Oz Makes Its Move
Beringer Wine Estates sale to the Australian beer and wine giant Foster’s Brewing Group is big news, indeed, but it hardly counts as a surprise. It’s just the latest chapter of a work in progress that might be titled “Oz Attacks.”
The $1.5-billion deal will create the world’s largest premium wine producing company (wine sales for the two companies last year were $886 million).
Foster’s--best known in this country as a brewery--will add such wineries as Beringer, Stags’ Leap, Chateau St. Jean, Meridian and Chateau Souverain to its holdings, which already include Wolf Blas, Black Opal and Greg Norman Estates.
To those who have been watching the global wine industry evolve over the last few decades, this is simply the latest step in the Aussies’ march toward world wine conquest.
In California, recent installments have included the 1996 debut of Seven Peaks, a Central Coast joint venture between Edna Valley’s Paragon Vineyards and Southcorp, Australia’s largest wine producer. Earlier this year, Mildara Blass acquired Windsor Vineyards, the huge Sonoma County direct-to-consumer wine business.
There are many subplots involving winemakers and viticultural consultants, from the long and highly successful tenure of Aussies Daryl Groom and Mick Schroeter at Geyser Peak to last month’s replacement of Domaine Chandon winemaker Dawnine Dyer by Australian Wayne Donaldson.
Vinous Vision
It’s part of the Australian wine industry’s campaign for global domination. In fact, Oz has been quite open about its intentions. As the Australian Wine Foundation first revealed in its 1995 strategy statement “Vision 2025,” the people who gave a new generation of wine consumers soft red wine, pedal-to-the-oak Chardonnay and palate-targeted residual sugar mean to conquer the wine world completely by the end of the first quarter of the 21st century.
The document states, in part, “The vision is that by the year 2025, the Australian wine industry will achieve $4.5 billion in annual sales by being the world’s most influential and profitable supplier of branded wines, pioneering wine as a universal first choice lifestyle beverage.”
In other words, if you’re a serious competitor in the global wine economy and you’re not Australian, you will be in second place, at best. And as far as the Australian wine industry is concerned, you’ll stay there.
For a country with a total population barely exceeding that of greater Los Angeles, Australia exerts remarkable influence in the international wine industry.
As the U.S. still grapples with the notion of wine as a part of everyday living, Australia has been a wine-drinking nation from the beginning of its wine industry in the 1830s. Although it produces less than half as much wine as the United States (The U.S. ranks rank fourth and Australia eighth among wine-producing nations), it consumes nearly three times as much wine per capita as the U.S.
And Australia is increasingly successful in exporting the product behind the product: oenological and viticultural expertise.
‘Flying Winemakers’
The latest spectacle of the corporate food chain in action is the least of it. For the last decade, a growing number of Australian winemakers, finished with their own harvest duties by March, have been zooming to the Northern Hemisphere to make wine in Europe and the U.S.
There is nothing new about winemakers, especially young ones, crossing the Equator to work two harvests a year, but Australia’s “flying winemakers” have made it a serious business. Their streamlined New World winemaking systems have helped give new life to languishing wine industries in Eastern Europe, Italy, Spain, Portugal and even southern France.
With a bag of technical tricks that includes such simple yet deft manipulations as finishing red wine fermentations in barrel and tweaking ripe white wines with ascorbic acid, Australian oenologists have accomplished in the value-for-money department much what the French did for controlled appellations and quality-at-any-cost in the last two centuries.
Several factors contribute to Australia’s ability to export expertise. One is simple geography: The Southern Hemisphere’s harvest is in February and March, and the northern hemisphere picks in September and October, when Australian winemakers are free to travel.
Too Much Talent
Another factor is a glut of winemaking talent in Australia. Those two factors add up to a very experienced, highly mobile wine production force that’s ready to roll on a moment’s notice.
“Our winemaking schools are turning out a lot of qualified winemakers, and it would be fair to say that there are more qualified winemakers than the industry is absorbing,” says Penfolds head winemaker John Duval.
“I think if I were a single, unattached winemaker with no commitments, the prospect of doing a vintage in the Northern Hemisphere and then one in the Southern Hemisphere each year would be very attractive indeed.”
Duval’s comment alludes to what may be the most important factor of all: a highly integrated and well-funded education and research infrastructure. Australia’s exportable expertise is the product of a cooperative system that is specifically focused on sharpening Australia’s competitive edge.
The influential California winemaker Zelma Long has been tracking Australia’s development for years and talks about it with mixed feelings: open admiration for what the Aussies have done, tinged with chagrin that the U.S. hasn’t kept up.
“Our industry is seriously underfunded in comparison to our overseas competitors, particularly Australia,” says Long. “And it’s not all of a sudden. They’ve organized themselves very well over the past 10 years to get money and to fund the kind of basic and applied research that moves their industry along.”
Australian funding is generated by levies on wine volume and grape tonnage paid by all Australian producers, and the Commonwealth matches that money dollar for dollar.
Wine U.
Much of the industry’s energy is generated on campus. The education system feeding the Australian wine industry, long considered one of the best in the world, has recently been upgraded and more closely integrated with industry researchers.
Roseworthy Agricultural College, Australia’s century-old equivalent of the UC Davis and France’s Montpellier, was absorbed by the University of Adelaide in 1991, at which time Roseworthy’s old three-year degree (established in the 1930s) was expanded to a four-year bachelor of agricultural science with a major in either viticulture or oenology.
Unlike the strongly science-oriented UC Davis, Roseworthy has always emphasized hands-on learning. Yet science is not neglected. Says Andrew Markides, a senior oenology lecturer at Adelaide, balancing the two is the key to well-rounded graduates.
“Research hasn’t always filtered down to the industry in a way that can be understood and used,” he says. “Now the graduates are more research-alert, thirsty for any information that will help improve quality of wine, make them more cost-effective and so forth.”
To that end the university recently put the finishing touches on a new $3.5-million teaching winery to replace the old Roseworthy winery. “Once they have the principles, it’s essential that they learn how to use them,” notes Markides. “Learning the principles doesn’t necessarily equip you to understand the realities out there.”
Marketing First
One of the most persistent of those realities is that tastes change, often suddenly and without apparent logic. Change often defeats tradition-bound producers, but Australian winemakers feast on it. Their collective ability to stay ahead of the rapidly evolving global market, in both wine styles and demand for technical services, is a big factor in their competitive edge.
Driving that ability is a distinct difference between the Australian attitude toward wine production and the Old World model. The European idea is to make a fine product and then find buyers. The Australians feel free to start with the market and work back to production, first figuring out what people want and then learning how to provide it.
“While they’ve been influenced a little by what goes on overseas, they’re not hamstrung by tradition,” observes Geyser Peak’s Groom. “They’re willing to do almost anything to make better-quality wines.”
Until fairly recently, Australia’s significance in the wine world was simply as the western and southernmost extension of European wine culture. Just a decade ago it began to focus and amplify the energy of that culture and send it back east, revitalized.
The scope of the Beringer-Foster’s merger is certainly extraordinary. But we can expect the Australian influence to become ever more widespread as we move toward 2025--or toward the end of this spectacular economy, whichever comes first.
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Smith is writer-at-large for Wine & Spirits Magazine.
