Big news… for wine Ontario

The current issue of Decanter magazine features an article on the best Chardonnays (outside Burgundy).

The article reports the results of a recent tasting by three leaders in Burgundy/Chardonnay/New World wines: Stephen Brook, Jasper Morris MW and Steven Spurrier.

Brook is an expert on many regions including California; Morris is the director of buying for the ancient (ca. 1698) London-based wine merchant, Berry Brothers & Rudd, and is the author of one of the modern references on Burgundy, Inside Burgundy (2010); Spurrier, of course, is known throughout the wine world for many things but is perhaps most famous as the man who put California wines on the map with the now-legendary Judgement of Paris.

The tasting covered some 80 wines from around the world made with the Chardonnay grape : Argentina, Australia, California, Chile, Italy, New Zealand, South Africa and Ontario. The wines were selected for tasting by an editorial panel independent of the tasters and they were tasted blind – the only thing the judges knew was grape variety and alcohol level.

There was no pattern where one region or style dominated the results. The best wines were distributed widely across the zones represented in the tasting with two Canadian wines achieving high scores. These wines were a Norman Hardie Prince Edward County 2012 (named a best-value wine by the judges) and a VQA Niagara Peninsula Tawse Estate 2011. In fact, the judges recorded the unexpectedly strong performances by wines from Lombardy and Niagara as the only surprises in the competition.

The panel selected a New Zealand Chard as the top wine of the tasting: Martinborough Vineyard Martinborough Terrace 2012.  This wine was cited for “finely expressed summer fruits”, “invigorating raciness and minerality”, “discreet oak influence… to support the structure of the wine” and a “long finish”. I have always considered Martinborough as an under-appreciated region and this performance demonstrates the quality and style delivered by makers in this place.

There were two runners’-up: a Lombardy Chardonnay made by the esteemed maker of Franciacorta, Ca’ del Bosco, and… the Niagara Chardonnay made by Tawse Estate (!).

This is a big deal: not only does this result demonstrate that a wine from Ontario can perform admirably against some of the best Chardonnays made anywhere, but most importantly this assessment is made by top-tier international judges – who bring no predisposed bias to the process.

The Tawse was described as showing ripe citrus and pineapple aromas – quite exotic with attractive florality. Good attack, with concentrated fruit and high acidity, showing real intensity and pungency. Discreet, fresh and very persistent. An extremely classy wine.

Classy, indeed! Hearty congratulations are due to vigneron Moray Tawse and winemaker Paul Pender. A big huzzah should also be extended to Noman Hardie for the strong showing of his PEC Chard.

Well done, Ontario!

à bientôt…

Copyright© W. John Switzer 2003 – 2015.

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Two items

First, the winter of 2014:

Canadians love to talk about the weather.  We always lament the lost weather we had last season when we are in the midst of whatever weather Mother Nature delivers this season.

Well, the winter of 2014 has given us plenty of cause for complaining this winter.  We are in the middle of the coldest winter Ontario has experienced in 20 years.  We have recorded 31 cold weather alerts to date since the beginning of December, more than all the alerts in the previous three winters combined.

We are all very tired of the unrelenting cold and yet, according to current weather forecasts, we face at least another two weeks of below-normal temperatures.

All this is to say the vineyards of Ontario have been under incredible cold stress this winter.  Many growers are reporting significant bud loss due to the cold weather and this will have a direct effect on yields in the upcoming growing season.  The buds are formed in the fall and lay dormant on the vines until the spring when pruning of the vines is done.  Depending on the pruning techniques used by the grower, more or less new growth will be enabled and this growth will determine the volume of grapes grown on the vines.

When bud damage occurs there is less freedom afforded the grower and pruning must be adapted to maximize the potential for an acceptable yield.  The damage in Ontario vineyards is widespread with Lake Erie North Shore and Prince Edward County being hardest hit.  Syrah and Sauvignon Blanc seem to be the hardest hit varieties but all varieties have been affected to varying degrees. An enormous drop in yield is forecast for 2014.

The extreme cold may also trigger damage to the vines themselves but the degree of this damage will only be measured properly once the new growth starts in the spring.

There is a modest silver lining to this cloud: the cold came early with the right intensity to allow an early harvest of fruit for Icewine.

Second, California…again:

Following my recent rant about France I received an invitation to this year’s California Wine Fair which will take place in Toronto on Monday April 7 at the Fairmont Royal York Hotel in Toronto. The invitation was unrelated to the rant.  I get this invitation every year.

The event has two components, the consumer event in the evening and the trade event in the afternoon.  Both events are huge; I think this is the biggest single day wine event on the calendar each year and is a testimony to the effective work done by the California Wine Institute and its local PR partner, Praxis.

The trade event is especially good as the media are able to taste in a private room which means we sit at tables, we pour our own wines, we are able to work at our own pace without being pushed around and we select which wines we choose to taste.

This is another way the industry can get its proper place in the consumer’s eye.  Give the centres of influence the tools and time and they will tell your story.

And it works.  California sent out recent data later in the week and US wine exports (90% of which are from California) reached a record high in 2013 to $1.15 billion (an increase from the previous year of over 16%). Volume also grew by 7.5% in 2013 from the previous year.

The EU is the largest market for California wines at just over $600 million (up 31% year-over-year) with Canada sitting in second place at $454 million (+12%).  Canada is a HUGE market for California, in both absolute and per capita terms

Clearly you will earn rewards if you spend your promotion dollars properly.

Is anybody watching California?  If not, you should be…

You can get more information and buy tickets for the California Wine Fair at http://www.calwine.ca/.

à bientôt…

Copyright© W. John Switzer 2003 – 2014.

Vinum Exhilarat Animum

For the third year in a row I have hosted visitors to Ontario from the wine trade in England. There is growing curiosity about what’s going on in Ontario in the English trade.  This curiosity is fed by the success garnered by many Ontario wines in competitions such as the International Wine Challenge and Decanter World Wine Awards, both London-based annual events.  This success is not met by wide availability in England of Ontario wines, so the curiosity has to be met by personal visits.

This year my guests had their way to Ontario paid by the Worshipful Company of Vintners, an ancient livery company (trade association) dating from the 14th century.  This Company is one 108 livery companies in London and apparently ranks 11th in precedence: presumably reflecting the importance of wine in the annals of ancient commerce in London.  Membership is made up of senior members of the wine trade some of whom – until recently – were able to sell wine anywhere in London without a license. The Latin motto of the Company of Vintners (quoted above) translates to Wine Cheers the Spirit.

The Company was instrumental in founding the Wine and Spirit Education Trust and the Institute of Masters of Wine, both of which have been important bodies in advancing the levels of skill and competency in the English wine trade.

Each year this Company grants the Vintners Cup to the WSET Diploma graduate attaining the highest aggregate marks on the six units comprising the Diploma curriculum. This year’s winner was Emma Harrison and her prize was a bursary which would fund travel to anywhere in the world of wine. Emma chose Ontario as her bursary destination as she sees few of our wines in London. She has travelled throughout the Old and New World and she wanted to learn more about this place.

I was asked to assemble a tour for Emma and her winemaker boyfriend so over the first week of July they visited 16 of the best wineries in Niagara and Prince Edward County, along with visits to the Wine Council of Ontario and the Vineland Research Centre. I received an instant and enthusiastic response from each winery I wrote to, introducing Emma as a prospective visitor. Well-done Ontario!

I joined our visitors for selected tastings and was delighted with the generous reception they were granted by each host, both in terms of time and content offered. We showed our best!

I participated in three tastings, catch-up tastings to see how things were evolving at Thirty Bench, Hidden Bench and Norman Hardie.

The following is simply a highlights overview – suffice it to say all three continue to progress higher up the quality ladder.

Emma Garner, winemaker at Thirty Bench, continues the traditions of this fine boutique operation (part of the Andrew Peller family since 2005) making small lot Rieslings, a small-lot Cabernet Franc and a fine Meritage blend (other varietals are vinified but these are the wines to seek out).

I think Peller should be congratulated for the work they have done as owner of Thirty Bench.  They have provided capital to upgrade the winemaking facilities and enhance vineyard management but they have left the operation in the hands of folks like Emma who behave like owners with an unrelenting focus on quality.

If you want to experience the impact that terroir has on wine -in the case of Thirty Bench soil and micro-climate – there is no better place to visit than Thirty Bench.  The three small-lot Rieslings: Wood Post, Triangle and Steel Post, are all stunning but distinctly different.  Similarly if you need proof that we can grow grapes in Niagara to make a solid Bordeaux-blend red, then you should taste the 2008 Winemakers Red.

Harald Thiel, vigneron at Hidden Bench, is a living demonstration of the importance of hands-on management when it comes to achieving lofty goals.  Since it released its first vintage with the 2005’s H-B has built a solid reputation as the leading maker of super-premium wines in Ontario, if not all of Canada.

As more newly-planted vines come on stream annual production continues to increase, now in the area of 7,000 cases. With Marlize Beyers now firmly settled into her role as winemaker there is modest evolution in the style of the H-B wines – the result being more finesse on the well-established reputation for intense fruit expression, precise acidity and firm minerality.

The H-B range is wide, covering:

  • aromatic Rieslings, Viognier  and Gewürztraminer
  • a firm and expressive Bordeaux white
  • an intense Fumé Blanc – give it 3 -4 years before opening
  • classic New World/Old World Chardonnays (let’s call them mid-Atlantic…)
  • a serious, small-volume Rosé (a blend which includes some Malbec)
  • two big Meritage reds
  • a suite of estate and single vineyard Pinot Noirs.

A couple of years ago Tony Aspler suggested to me the most important thing for Ontario winemakers to do is reduce the number of varieties they vinify.  The effect would be to focus more what we do best and build a brand for world class wines made with that handful of varieties.  H-B covers a wide varietal waterfront with its wines.  The problem Harald and team would have if they were to try to cull the number of varieties would be…which ones?  They do them all with style and flair.

I also spent a day in Prince Edward County with my guests and that time was spent at Norman Hardie Winery.  Norman was granted special recognition when Matt Kramer, Wine Spectator columnist, listed the 2008 Prince Edward County Chardonnay as one of the three best wines he tasted in 2011 (the other two wines were a dry Tokaji Furmint from Hungary and a Clare Valley Riesling).

Norman is a widely-travelled vigneron who marches to his own drummer to make wines that are solid and expressive, across the full range. We best know Norman for his Chardonnays and Pinot Noirs but I discovered his stunning Melon de Bourgogne, Pinot Gris, Rieslings and Cabernet Franc during our visit.

Norman’s wines are not for everyone, especially if your palate has developed on New World wines.  Some of Norman’s wines show modest reduction on the nose and this will put off inexperienced tasters.  Norman also uses lees aging almost across the board so along with intense fruit expression comes the autolytic character of the dead yeast cells that adds complexity. He uses stainless dairy tanks, lain on their sides to maximize lees contact, with no batonnage. While Norman matures his Chardonnays and Pinot Noirs in wood, the wood regime yields only modest smoke and vanilla. For me these elements lend a distinctly Old World experience that is appealing and once again shows the potential for Ontario, when solid, principled viticulture and winemaking are combined.

There you have a quick update on three of our leading makers in Ontario.  Things continue to be on the up-tick in wine country Ontario and I encourage all to learn more about our domestic wines…and buy!

I should note my guests were impressed consistently with the quality of the wines they tasted and also with the welcoming reception they received everywhere they went. Well-done Ontario!

If you would like the names of the wineries I selected for this tour, send me a note.

A sidebar on Cabernet Franc:  this grape is emerging for me as a true Ontario champion, along with Chardonnay, Riesling and Pinot Noir. This is a grape which ripens earlier than Cabernet Sauvignon and which grows on hardy vine-stock able to withstand killing winter cold. Sounds like the perfect black grape for a cool-climate place like Ontario, don’t you think?

Several Ontario producers are making excellent wines from this grape, a grape that is often used in blends (Bordeaux and California for example) but which has its highest expression as the main black grape of the Loire Valley.

Cabernet Franc is THE Cabernet, as it is the parent – along with its crossing partner,  Sauvignon Blanc – of Cabernet Sauvignon. Apparently this was an accidental crossing, the story lost with the passage of time.

Oz Clarke gives the best description of the taste of C-F: “at its best Cabernet Franc has the unmistakable and ridiculously appetizing flavor of raspberries, also pebbles washed clean by pure spring water and a refreshing tang of blackcurrant leaves”.

There you have it: ridiculously appetizing and refreshing!  If you haven’t discovered this grape yet I recommend you check out the single varietal C-F wines made by the following Ontario makers: Norman Hardie, Rosewood, Southbrook, Stratus, Strewn and Thirty Bench.

à bientôt…

Copyright© W. John Switzer 2003 – 2013.

Good grapes make good wine

A news item in the trade press this past week reminded me of a renewed agreement concluded in February between the Grape Growers of Ontario and Ontario wineries (represented by the Wine Council of Ontario and the Winery and Grower Alliance).  This agreement continues a pricing practice negotiated in 2010 where base prices for selected varietals that meet minimum sugar levels are established early in the growing season (late April/early May).

The goal of this system is to provide certainty for growers and to give them a basis for making decisions later in the growing season – do I do a green harvest to reduce yield but improve fruit concentration? Do I pick now or wait a few days for sugar levels to increase? The intent of this system is to minimize grape surpluses which have become a blight on growers across the winegrowing industry, worldwide. This is especially important if the set-pricing model encourages wineries to buy local grapes before they consider purchasing imported grapes. Similarly the local grower community has better assurance about its revenues, an important contributor to industry stability.

In this regime prices increase as sugar levels increase, so there is incentive to let grapes hang longer before picking but if weather conditions suggest a delayed harvest will be damaged by cold or rain then the grower knows they will receive the base price as long as the minimum sugar content is achieved.

This system is euphemistically called plateau pricing. Put another way this system provides a floor price that will encourage high volumes per acre and grapes that are of poorer quality.  Note, this is a floor price.  That is, the lowest price a grower will accept if he/she meets minimum sugar content.  The goal is to deliver grapes, maybe barely ripe, to wineries who want to make low-priced wine.

This regime applies to only four varieties at the present time:  Chardonnay, Riesling, Cabernet Franc and Cabernet Sauvignon.  Cabernet Sauvignon is an odd variety to include in this scheme: the Ontario climate is cool enough that it can be difficult to achieve full phenolic ripeness with CS if the growing season is short and/or cool. Why include a grape that is at best marginal in this agreement?  Instead we should encourage cultivation of those grapes that are emerging as Ontario champions, such as the other three grapes in the formula along with Pinot Noir…  politics… farm lobby… industry fragmentation… roadblocks.  Welcome to Ontario!

Generally, Wine Ontario is on a positive trajectory.  Wine quality has improved as vinifera vines planted in the 1990’s mature into their productive years.  Grape quality is improving as we better understand which varieties prosper in our challenging climate and soil conditions.  Winemaking  has improved dramatically as our winemakers are more qualified – in terms of academic credentials and global experience, both.

This deal seems keen to undue the progress we have made, especially when it comes to grape quality. I have previously written about a troubling aspect of Ontario wines, namely the commonly-found thin character of many of our locally-made wines.  Theses insipid wines are usually the result of over-planting and poor vineyard management practices. I believe these wines are the direct result of incentives which encourage high yields of low-quality fruit.

I should note that not all grape growers are guilty of the offences I cite.  Most growers are responsible farmers who are proud of their vines and work hard to produce the best fruit they can grow.  These farmers have among-term contracts with wineries who expect high quality and who work with the growers to achieve outcomes that support quality winemaking.

A deal such as this one, which continues a practice started in 2010 is damaging, for the medium-term goal of strengthening Brand Ontario. If the effect is to continue to make wines that show little character or potential.  We are trying to avoid surplus grape production by we are trying to eliminate the importation of foreign juice to make low-priced international blends and in the process, weakening further the quality of made-in Ontario-with-domestic grapes wines.

I wonder what readers in other winegrowing places think of Ontario after reading this trade item?  This deal would suggest to the reader we are over-regulated, that we seek a new bottom in quality and simply want to isolate ourselves from the challenges of the global competition for market share in the quality wine segment.

This deal is nuts and is embarrassing for those of us who travel to international wine regions and those growers and makers who strive to showcase the best wines we can make in Ontario.  The people from Ontario are the ones with the brown paper bags over their heads…

Where is the leadership in the Ontario wine industry?  We are a small region and a region that faces so many regulatory and distribution challenges that we need to everything we can to help the industry build a brand for quality and gain greater acceptance among Ontario consumers.

I think it’s time for two things to be seriously considered by the provincial government. My first choice is de-regulate the grape wine market and open this market to full and free competition.  Let growers and wineries negotiate prices with each other and let the market dictate how the price/quality equation will be balanced to the satisfaction of both parties.  B.C did this several years ago and the result is a cooperative market where growers and makers are successful as partners.  Oh, and by the way, these partners have raised the quality bar and both sides make adequate returns for their efforts and needs in the process.

If our government doesn’t have the nerve to pull the plug on this regulated regime then we should impose strict controls on planting.  If indeed we have too much grape growing capacity in Ontario/Niagara then force marginal operations to pull their grapes and do not permit any new plantings without prior regulatory approval.  This is the regime in Australia and maybe we need it here if we are going to truly commit to a move up the quality scale.

I hope someone can stand up to this bad deal and work to fix the underlying problems in Ontario before the next renewal in 2014.

à bientôt…

Copyright© W. John Switzer 2003 – 2012.

Cross-border wine

This is a follow up to an earlier post from January 2011: Cross-Border Barriers (http://wp.me/p1dVAg-1X).

A piece of legislation of interest to wine lovers is presently winding its course through the parliamentary process in Ottawa.  This legislation is lost in all the noise on such matters as election malfeasances, debates over the right-ness of economic stimulus or fiscal restraint, federal funding for provincial health budgets and so on.

The legislation I speak of is Bill C-311 which has been introduced in the House of Commons intending to amend the Importation of Intoxicating Liquors Act (IILA) to create a national personal use exemption, thereby enabling individuals to import wine for their personal use from one province to another.  Perhaps most importantly the legislation will make it possible for wineries to ship to individuals out-of-province without sanctions and fines.

Why is this an issue?

Presently you or I are prohibited by the provisions of IILA from bringing wine from BC to Ontario, for instance, without the importation of that wine being processed by the LCBO (meaning, of course, that the LCBO applies its markups and local taxes to the cost of that wine to me or you). The point of our regulators is: we must stop all possible sources of revenue leakage, at all costs!

The IILA dates from 1928, when Prohibition in Canada was brought to an end and at which time the provincial liquor control bodies were put in place.  The need at the time was to restrict access to beverage alcohol so the abuses that led to Prohibition could be avoided going forward. It was necessary at the time to restrict consumer access to demon alcohol and this meant both within – and across – provincial boundaries.

We have come a long way since 1928.  For instance, consider the shift in emphasis that has occurred at the LCBO within the past generation.  No longer is the focus on control – it is still there – but rather the LCBO has adopted an aggressive distribution strategy built on marketing, healthy consumption of beverage alcohol, exploration of new regions, grape varieties and taste sensations and embracing a cross-generational hedonistic lifestyle which has a large component of wine and spirits at its social centre.

The LCBO is no different from the monopolies in other provinces: prudent consumption by everyone in the province of [your name here] builds revenue for the provincial budget. Marketing helps grow revenue…and restrictions of illegal cross-border imports help minimize revenue leakage.

While some provincial authorities – such as the LCBO in Ontario – have recently relaxed the restrictions on personal transport of wines across provincial boundaries where such wine is intended for personal use (one case of wine can now be transported by an individual across provincial lines under the LCBO relief provisions), the IILA is still in force making it an offense to import wines ordered from a winery in another province, unless the order was processed by your local liquor monopoly.

Give us a break!

This is Canada and it’s already hard enough to buy local wine locally.  It is even harder for the consumer to endure a further set of hurdles imposed where we are prohibited from directly ordering wine from a BC maker without additional bureaucratic and financial hoops to bring said wine into Ontario. It might be acceptable if it weren’t for the fact that we likely can’t get those BC wines we hanker for any other way …because our provincial monopolies would rather sell icons from anywhere but Canada, to bolster their margins and reduce their risks of unsold product. The monopolies apply very safe buying practices these days: they go for wines made in fashionable regions which also possess high critic scores. Did I mention this is Canada and many of our monopoly buyers don’t believe we make wines of acceptable quality…?

An earlier version of Bill 311 was introduced as a motion in the last government by Ron Cannan, the Conservative MP from Kelowna-Lake Country.  While that first motion did not go anywhere before the spring election was called in 2011 Cannan’s motion was resurrected as Bill C-311 in the current house by a fellow Conservative backbencher from BC, the member from Okanagan-Coquihalla, Dan Albas.

Albas and Cannan both represent ridings in the heart of Okanagan wine country and while he and Cannan have clear regional focus, their leadership provides  good representation of the interests of their constituents as well as winemakers elsewhere in Canada, and consumers of wine in every province.  Good on them!

The good news is that Bill C-311 has completed second reading and is now under review by the House Finance Committee before returning to the House for third and final reading.  To this point support for Bill C-311 has been unanimous.  This is unheard of in the current age of fiercely partisan politics and reflects a widespread disbelief that we can trade freely with Mexico but can trade freely in wine between Canadian provinces.

Before you break out a bottle of Jackson-Triggs BC traditional method sparkling wine, remember we are in Canada.  The provincial governments and their monopolies will still have to agree to accept the provisions of the amendments to the IILA imposed by Bill C-311 when passed.

There are big stakes associated with the domestic wine industry in Canada and the economic impact of this industry has grown rapidly in recent years, as quality has improved.

A recent study assessed the economic impact of Ontario VQA wines on the provincial economy. This study was commissioned by the Wine Council of Ontario and was conducted by the consulting firm, KPMG. The study found that the economic effect of VQA on the Ontario economy had grown considerably between 2007 and 2011. VQA revenue grew by 50% in the four years to $268 million in 2011. Solid performance was achieved despite the adverse effects of the recession of 2008/9 and 1300 new jobs in the VQA sector were created during this period. In the year-ended March 31, 2011 the sector is estimated to have created $191 million in added-value to the province of Ontario (an amount which equals $12.29 per litre of VQA wine sold (up from $11.50 in 2007).

It should be noted that market share of Ontario VQA wines in 2011 was 26% of all wines sold in Ontario, an increase from 20% in 2007. The domestic wine industry is growing in importance and we need to facilitate this growth in whatever ways make sense.  Clearly Albas and Cannan know this, as do their colleagues in Ottawa.  Let’s hope our provincial governments don’t step on their own interests as Bill C-311 proceeds.

There is an interesting sidelight to the story of Bill C-311. Ron Cannan is Chair of the Conservative Wine Caucus and in this capacity works with his colleagues across the country to promote the wine regions of Canada.  This sort of advocacy is much needed and hopefully the federal activity will spawn similar advocacy by local MPPs on behalf of their constituent wine producers.  Even if the MPPs can’t muster active advocacy for their industry they should at least be ready to stand aside and make the wines of their province more easily available in-province and across provincial borders when C-31 is enacted. If you have views on this and would like to see easier access in Ontario for wines from BC, Nova Scotia or Quebec, let you MPP know your views

An interesting web site chronicles this issue: http://www.freemygrapes.ca/welcome.shtml.

à bientôt…

Copyright© W. John Switzer 2003 – 2012.

Australia – a case study in the making

The situation in the Australian wine sector – plummeting exports and chronic over-production – is a curious one. With the feature on Aus this past release I decided to dig into the Australian challenge to better understand what has happened and what might be the solutions to resolve the imbalances.

I have written previously on some aspects of wine Australia: the rapid growth of the sector; the problems of multi-year drought conditions in some regions; the decision to undertake major de-planting of low-quality, unprofitable vines; the recognition that brand Australia needs to move up-market with greater emphasis on wines that reflect the place of their origin. These are all actions that need to be taken and I suspect they will eventually address many aspects of the problems faced by growers and distributors.

Australia has come from nowhere over the past 25 years to become the seventh largest producer of wine by volume.  For example between 1995 and 2004 wine production grew 2.5 times, recording a whopping 10% average annual increase. Australian acreage under vine totaled 400,000 acres by 2009, ranking 12th worldwide and representing 2.2 of total global acreage. During this period only China among major wine producing countries has exceeded Australia’s growth in wine production.

Note, by the way the dissonant ranking: 7th in production, 12th in acreage.  There must be some high yields along the way… see below for more.

Along with many countries in the New World Australia has experienced dramatic changes in domestic consumption of wine. Alcohol consumption in Australia has declined 1% per annum over the past 35 years with per capita consumption declining from 13.1 litres per person in 1974/75 to 10.4 litres per person in 2009/10. This decrease has been largely at the expense of beer consumption with beer share of market dropping from 70% to 44% since the mid-1970’s. During this period wine consumption grew so that wine share of market increased from 17% to 37% in the same period.

Despite the increased consumption of wine, local consumption did not keep pace with the growth in Australian wine production. Fortunately exports grew during this period and they grew rapidly. The global appetite for oaked Chardonnays, ripe and jammy Shirazes and early-drinking Cabernets was enormous and Aussie exports took off. Over the past decade exports grew at an annual rate of 11% such that today Australian exports consume roughly two-thirds of total wine production.

There is another element to Australian exports that should be noted: bulk wine. Today some 46% of wine exported from Australia is shipped in bulk.  This is low-quality, high-yield wine used for bottling or blending in the importing country and this wine is one of the factors contributing to the global glut of wine that exists today.

Another factor in this complex equation is imports of wine into Australia.  Imports have grown along with every other variable: from 3% of total local consumption in 2000/01, imports have grown to represent 12% of all wine consumed in 2090/10.  The bulk of this imported wine comes from New Zealand and is largely wine made from the Sauvignon Blanc grape, a grape not widely grown in Australia.

The heart of the Australian challenges now lies in how to deal with growing inventories of wine.  Because of growing volumes of wine made, combined with recent declines in exports, the oversupply of wine in Australia is another growing phenomenon. It is presently estimated that Australia makes 20% more wine than it sells.  This means there is somewhere between 20 and 40 million cases of wine made annually that is surplus to demand.  Unchecked, the growing imbalance between production and sales will see this number grow to levels which could destabilize markets if this wine were to be dumped.

Reduced demand/oversupply in the vineyard is the source of the final factor:  domestic grape prices are in decline.  Grapes are a commodity and when quality is low or when demand is low or when supply exceeds demand, prices will fall.  Producers are under financial pressure and this will have its corrective effect.  Vines will be pulled for other crops.

During this period of phenomenal growth for Australia  there have been dramatic changes in global consumption patterns.  Global wine consumption actually declined between 1980 and 2000 by an average of 1.4% annually. Since 2000 consumption has been steady, in line with population growth, although it declined by 2.0% between 2008 and 2009.

In the Old World there has been a steady decline in per capita consumption of wine. For instance the rate of decline has been almost 1.5% per annum in France  from 63 litres per person per year in 1995 to 54 litres per person per year in 2006.  Italy has shown similar decreases in per capita consumption of wine.

On the other hand consumption of wine has increased in the new World: by 1.9% per annum in the USA, 4.4% in the United Kingdom and an astounding 6.5% in China.

Similarly production in place like New Zealand, Chile, Argentina and South Africa has grown.  All these elements have created a highly competitive export market place: more wine coming into a global marketplace where growth in wine consumption is stagnant or in decline

Add to the mix, the fact that wine consumers are faddish.  Yesterday’s Chardonnay became today’s Sauvignon Blanc and tomorrow’s Sauvignon Blanc will be Torrontes or Riesling. Consumer tastes are evolving to appreciate lighter wines – body and alcohol, both – with more elegance, higher acid and more food-friendly character being sought by palates that are maturing.  If you are offside on changing tastes you can be left behind.  Australian acreage is dominated by Shiraz (30% of all vines), Chardonnay (18%) and Cabernet Sauvignon (17%). Uprooting vines will involve major shifts in plantings and decreases in production while the new vines reach maturity…

Price is another factor.  The Australian dollar trades today at almost par with the US dollar (compared with approximately A$.70 per USD at the turn of the century), making Australian wines more expensive to export markets.  This is a major deterrent in the low end of the market and in the bulk wine sector where buyers are much more sensitive to changes in price than changes in quality.

The point of this somewhat turgid exposition is to say there are some serious issues faced by Australia that other growing producers need to heed.

First, growth is good but it needs to be managed: vine planting, types of grapes, yields, etc. all need to be carefully managed  Wine Australia had an ambitious goal, stated in the Vision 2025 strategy developed in 1996, to become a $4.5 billion industry by 2025.  That goal was achieved in 2002. Clearly something was out of control during this period of phenomenal expansion.

Secondly, diversification of markets and products is essential.  Australia ships 63% of its exports to the UK and the USA.  If currencies work against you and you are selling wines that can be easily substituted (i.e. cheap bottles or bulk wine) your markets can abandon you overnight.

Thirdly, a regulatory process with teeth  is required in an expansionary environment.  Such regulatory regime must be granted  the power to address and correct under-performers – be such underperformance be in terms of quality and/or economics.  Once a steady state is achieved this form of regulation is to be avoided.  But in the meantime it is required to avoid distortions in supply and quality. Some of this regulation can be provided by lenders and I expect the ag-lending community in Australia is actively calling loans as I write this piece.

All this said, we will see case studies on Australia hitting the classrooms at UC Davis and the University of Adelaide over the next few years.  This is a case that is still being written as this great country pulls itself together.  The Australian people are resilient and resourceful so rest assured  they will find a successful resolution to their challenges.

In the meantime, buy Australian wine.

à bientôt…

Copyright© W. John Switzer 2003 – 2012.

 

 

Chile, an update

I attended a trade tasting of Chilean wines this past week.  I have not invested much time on Chile and I felt it was time for an update to see whether there were developments to warrant a closer eye on this rapidly-growing region.

The headline: Chile’s growth rate is warranted and the outlook is bullish.

Chile has shown rapid and consistent growth in volume and value over the past 25 years and this growth continues.  Initially driven by attractive/bargain prices for acceptable wines made from noble varieties such as Cabernet Sauvignon and Chardonnay, the growth engine is now fed by improving quality in both  fruit and winemaking.

Chile exports over $250 million worth of wine to Canada annually and is now the 6th largest wine importing country to Canada.  In 2010 Chilean wine imports into Ontario grew by 9% in both volume and value.

There are three important developments gaining traction in Chile, in addition to significant ongoing investment in skills and equipment.  New areas are being explored for grape cultivation with a view to exploiting local unique terroir in ways not previously considered.  The second development is recognition that there are distinct regional terroirs that can be identified in Chile and which suggest an opportunity to establish an appellation system which will become part of the Chilean brand and contribute to continuing efforts to enhance wine quality.  The third development is a growing trend to adopt sustainable practices in vineyard and winery.  Like New Zealand, Chile has recently introduced a sustainable program that will be another valuable brand enhancement but, more importantly, will support distinguishing the best Chilean wines on the global stage.

The tasting this week demonstrated the progress being made as these developments show their effect on quality.

Over a 45-minute period we were walked through a total of 14 wines by winemakers or sales agents for 7 producers.  There were some familiar names in the group such as Cono Sur and Errazuriz, and there were new names (for me at least) such as Arboleda and Sena.

Generally the wines presented to us were of very good quality.  While not all were complex or well structured, the varietal character of the wines was consistently correct across the range.  The best wines were exceptional values.

The wines I recommend from the tasting include:

Chile, Maipo Valley – Carmen Nativa Terra Reserva Sauvignon Blanc 2011

This was an herbaceous wine with great intensity on nose and palate.  The attack was dominated by stony minerality which gave way to a spicy, green peach, gooseberry mid-palate.  The finish was long and juicy. Dry, white wine – $19.95 per bottle (Ontario agent – Charton Hobbs)

Chile, Casablanca Valley – Emiliana Adobe Sauvignon Blanc 2011

Emiliana is a maker which is committed fully to organic and biodynamic practices and is producing consistently impressive wines, some of which I have recently recommended in this newsletter. This wine is an amazing value and displays intensity, structure and balance.  For lovers of Marlborough S-B  I suggest you try this wine; it is a delightful, youthful beauty with character that punches well above its price point.  Extra dry, white wine – $12.95 per bottle (Ontario agent – Diamond Estates Wines & Spirits)

Chile, Colchagua Valley – Emiliana Coyam 2008

This wine is an intriguing blend of 41 % Shiraz, 29% Carmenere, 20% Merlot and the balance is Cabernet Sauvignon.  Unusual as it might sound, this blend works.  The wine is ripe, full-bodied and well-balanced.  The nose has notes of blackberry, stewed plum, and game.  There is a slight reductive character which adds to the Old World Syrah-like aromas. The palate delivers more black, stewed fruit, round tannins, juicy acid and spice.  Even though the wine was matured in French oak for 12 months, the wood adds modest character; the fruit dominates!  Dry, red wine – $29.95 per bottle (Coyam 2007 is available at Vintages Online.  Same price as the 2008).

Chile, Colchagua Valley – Montes Purple Angel 2009

This is a Carmenere blend (half coastal Carmenere, half inland Carmenere, with a small amount of Petit Verdot for structure). It is an age able wine that presently shows the characteristic green nose and palate of Carmenere fruit.  I find the greenness of Carmenere off-putting when it dominates; in this wine it adds complexity to an otherwise supple wine that is still young.  The nose and palate have plenty of apple, plum, pepper spice and smoke .  The tannins are dusty, the finish is long. Very fine structure throughout.  Extra dry, red wine – $49.95 per bottle (Ontario agent – Sylvestre Wines & Spirits)

à bientôt…

Copyright© W. John Switzer 2003 – 2011.