Australia - how are they doing?

publication date: Feb 15, 2003

If Australian wine producers had egos (which I rather doubt) they must surely find it much more comfortable to visit the United States, where they are generally regarded as heroes, than Britain.

The British fell so resoundingly in love with Australian wine in the early 1990s that there is now the inevitable backlash from them, accusing Australians of making boring wines to a formula for faceless corporations. The problem of course is that the British wine buyer is, typically, a penny-pincher in a supermarket. It is not surprising therefore that most of the Australian wines seen on this side of Atlantic are heavily discounted big company offerings.

American wine consumers may not represent such a high proportion of the population but they are open-fisted - indeed, unlike their British counterparts who view wines over £10 a bottle with deep suspicion, they tend to believe that there is a direct correlation between price and quality (another proposition which I personally doubt).

The result is that the average price paid by Americans for a litre of Australian wine last year was US $4.65 at the cellar door, almost half as much again as the British paid. And many of Australia's most interesting, generally smaller, wine producers are focusing all their export attention on the US market rather than the budget-conscious British one (which is still much larger than the US, but the US is catching up fast).

Fish in wine, executives in a pickle, vines hardly in the ground but Americans in clover. Here is a round-up of some of the more interesting recent developments in Australian wine.

• Britain's wine imports from Australia may overtake those from France by volume as well as value soon, but the US will surely overtake the UK as Australia's financially most important export market this year too.

  The figures for how much Australian wine was exported to the US last December were so high that Australian officials could not believe them and deliberately held up their publication. They were true. Even at this dog - traditionally quiet - end of the year, the US market hoovered up wines from Down Under with such enthusiasm that they pushed the total value of 2002's Australian wine exports to the US to US $438 million at the year end, 82 per cent of the total value of the very much larger quantity of wine (216 million litres as opposed to 120 million litres) imported by the much more tight-fisted British.

• Last year, according to AC Neilsen's data, a full 64 per cent of all Australian wine sold in British offlicences and supermarkets was on special offer.

  There is much gnashing of teeth about the possible damage to Australian wine's image done by the continuous cycle of 'promotions' offered by Australia's big four wine companies to the powerful British retailers. The comparable figure for France was 40 per cent.

• The big four Australian wine companies are not (Australian, that is).

  Now that Constellation is swallowing BRL Hardy, and Foster's has amalgamated Beringer and Blass, a trend is firmly in place to create American-Australian wine alliances to tower over Europe's fatally fragmented wine supply base. Orlando Wyndham, whose Jacob's Creek is a world-beating brand, is actually owned by the French Pernod Ricard. The most Australian big company, Southcorp, is in turmoil, CEO Keith Lambert criticised for heavy discounting having walked the plank the day before Australia's vast annual wine trade presentation in London last week.

• Australian wine is cheap and getting cheaper in the UK.

  The average price of Australian wine in British offlicences was two per cent lower in 2002 than the year below according to AC Neilsen, and only about two-thirds as much per litre as the price paid by Americans according to export statistics.

• The range available, in terms of grape varieties, styles and new regions, is wildly more interesting than it was even two years ago, but quality has still to catch up (see below).

  Wrattonbully, Pemberton, Orange, Alpine Valleys and Henty are all regions relatively new to export markets - some of them new to Australians themselves. As for grape varieties, the hegemony of Shiraz, Cabernet and Chardonnay seems to be well and truly over, with Viognier in particular enjoying the full spotlight of fashion.

• Co-fermentation is the Australian winemaker's new toy.

  Hard on the heels of barrel fermentation for red wines and micro-oxygenation of all sorts of wines (both these techniques designed to make wines look good in their youth) comes co-fermentation of two or more grape varieties. The theory goes that certain white grapes, such as Viognier in particular, if fermented in the same tank as Syrah/Shiraz, can help to extract colour and certain flavour elements. The recipe of Syrah with a little Viognier is a historic practice in Côte Rôtie south of Lyon but is suddenly far more widespread in Australia. Pioneered there some years ago by Yarra Yering near Melbourne, the technique also has the advantage of adding Viognier perfume to the sturdy red Shiraz.

• Nearly two-thirds of all Australian vines are just five years old on average.

  Australia has been such a successful exporter, and has been planting vineyards at such a rate - encouraged by tax breaks and peaking in the 1998/9 growing season - that the majority of its wine is made from young vines, notoriously prone to make rather vapid wine. 'Vine age is a quality issue, whatever anyone says,' admitted chairman of the Adelaide Wine Show Michael Hill Smith of Shaw & Smith, a notable producer in the Adelaide Hills. 'We saw lots of wines that lacked concentration and length in the Show this year.' His neighbour Tim Knappstein may argue that young vines can make decent wine provided yields are deliberately kept in check but this may be unlikely (see below).

• Drought will reduce the next two grape harvests.

  South-east Australia where most vines are grown has been perilously short of rain so that the 2003 and 2004 crops are likely to be reduced by 10 to 30 per cent. This should lessen the problem of Australia's mounting grape surplus.

• Most recent plantings were of red grapes so a Shiraz lake is to be expected, although fortunately the 2002 vintage, in the pipeline, was unusually good quality. Australian syndicates investing in vineyards got carried away by the red wine phenomenon and rather overlooked the world's thirst for Australian Chardonnay.

• Verdelho, Riesling and even Semillon are fighting back.

  For years white wine had to be Chardonnay to command a high price but today there is no shortage of sought-after examples of other varieties. Rhône varieties Viognier, Marsanne and Roussanne are increasingly fashionable but many of the vines are pretty young. These three varieties on the other hand have a long history in Australia and were planted in quantity long before Chardonnay was ever thought of.

• Australians pioneer wine research.

  A good 20 per cent of all technical papers published on matters oenological and viticultural - and a higher proportion of the most useful ones - are written by Australians, even though they produce just 3.3 per cent of the world's wine (while being the world's fourth biggest wine exporter).

• This wine may contain traces of fish, or added tannin.

  New Australian food and drink labelling regulations came into force in December 2002 and require any traces of a potential allergen, whether an ingredient, additive or processing agent, to be spelt out on the label. This has perhaps surprising consequences for the wine industry. If the common fining agents isinglass (from sturgeons' swim bladders), casein/milk and egg whites are used, then the labels have to carry the warning that the wine may contain traces of fish, milk and egg products respectively. Sulphites, a hazard for asthmatics, are used by the vast majority of the world's winemakers and also have to be acknowledged on the label (as elsewhere). The Australian Wine and Brandy Corporation also warns wine producers that the tannins deliberately added by some of them to give red wines backbone may be derived from chestnuts and, because of nut allergies, would have to be acknowledged on the label. 'Note', adds the AWBC website, 'that some allergen substances may potentially come from obscure sources. For example, some caramels are produced from wheat [gluten].'

As Michael Hill Smith concluded a speech on Australian wine's quality and diversity in London last week, 'we're on the cusp of the next leap forward in terms of quality and variety'.

See my tasting notes on purple pages for some favourite old-vine Australians.