Reflections on Australian Wine

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A1

The traditional story with Australian wine’s collapse in North America is the disastrous feedback loop of consumer expectations and lack of winemaking integrity. The Australian wines that gobbled huge market share were sugary at the low end and monstrosities of extraction and over-ripeness at the upper. When consumer palates shifted, their expectations of Australian wine remained the same and so consumers dropped the wines en masse.

That is the traditional story anyhow. Of course, those in the know are aware that Australia is far more than this now out of date Brand Australia. In increasing numbers, producers are focusing on balance, site expression and the unique fruit characteristics that only Australia can deliver. More and more producers are experimenting with new techniques such as low or no sulphur wines, maceration, differing fermentation techniques and vessels, etc. There are also a few classic producers that have remained stalwart even during the hyped export years between 1991 and 2007, which saw a tripling of export volume and an increase in export value from $200 million to almost $3 billion.

Australia’s Appreciating Dollar

Yet almost none of these producers make it to North America. Why is this? Simply put – currency much more so than a tarnished “Brand Australia”. Due to the meteoric rise of the Australian Dollar, Australian wines have difficulty competing with US and European wines at the same price point. From 2007 to 2011, the AUD appreciated against the US dollar between 29-35%, not dissimilar to the Canadian dollar. This was the highest appreciation of all major wine exporting nations by a significant margin (e.g. according to the University of Adelaide’s Wine Economics Research Centre Chile was only 16% and Europe essentially 0%). As a result, exports dropped from $2.9 billion in 2007 to $2 billion in 2011. The total volume of exports to the US declined by 52% in the same period – a massive amount. Because of Canada’s strong dollar, Australian wine still does well here, declining only 8%.

However, competing in the premium market in both Canada and the US has encountered significant problems due to the inability to compete competitively with European wine pricing. For example, in Canada European wines have become significantly cheaper since 2007 due to our dollar’s appreciation against the Euro (though depreciating somewhat in 2014). At the same time, prices for Australian wine remained the same. All of a sudden that $15 easy to understand, sugary Australian bottle has to compete with much better quality bottles from France, Italy and Spain for the same price. Add to this improved wine quality at the low end from Europe and Australia has had a lot to contend with.

Domestic Demand in Australia

Some argue that domestic demand in Australia also plays a role. This is only true in part. Overall domestic demand has only increased 3% since 2007, which is negligible and cannot compensate for the collapse of the export market. However, when you narrow down to the ‘above $15’ category, then domestic demand has played a huge role, increasing by 64% in volume and 42% in value between 2007 and 2011.

So, when we’re talking about the availability of premium Australian wines – the only Australian wines that any reader of this blog will be interested in – then domestic demand combined with the high Australian dollar explains these wines’ scarcity in Canada and the US.

A Few Australian Wines

So it was in this economic context that I shared dinner with a few industry friends and several bottles of Australian wine. We ideally wanted to explore as many of the more interesting wines and producers as possible, but there was some difficulty sourcing many of the new exciting producers.

That said, the dinner offered a nice overview of pre-export boom Australia, mid-export boom Australia and post-export boom Australia. The consensus was that the best wines came pre and post boom and that Australia’s best are world class and are well worthy of sale and consumption. Once the exchange rate drops, these wines will become more viable in North America.

A2

Tolpuddle Vineyard 2012 Chardonnay: Tasmania. Tolpuddle is a project by Martin Shaw and Michael Hill Smith MW, started in 2011 from a piece of land in Tasmania’s Coal River Valley that was planted in 1988 with Pinot Noir and Chardonnay. Being in Tasmania, the vineyard is amongst the cooler in Australia and certainly has a unique terroir, with low rainfall and cool temperatures. The goal at this winery is to make the vineyard one of Australia’s blue chip. This release shows quality fruit, but a too heavy hand with lees stirring, not dissimilar to some of the lesser Kumeu River Chardonnays. Otherwise you get a minerally, citrus driven Chardonnay with a clean palate and biting acidity. Very Good+. $90 at Kits Wine.

A3

Domaine de la Solitude Reserve Secrete Chateauneuf du Pape 2001: Chateauneuf, France. OK, obviously not Australian, but there is a connection. This wine was made during the hayday of Australia’s export boom influence and the producers at Solitude wanted to make a ‘modern’ Chateauneuf influenced by this successful Australian style. The opinion was unanimous amongst the group that this was virtually undrinkable wine. At over 16% ABV, it’s a soupy, alcoholic mess. The nose is port-like, with figs and kirsch. It is rich and very sweet on the palate, with lots of rich chocolate cherry liquor. For my palate this is unpleasant. A blend of Grenache (around 65%) and Syrah. Fair. ~$150-$200 in BC for the current release.

A4

Wynns Coonawarra Estate John Riddoch Cabernet Sauvignon 1990: Coonawara. The only wine of the tasting actually made pre-export Boom, the John Riddoch has always had an excellent reputation. Wynns, however, was one of the dominant export producers and much of their market for their low-end commercial wines hasn’t done too well since 2007. Further, reports are that the Riddoch has changed considerably since these early pre-boom releases. The nose offers classic Coonawara menthol/mint/eucalyptus, chocolate and some cassis. The wine has a saline component, and much more eucalyptus and chocolate on the palate. I usually don’t love the Coonawara Cabernet signature mint flavours, but here you get a wine reminiscent of very good old Bordeaux. The wine is not at all tired, and provides a complete drinking experience. Excellent. ~$100 in BC at various stores for the new release.

A5

Giant Steps Sexton Vineyard Pinot Noir 2010: Yarra Valley. Giant Steps is run by the founder and former owner of Devil’s Lair winery in the Margaret River, Phil Sexton. It is the estate vineyard of Innocent Bystander (which makes more commercial wines) and is the beneficiary of a seriously insane state-of-the-art winery, described by Jamie Goode as “the largest thermomass building in Australia’, consisting of a concrete shell suspended in air with another concrete shell around it”. This allows perfect temperature control. The winery is also designed to avoid all pumping, being completely gravity fed. The Sexton vineyard is located in the Warramate Ranges in Coldstream and was planted in 1997 in clay loam soils. Vineyard management is all by hand, and the winery is converting to biodynamics. The wine offers cherry and strawberry fruit, but also some cola and cough syrup notes on the nose. For me, while the palate is very balanced and soft, the over-ripe flavours bug me. Great Pinot Noir should not have any cola or cough syrup notes. Other than that, the wine is well built with good freshness. Hopefully Giant Steps dial in their wine a bit more to control the ripeness and then it could be really great. Very Good+.

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Kreglinger Wine Estates Pipers Brook Vineyard Pinot Noir 2010: Tasmania. Wineries from this tiny island are becoming all the rage in post-boom Australia. The island’s unique terroir and cool climate sit well with consumers looking for more finesse and food friendliness in their wines. Unlike the Tolpuddle, Kreglinger’s Pipers Brook vineyard is situated in the northern part of Tasmania, with the vineyard lying quite close to the coast. The winery uses Pipers Brook for the purpose of finding some form of Tasmanian terroir. The vineyard has kraznozem soils, which are essentially red volcanic soils. Strangely, this wine is actually a blend of Pipers Brook and a vineyard in the Tamar Valley, which I find astonishing given the name on the bottle and the winery’s professed focus on terroir: honestly quite deceptive. The soils from the Tamar Valley are black clay. The wine is harshly acidic. The nose, however, is beautiful and very evocative with cherry nibs and clean red fruits. There is no cola here. Because of the over-the-top acidity, the wine is unfortunately overall unbalanced. There is obviously something interesting to say in northern Tasmania with Pinot Noir given the fantastic aromatics, but the winery needs to work on a better balanced wine. Very Good. $?

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Bindi Quartz Chardonnay 2006: Victoria, Macedon Ranges. Bindi is one of those classic wineries that have been doing their thing since the 1980’s, not changing too much. The focus has always been on Pinot Noir and Chardonnay (with the original vineyards planted in 1988 on quartz soils). In my opinion this is the best Chardonnay in Australia. The group debated the relative merits of this Chardonnay to top Burgundy, with most comparing it in quality to a top lieu-dit but below a premier cru from an excellent producer as the wine did not quite have the potency and weight of the top white Burgundies. For myself, this comparison is not all that important because the wine obviously has a lot to say – florals, real lemon-lime Chardonnay fruit, superb oak treatment. The cellar work has the touch of a master. This could also clearly age a while longer as it showed no signs of fatigue. Excellent. ~$100 if you can find it (almost none is exported, with overwhelming domestic demand for this cult producer).

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Elderton Command Shiraz 1999: Barossa. Elderton is one of those producers that got quite a bit of attention from the western press during the export boom years. They generally make good wines. The Command Shiraz is from a single vineyard comprised of alluvial soils over limestone bedrock on the banks of the North Para river. These are very old vines, planted in 1894. It is regularly awarded high points. This is classic Barossa Shiraz, made in a style that epitomizes the ‘elite’ wines of the export boom era. It is a good version of that style, and not a caricature wine. However, this wine is still very very rich and sweet. The nose is quite high toned with cherry and black berries. Cherry and plum fill the palate of this long, sweet wine that wears its age very well. I imagine it could go for another 10 years. That said, it didn’t quite have the excitement you’d expect for 100 year old vines. Barossa can do better. Very Good+, though I must admit I would not purchase this wine. ~$100 for the new vintage.

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Lucy Margaux Vineyards Little Creek Vineyard Estate Pinot Noir 2012: Adelaide Hills. Lucy Margaux epitomizes the new movement in Australia that embraces naturalist techniques. Owner and winemaker Anton von Klopper holds no bones about wanting to make ‘natural’ wine from biodynamically farmed fruit and buys into the artist vs. chemist dichotomy. The winery is part of the “Natural Selection Theory” group, a band of four natural-wine minded producers. He purchased the land that became the winery with his wife in 2002 in the Basket Range, which is part of the Adelaide Hills appellation. It was a former cherry orchard. This wine, however, is made from a non-estate vineyard with which Lucy Margaux has a fruit contract. The Little Creek vineyard is a small 10 acre vineyard sited within view of the ocean. The wine bears the hallmarks of well made ‘naturalist’ wine: impressive aromatics with an almost gamay-like nose of peppy red berry fruits, soft texture and extreme drinkability. It is not an immensely complex wine, but is extremely enjoyable, nay, chuggable wine. It will go well with or without food. Very Good+. $45 from the winery in Australia. Not available in BC (or North America as far as I know).

Posted in: Features, Tastings

Comments

  1. Edward
    August 23, 2014

    Shea, As always a comprehensive and balanced analysis. It’s interesting observing what is happening at a corporate level in Australian wine. Treasury wines, which was formerly Fosters and before that Southcorp is in the process of being bought out. At least there is an offer on the table and negotiations are ongoing (with KKR the corporate raiders). It will be the end of another failed experiment. Taking well known brands with a historical (and small producer beginning) reason for their reputation (Penfolds, Wynns etc) and then trying to leverage this by expanding the range offered and lowering the quality at the bottom end. It’s the bottom end that makes it to market and creates the lasting market impression and its why Fosters had a lake of unsold wine in the US.

    It’s no surprise that most of the wines you reviewed above are the product of small producers who are focused on a small area. Lucy Margeaux, Bindi, Giant Steps. It’s the antidote to all of the Treasury nonsense. Single owners, small plots, and small production. This is what I as an Aussie wine drinker am interested in. It’s also why very little gets out. It’s the same everywhere isn’t it. Even in France the most interesting bottles are made by a single person with a small plot. That the bottles make it Australia is partly reputation a pool of interested drinkers and also an observant wine importer. The converse must be true of Canada. There are interested drinkers such as yourself and hopefully importers who have a finger on the pulse.

    The idea that there can be a Brand Australia is just so flawed. Yes we make a lot of wine, but much of it is in the middle – fruit driven, sweet and inoffensive. These features were never going to make a lasting impact.

  2. Shea
    August 23, 2014

    Edward,

    Thanks for the comprehensive response. It’s impossible to write about Canada as a whole when it comes to high end small producer wines as each province’s regulatory system and monopoly (or lack thereof) operates totally differently. Quebec skews French obviously and a lot of top small producers make it into that market. Ontario retail shops have very little of interest as they are completely monopoly and the buyers have little inspiration. The most interesting small producers are relegated to what is called ‘consignment’, which is only available to restaurants, who obviously love the practice. Consumers get screwed though. BC and Alberta are the best markets for the widest range of small producers because they have the most innovative importers and the best consumer outlets given the private or semi-private retail space. It is only in these two markets, I think, that small producer Australian wine has much of a chance.

    The only way we get access to the coolest Australian stuff here now is through dedicated searching and the Australian ex-pat community, some of whom are in the wine industry and bring back bottles from their visits home. This was the source of the Lucy Margaux Pinot for our tasting. Hopefully this will change with time.

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