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Update Australia
by James Halliday
 (October 30, 2002)

From time to time I shall be inviting my wine writing colleagues to contribute guest editorials to this site. The first is from Australia's pre-eminent wine authority, James Halliday.
Cheers, Tony

The Australian wine industry continues to grow at breakneck speed, but the question is how long will it be before the pace slackens. Looking at the industry's growth since 1996, it is immediately apparent that exports are the driving force.

Here the irony remains: the official Federal Government policy is to back winners, not losers. Yet it has provided hundreds of millions of dollars to support the restructuring of failing dairy and sugar industries while singling out the wine industry for a usurious tax regime which inevitably restricts domestic sales growth.

This is of particular concern to the smaller wineries. In 1990 there were around 530 of these; now there are 1440, with a birth rate of 200 per year. Yet over this 12-year period, domestic consumption only grew from 300 million litres to 384 million litres. It hardly needs be said this is an ominous scenario for the small and new producers which have to overcome major logistical and financial barriers if they are to become successful exporters.

Wine is the only Australian product to have its very own sales tax: the so-called WET, or Wine Equalisation Tax, of 26 per cent is levied in addition to the ten per cent GST applied to all other (non exempt) products. The resultant impost is twice the average tax imposed by the major European producers and by California.

It is all very well for the Federal Government to point out how well the wine industry is performing. The real question is how much better the performance would be if wine were not so savagely taxed, and how much better it would be able to cope with a strengthening Australian dollar, and with a recently announced multi-billion Euro assistance package to the nine wine-producing members of the EU "to meet the challenge of New World exporters."

Ominously, France has at last abandoned the line "We don't like those fruity Australian wines, therefore no-one else will" as it has seen Australia push it into second place in the United Kingdom, and threaten to do so in the United States.

The much-parroted need to over-deliver in terms of expectation on both price and quality is, if anything, more important than ever. The English press, once nigh-on unanimous in its praise of Australian wine, is becoming increasingly critical. Whether its criticism is well-founded is beside the point; the best response is to make the Australian wine proposition more appealing than ever.

This means a better price/quality ratio, but also providing wine styles and varieties which satisfy the up-to-the-moment demands of a constantly changing market both here and abroad.

It is here that Australia has the upper hand. In 1986, 85 per cent of the vineyards were planted to non-premium varieties, 15 per cent to premium. Today, 89 per cent of vineyards are premium, 11 per cent non-premium. Then, 28 per cent of the plantings were red; today the figure is 58 per cent.

It is a rate of change (and improvement) which European producers such as France are incapable of matching – not because of lack of funding, but due to deeply entrenched conservative cultural attitudes born of long-term reliance on subsidies.

These changes lie behind the spectacular increases in the amounts of chardonnay, shiraz, merlot and cabernet sauvignon being grown. These are the four most important varieties for both the local and international markets; it is these which pay the bills.

But there is also a fashion industry component provided by the new and trendy varieties all but unknown in 1996. Viognier wasn't separately recorded in the figures for that year, but we do know it increased by 91 per cent between 2001 and 2002, with 1302 tonnes crushed in 2002, or around 85,000 dozen bottles.

This Northern Rhône variety produces a rich, almost oily, full-bodied wine with a fruit pastille flavour; it can be barrel-fermented or stainless-steel-fermented, without much turning on the choice. It is also a la mode to add five to ten per cent to shiraz, as is done in the Northern Rhône.

Pinot gris is the other major newcomer, although not so major as to rate a mention in the 2002 figures. Widespread through northern Italy (where it is called pinot grigio) and Alsace (confusingly called Tokay d'Alsace) it needs a genuinely cool climate; even then its tendency to neutrality led one prominent New Zealand winemaker to describe it as "like painting a picture with white paint".

The foremost new red variety (not recorded in 1996) is undoubtedly petit verdot, outshining all others with a 134 per cent increase between 2001 and 2002, producing 14,354 tonnes. The fourth leg of red Bordeaux wines (where cabernet sauvignon, merlot and cabernet franc are far more important), it was regarded as a source of colour and tannin in the blend.

Its late-ripening performance made it problematic in Bordeaux, but there are no such worries in Australia, and we shall see sharply increasing amounts both in blends and as a single varietal wine.

Sangiovese, the red grape of Tuscany, has also made the list in 2002, with 4597 tonnes, up 40 per cent on 2001. That's almost 300,000 cases, and more if blended with cabernet sauvignon, merlot or other varieties (as is the practice in Italy).

There are dozens of other varieties with French, Italian, Spanish (watch for tempranillo), Portuguese or Russian homelands which are being commercially grown or trialled here. For the consumer, the party's only just begun. For those small producers recently lured into what seems a glamorous industry, it may well be over.




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