauternes.

Fortified wines (rare muscats/topaques and ports) once accounted for almost all production but this has dramatically changed to the extent that only a few remaining producers such as Campbells and All Saints Estate in Rutherglen still excel at this blending art and Penfolds producing limited release ports in Barossa Valley.

Whatever the future holds with all its challenges, I believe that UK and Australia will continue their strong symbiotic relationship. The UK still remains Australian number one export market despite the stick that Brits sometimes give to Aussie wines, historically being too ripe and now for being too lean. Brits seek Australian innovation and their easy-to-understand wines that don’t break the bank. As the worldwide focus thankfully tends to premium wine production with individual site distinction improving quality and profitability, Australia is well positioned. After all I believe that this spectacular country is still at a learning stage and the best wines are still to be made and discovered by us.

 
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Posted by on October 5, 2014 in Australia

 

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What happens when an MW student goes on holiday?

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My hubby, Ben is an angel. Not many people would put up with their partners spending holidays meeting winemakers and viticulturists, talking about yeast cultures and canopy management and even fewer loved ones would be persuaded to be dragged along to visit wineries instead of well-deserved lie-ins and beach tranquillity. Well, my hubby has been doing just that for the last two years and the recent three-week trip in Australia was the ultimate proof of what a lucky wifey I am.

Being an MW student practically means you are married to the wine industry. From the initial “I do” you breathe wine for better, for worse, in sickness, in health. Holidays are no exception. This time we travelled across five wine regions (Tasmania, Yarra Valley, Mornington Peninsula, Margaret River, Mount Barker) visited close to 30 wineries and sipped through hundreds of wines. And we are still happily married, I hasten to add.

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Let me be absolutely clear about one thing – Australian wine rocks! We were instantly struck by the infectious passion for food and wine here. From delicately roasted, nutty and frothy flat whites wherever you go (from petrol stations to your ordinary corner cafés), the high standard of locally produced ingredients to a sheer stubbornness to create the best possible wines. Melbourne in particular is a true gastronomic destination, full of quirky wine bars and gourmet bistros (see below for our recommendations).

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Australian wine producers are very proud of their hard craft and so they should be. What we liked the most is that many are not afraid to have fun, innovate and diversify. They understand the importance of giving people want they actually want. At the same time, many are proud of their land and are realising the regional potential and creating their own distinctive style of wines. It is common sense that is driving winemaking and viticultural decisions here rather than regulations and chasing after specific certifications.

Whether you believe in climate change or not, Hobart in Tasmania with its cool Southern Ocean influence and latitude similar to Nelson in NZ is showing great potential for early-ripening Chardonnays and Pinot Noirs and not only for the production of premium sparkling wines. No wonder Penfolds are sourcing Chardonnay grapes for their Yattarna in Derwent Valley and Shaw & Smith are growing Chardonnay and Pinot Noir in Coal River Valley for their new premium label Tolpuddle.

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However, the 2014 vintage will see a very small harvest. Talking to Andrew Hanigan and John Schuts of Derwent Estate and Stefano Lubiano, they all predict a significant loss of yield due to windy and rainy weather during flowering and fruit set. Luckily, the quality of the remaining fruit is bound to be exceptional.

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This year’s harvest in Yarra Valley is very similar to Tassie. Timo Mayer and Andrew Marks of Gembrook Hill Vineyard in Upper Yarra had their yield reduced from 40hl/ha to 25hl/ha due to low fruit set. The loss of crop of up to 50% has particularly affected early ripening Chardonnays and Pinot Noirs. Mornington Peninsula seemed to be affected even more. Lindsay McCall of Paringa Estate and Ten Minutes by Tractor reported only one third of their normal harvest. We saw a noticeable millerandage on Chardonnay grapes at Moorooduc Estate. Luckily, Richard McIntyre uses Mendoza clones, which he believes still achieve good quality crop.

In fact the harvest was so small that Mac Forbes in Yarra Valley was done and dusted by the 3rd of March. Similarly, when we arrived to Gembrook we were greeted with a generous glass of Andrew’s gin (called The Melbourne Gin Company) instead of traditional tank and barrel sampling. Ben was particularly pleased about this outcome as trying half fermented cloudy juice and then trying skilfully to spit it in a gutter is not exactly his forte.

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When leaving Healesville I could only reflect upon the change in wine styles I saw compared to my last visit 4 years ago. The intense ripe fruit and opulence was already being replaced with lean and elegant styles then but it is now reaching a point of subtlety and restraint that is reminiscent of Burgundy. Noticeable acidity and reductive character is the trend now but I did wonder whether some producers have gone too far with earlier picking, stressed ferments, blocked malos and pH & oxygen management. All these tricks are making it an absolute nightmare when trying to pinpoint wines during blind tastings.

But the overall quality is high and I must agree with David Gleave MW of Liberty Wines when he predicts that it is the premium regional offering that will pick up strength in the years to come, and not only in the UK.

Bree Boskov working her magic and gently pressing and caressing 2014 Oakridge Pinot Noir while being supervised by David Bicknell and Steve Wood

Bree Boskov working her magic and gently pressing and caressing 2014 Oakridge Pinot Noir while being supervised by David Bicknell and Steve Wood

Many old snobs argue that the New World cannot produce minerality in wines. Well I would suggest them trying David Bicknell’s 2012 Chardonnays and Pinot Noirs from Yarra Valley (Oakridge), Dom Valentine’s 2012 Valere Riesling (Crisp Wines) from Long Gully Road vineyard or Gary Gills’ 2012 Beechworth Syrah (Jamsheed). It is when we tasted (drank would be more appropriate) wines like these that Ben started to realise that this wine tour disguised as a holiday is not that bad after all.

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The willingness to spit lessened significantly after a delicious lunch at Ten Minutes by Tractor. This classy joint in the heart of Mornington was a perfect watering hole and an oasis of calmness and exceptional food. Despite the initial stiffness of this place, the head sommelier and the other waitresses took a shine (possibly pity) to our unpretentious outfits and geeky enthusiasm over their extensive wine list. It was also time to make Ben happy and a couple of glasses of 10XTractor Chardonnay 2007 did the trick, knowing that we have more wineries to visit and more knowledge to absorb in Mornington.

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If you ever wanted to learn more about vine grafting and clonal selection but lack an affinity to books about viticulture, like me, then meeting Richard McIntyre of Moorooduc Estate is your best bet. His vineyards are a wealth of carefully selected Pinot Noir clones (some grafted onto original plantings) from the most widely planted MV6 (originally brought here by James Busby), Davis clones selected for their high yields to some of the best Dijon clones 777, 114 and 115. Indeed, Richard spends much of his time in the vineyards and also found a handy and so far successful way of dealing with Eutypa disease (which according to Dr Richard Smart could become as disastrous and widely spread as phylloxera once was).

Moorooduc wines are very unique. Chardonnays are lean and elegant as they are picked early and only about 50% undergoes malo. The Pinot Noirs have distinctive blood orange, anise and wild strawberry perfume. And if you appreciate whole bunch perfumed style, like Ben as it turned out, then try Richard’s 100% McIntyre vineyard 100% whole bunch Shiraz.

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Next stop, Margaret River in Western Australia. The most exciting about this region is the sense of change to come. The investment from Perth and the mining industry focussed on Wilyabrup and Wallcliffe has already reflected in rising wine quality and smartly equipped cellar doors.

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Despite being so far away from anywhere else, 3,5 hours drive from the most remote city in the world Perth, this place is full of potential. For Bordeaux blends in particular. The ideal soil combination of shallow red sandy and granite loam full of oxidised iron and gravels perfect for drainage and clay subsoil ensuring rainfall retention is not that dissimilar to Medoc. Sustainable water sources are ensured thanks to remaining vegetation deterring salinity and easy access to dams. The region does not suffer annual weather extremes that are so frequent and cause such significant damage elsewhere in the world. Apart from occasional hail and the risk of bushfires, Margaret River seems to be your perfect spot for viticulture.

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Much attention is also being given to clonal selection. Rob Mann of Cape Mentelle is bringing sexy back to Merlot by replanting their vineyards with more consistent high quality 181 clone whose origins can be traced to Pomerol. Rob also revealed to us his not-so-well-kept secret. He is making a very intriguing white wine from the first truly Australian grape variety – Cygne Blanc. This extremely rare grape, a seedling of Cabernet Sauvignon, was first discovered 25 years ago in Western Australia and kept under wraps until now. It is reminiscent of its grandparent Sauvignon Blanc with its herbal and floral perfume and has delicacy and waxy notes of Semillon.

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To finish off our trip in style, we were treated to a relaxed and private tasting and lunch with the very charismatic Vanya Cullen. As we sipped through her delicious Chardonnays and Cabernets we reflected on our Australian adventure.  It has left us super excited about all things Australian. Furthermore, thanks to everyone’s openness and friendly attitude I have gained so much invaluable information that I hope will help me during those 4 crucial days in June.

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Delicious Places To Drink & Dine

SYDNEY

Speakeasy Bistro in Bondi Beach (with only 5 tables this is the cosiest place, hidden away behind the main tourist promenade – simple yet flavoursome and fresh small dishes will get your taste buds tingling)

Café Sydney at Circular Quay (must book)

MELBOURNE

The Town Mouse Restaurant on Drummond Street (relaxed high class drinking and dining)

Harry&Frankie at Port Melbourne (shop/ wine bar with $15 flat corkage for any wines – heaven for wine geeks)

VICTORIA

Innocent Bystander at Healesville (your perfect chill-out place in the heart of Yarra – everything here is locally brewed, fermented, toasted, baked or churned)

Healesville Hotel & Restaurant (great place to stay and dine)

Ten Minutes by Tractor Restaurant in Mornington Peninsula (outstanding high quality, well-crafted dishes worth the pennies (not cheap) and a wine list you could spend hours admiring)

TASMANIA

Sidecar Bar at Hobart (a cosy natural wine bar in the city also offering simple yet tasty snacks)

Garagistes Restaurant at Hobart (ever-changing five course dining with matching Sake or a choice of organic, biodynamic or natural wines from round the world)

The Source Restaurant at Mona in Hobart (modern French cuisine + fantastic wine list) – the modern art museum is amazing

Smolt at Hobart (great food but service could have been more attentive)

 WESTERN AUSTRALIA

Settlers Tavern in the centre of Margaret River (Spectator awarded this place World’s Best Wine List and rightly so – you can buy wines here that you will not find anywhere else thanks to hard work by the owners – Karen and Rob)

Leeuwin Restaurant in Margaret River (must-visit for lunch)

Cullen Restaurant in Margaret River (great for biodynamic produce and tranquillity)

Gnarabar Pub in Margaret River (simple pub but with a great location and some huge portions)

Maleeya’s Thai Café in Mount Barker (this place may not sound much but we had the most authentic and tasty Thai food outside Thailand – tucked away in the middle of nowhere this place is a real treat – many of the ingredients are grown and farmed on the premises)

Raats Bar at Middleton Beach, Albany 

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Wines worth trying

TASMANIA

Moorilla Estate (not in the UK)

Derwent Estate (not in the UK)

Pooley Wines (not in the UK)

Stefano Lubiana Wines – Whirly Wine

Shaw & Smith Tolpuddle Vineyard – Liberty Wines

YARRA VALLEY

Gembrook Hill Vineyard (not in the UK)

Timo Mayer – Les Caves de Pyrene

Mac Forbes – Clark Foyster

Luke Lambert – Les Caves de Pyrene

Innocent Bystander – Liberty Wines

Oakridge – Matthew Clark

Jamsheed – Indigo Wines

Yabby Lake – Swig Wines

MORNINGTON PENINSULA

Moorooduc Estate – Coe Vintners

Ten Minutes by Tractor – Bancroft Wines

Ocean Eight – Hallowed Ground

Paringa Estate – Hallowed Ground

MARGARET RIVER

Moss Wood – Laytons

Leeuwin Estate – Domaine Direct

Cullen – Liberty Wines

Cape Mentelle – Moët Hennessy

Woodlands Wines (not in the UK)

MOUNT BARKER

Plantagenet – Liberty Wines

 
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Posted by on March 30, 2014 in Australia

 

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Things are looking up again for the Australian Wine Industry in its international markets – or are they?

AustraliaChina is a lucrative market for Australian premium wines.

Australia is not only the second largest bottled wine exporter to China with a 15% market share in value and 13% in volume but exports “are expected to rise by 50% over the next three years” (The Drinks Business, Oct 2013). This projection would make it surpass the current biggest export market, the US. Annual Chinese consumption growth (+59%) is way ahead of its production (+24%) and China is expected to become the sixth largest consumer of wine in the world by 2014. With a growing middle class interest in premium wines in particular and decreasing demand for EU imports, Dean Person the National Australian Bank’s head of industry analysis is predicting a huge potential for Australian winemakers.  Australia’s First Families of Wine visited China this year in a bid to highlight the quality and diversity of Australian wine and Mitchell Taylor, AFFW chairman proudly announced “Our Chinese launch was an overwhelming success”.

Opening high-end tasting rooms and cellars in China has proven to be a successful way to engage and penetrate this new market for wineries like Yabby Lake. This Mornington Peninsula winery has a presence in eight provinces with five cellar doors offering wine education experiences. Having a cellar door in the current market saturated with cheap and often counterfeit wines, offers confidence to the consumers. “There is a lot of scepticism about wine in China… that cellar door base gives the wine some credibility” says Duane Roy, winemaker of Glandore Estate.

Despite the love-hate relationship with the UK, Australia knows it can sell volume here.

The UK with its discount culture and consumption driven by brands is an opportunity and challenge for Australian big brand owners, if they are willing to listen and invest. Paul Schaafsma, UK and European head of Accolade Wine with its number one UK brand Hardys, believes that producers need to “closely engage with retailers and understand what their consumers want to drink” (Harpers, Oct 2013) to succeed. Accolade Wines has just signed a three-year deal with the UK’s largest retailer, Tesco. This may well bode well for Accolade, but it raises questions for that company’s Australian competitors that have yet to sign that kind of agreement.

Australians know how to throw a party.

Savour was one of the biggest marketing initiatives undertaken by the Australian Government and Tourism Australia. The event attracted 750 of the world’s leading wine trade professionals offering a potential economic benefit to Australia of AU$2.8 million according to The Advertiser. It demonstrated two key things. Firstly that Australian producers are aware of the current unprofitable situation. Exports have dropped visibly from AU$3 billion in 2007 to AU$1.8 billion in 2012 according to the Winemaker’s Federation of Australia. Secondly they are committed to innovation and willing to listen to the world. Paul Schaafsma praised the event’s “appropriate focus on Australia’s regional and premium wine offer” and highlighted its necessary balance. One of the positive outcomes was a three-year joint food and wine campaign between Tourism Australia and Wine Australia. The fact that both small and big producers got together to promote their wines shows an important commitment to the Australian future as a whole.

The weakening Australian Dollar is helping to stimulate sales again in the US.

The fact that “the single most important economic factor in the last 20 years affecting Australian wine has been the exchange rate” as suggested by wine economist Mike Veseth, shows how fragile both margins and retail prices can be. Prayers for exporters were answered early in 2013 when the Australian dollar started to depreciate. No one was more pleased than Casella Wines, whose brand Yellow Tail has 75% of its sales in the US.  They experienced their first ever-financial loss (AU$30 million) last year due to the exchange rate after 20 years of trading. According to The Drinks Business, Yellow Tail is now looking to regain its lost profit. Yalumba from the Barossa (Australia’s oldest family-run winery) has already achieved 300% sales growth in the US after the favorable exchange rate enabled the retail price of its Y Series to be lowered by $2 to $10.

However Australia is finding it tough to make a come back in the US.

Despite the promises of growth and restored quality reputation, there remain some doubts. Will Australia be able to grow its market share in the US? Will it be able to reclaim its profitability yet again? According to The Drinks Business, Treasury Wine Estate anticipates shipments to the US will fall by up to 2 million cases in its 2014 financial year. Further more, Paul Rayner, the chairman, suggested “the company may look to offload its US business after chief executive David Dearie was shown the door over a AU$160 million loss” (The Australian, Sep 2013). The business also revealed a 53% drop in profit, down to AU$42 million in 2013, causing the shares plunge from AU$6.50 to $4.45. Larry Gandler, a Credit Suisse analyst, echoed this saying that “The underlying problem in the US is the health of the brand because of underinvestment in marketing” (The Australian, Sep 2013). Mike Veseth also pointed out during his Savour speech that “US market is so fragmented with at least 52 wine markets and the consumers are so diverse with more than 40% of adult Americans not drinking any alcohol at all, it is a maze to find your consumers and the right distribution.”

The real test is whether Australia can learn from its mistakes.

Overproduction and overreliance to selling the volume through the UK and the US are still haunting the Australian Wine Industry.  Treasury Wines Estates was forced to pour AU$35 million worth of excess wine down the drain in the US (the equivalent of 500,000 cases) in July 2013. According to Bloomberg, a bumper grape crop this year is threatening to encourage further price cutting that could damage Australia’s quality image abroad (The Drink Business, Aug 2013). This calls for a review of Australian strategy.

Despite the fact that the industry has observed that the commercial grape oversupply causes distortion of the price and potentially the image, no effective solution has been find to tackle this issue. Muray Valley Winegrower chief executive Mark McKenzie lashed out after the outcomes of the Expert Review of the Wine Industry and said “It is ironic that the wineries blame fruit oversupply from independent growers for much of their woes, but they have not advocated any direct action to reduce excess production either through cool climate commercial wine grape production, or through the removal of excess wine production capacity” (Sunraysia Daily, Oct 2013). Whereas Mike Veseth spins more positive view and suggest that “Australia has come a long way toward alighting supply and demand in the markets and removing its excess capacity which various by regions yet there is still work to be done.”

Combination of all these thoughts justify the conclusion that yes things are, for many producers, looking up. Growing markets such as China are opening doors to Australian premium wine producers. UK thirst for promoted big brands will guarantee sales, even if margins will remain poor, for big brand owners. Savour has demonstrated that Australia has a good story to tell and is engaging with its customers. Yes exchange rates cannot be controlled, are hard to predict and have crucial impact on the margins but the current weakening of Australian dollar is stimulating sales. However, changes and strategy reviews are also due in order to tackle the wine surplus and falling prices. With the global consumption of wine exceeding global production of wine for the last 6 years, the new world is full of rising opportunities.

 
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Posted by on October 21, 2013 in Australia

 

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Tahbilk vertical tasting and lunch at 28-50 Maddox Street

Tahbilk Maddox Street is the newest addition to the 28-50 family with other restaurants at Marylebone and Fetter Lane  A brain-child of visionary Xavier Rousset and top chef Agnar Sverrisson who have created a relaxing place to enjoy fine yet affordable food and wine. The main room has a bright and airy interior with a chic wine bar displaying tempting seafood and an aficiado cigar humidor. The side-wall made of classic French wooden boxes is a neat way of storing bottles of wine while giving you the impression that this place means business. There is also a cosy underground space with polished wooden tables and a view of the kitchen, creating a perfect hide-away for those long boozy lunches.

Talking about lunch – ours was fair, but nowhere near as good as the last couple of times I dined at 28-50 at Fetter Lane. The starter (ranging £7 – £9) of baby beetroots, goat’s cheese curd and salad leaves was simple but delicious. Our main (around £15) chicken spatchcock was average, lacking taste and a bit dry unfortunately.

While this was bit of a let down on the day, a rare opportunity to try older vintages of Tahbilk, one of the oldest and most beautiful Australian wineries, more than made up for it. There are two things that you should know about this unique producer.

Their famous 100-acre (40 ha) Marsanne vineyard is the largest single holding of the variety in the world with 16 acres (6 ha) of vines dating back to 1927. The current release of 2011 (Armit £78 per 6) is delicate, pure and floral with lemony vibrancy and green apple freshness. By the time you start sipping the 1995, the wine is unrecognisable. Dark in colour reminiscent of an aged Sauternes, this is an aromatic infusion of orange peel, honey and dried fruits with a spicy, resiny finish and still with mouth-watering acidity. The 2004 vintage was a great balance between the two wines, perfect drinking now and my personal favourite.

The second fact you should know is that Tahbilk’s 1860 Vine Shiraz is one of the great 25 vineyards in the world and amongst the oldest Shiraz vines in the world with less than one hectare left. Many of these 153 years old vines did not survive the difficult 2006 frost and it is predicted that the remaining vines have only about 20 years left in them. So now is your chance to try these still affordable and available wines before they become a mere memory. Only 80 dozen were produced of the current release 2006 vintage but luckily Armit still has some in stock (£600 per 6). At the moment the 2006 vintage tastes like a young Hermitage but give it another 8-10 years (if you can) and nervy intensity with bright black pepper and sweet oaky notes will mellow to a rich, deep and complex delight. The 1999s were my favourite showing that these wines definitely shine with moderate ageing.

Let’s hope that Xavier will add some of these treasures to the wine list so that everyone gets the chance to try them. They should be a great addition to what is already a pretty interesting offer with many rarely seen wines. The fact that the majority are served by the glass, in a carafe or a bottle, is a great way to give people confidence to try and discover something new.

 
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Posted by on October 12, 2013 in Australia

 

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