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Guy Woodward: Aussie identity crisis

But it’s all in keeping with Penfolds’ “strategic shift from fine wine brand to global luxury icon” (again, its words). Cue extravagantly priced Wines of the World where Bordeaux Cabernet is shipped across the globe for blending with Aussie Shiraz in an erosion of current watchwords: terroir, sustainability and carbon neutrality.

Even the normally circumspect Jancis Robinson MW concluded the brand was “after collectors much less cynical than me”. Many of those were in China, a market that, in the late 2010s, accounted for 40% of Penfolds sales. Until, that is, the Chinese imposed tariffs of 200% on Australian wines in response to Canberra blaming Beijing for Covid. No matter – after backing the wrong horse once, Penfolds owner Treasury Wine Estates went all in again. In 2021, with the economy in freefall, it spent US$315m (£233m) on Napa’s Frank Family Vineyards followed, two years later, by US$900m (£665m) (yes, nearly a billion dollars) on the 15-year-old Paso Robles start-up Daou.

TWE’s latest results show a loss of AUS$649m (£344m), after downgrading the value of its US business by some US$450m (£238m). Revenue plummeted 40% – “the impact of adverse category trends in the US and China” – while share value has sunk from AUS$18.50 (£9.80) in 2018 to AUS$3.70 (£1.96) today (though this bounced slightly after a major restructure was announced last month).

Penfolds is something of a microcosm of how Australian wine as a whole has lost its way – and its identity. It was all so different 30 years ago, when The Winemakers Federation of Australia launched its infamous Strategy 2025. Back in 1996, Australia was riding the crest of a wave with a bold vision to become “the world’s most influential and profitable supplier of branded wines” and hit annual sales of AUS$4.5bn (£2.4bn).

With demand outstripping supply, the document called for 40,000ha of new plantings over the next 30 years. Tax breaks for new investors saw the target met within five. Unfortunately – Wine GB take note – it was too much too soon. Or, as viticulturist Di Davidson said: “Too many people coming into the industry with not enough experience.”

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Can Australia bounce back?

The latest Wine Australia report shows a drop of 8% in exports year-on-year, to AUS$2.34bn (£1.24bn), and a 262m-litre surplus. Robert Hill-Smith, chairman of Australia’s oldest winery, Yalumba, says. “We’re paying the penalty [for Strategy 2025] and no matter where you are in the value chain, you’re getting hurt.”

The UK remains Australia’s largest export market in volume and second largest in value (behind China, but ahead of the US). Yet the support given by Wine Australia is a shadow of its glory days (teaming up with New Zealand Winegrowers for the annual tasting is a sad indictment of any notion of regionality). Indeed it sometimes feels that, with Amelia’s State-by-State tastings and husband Matthew’s 100 Best Australian Wines roadshow, the Jukes household’s contribution outweighs that of Australia House.

Jukes himself says Australia’s fine wines have never been better, claiming they “stand shoulder to shoulder with any other country’s finest creations”. If there is one quality that defines this, he adds, it is their diversity, notably the wealth of medium-weight reds – “something the market is wanting and where the country is heading”. Grenache is emerging fastest. Just one made the grade in his first ever report [in 2004]; this year there were eight.

Back then, Australian wine was defined by scale, consistency and approachability, all harnessed in a spirit of innovation that responded to what the market wanted. Now, as Larry Cherubino of Cherubino Wines says, “It’s all about the vineyard”. And there are so many superb sites around – particularly in the cooler Mornington Peninsula, Yarra Valley, Margaret River and Tasmania – all turning out stunningly good, nuanced wines.

Majestic’s head of buying Matt Fowkes talks of the “massive opportunity for an Australian white resurgence and a stylistic evolution of heavy reds” via “cooler-climate expressions”. Even lower down the chain, Australian Vintage says it is refocusing on “lighter, lower-alcohol wines to… reduce reliance on red-heavy products”. Vinarchy has just relaunched Jacob’s Creek in the UK, via four labels, all “lighter, fresher styles designed for modern drinking”.

It feels like a clear message, but it will need to be communicated in a coherent fashion. Perhaps someone can come up with a good ad campaign?

• Australian wine
• advertising
• messaging
• identity crisis communication
• bland