Wednesday, December 09, 2009

Strike One for the Good Guys: Small Wineries = Higher Quality, and the Public Knows IT!

Here is an article from Adelaide that illustrates the simple fact that hard work and a focused desire to produce quality will win out against big corporate interests.

Althought his article does not really describe why there was such a drop among the largest players - I can attest from my little part of the wine world that people (both industry pro's and consumers) prefer wines made by smaller wineries. Why? Because there is quality associated with smaller wineries. Quality that translates to the taste and uniqueness of the wines they make. This concept of quality goes deeper than just simple taste assesment, though. There is also the concept of integrity that many smaller (family) wineries have that big corporate players will never have. Now, are there larger wineries that make good wine? Sure. But I find that many people are much more likely to buy wine when there is a person or a family that has a unique investment in producing a particular wine, rahter than just another made-up corparate label, which is all that Fosters, Constellation and the other "big" guys make. Read on...

Family wine companies beat corporate giants
Article from: AdelaideNow
NIGEL AUSTIN
December 08, 2009 12:01am

IN A dramatic reversal of fortunes, family wine companies have grabbed significant market share from two industry giants during one of the sector's worst downturns.
Fosters Group's market share has dropped from 28.5 per cent in 2005 to 21.2 per cent, while Constellation Wines Australia has fallen from 22 per cent to 13.5 per cent. The big winners have been popular family wine companies such as Yalumba, Angove's, Grant Burge, d'Arenberg, Taylors, Peter Lehmann, Bleasdale, McWilliam's, Brown Brothers, De Bortoli and Casella.

The major companies have also lost out to a plethora of cleanskins, many produced by the supermarket giants, and the continuing rise of New Zealand sauvignon blanc.
Barossa winemaker Grant Burge has doubled his sales to about $50 million in the past three years, belying the commonly held view of the sector as a disaster zone.

Angove's managing director John Angove said he could recall sitting around the table with the industry giants in the 1990s when they warned they would take over the industry and smaller companies would be squeezed out. Happily for him and other family wine firms, they have thrived and grabbed significant market share.
"The industry's rapid growth of the 1990s masked the reality and it appeared that wine was a money-making bonanza," Mr Angove said.

"I don't think any Australian public companies are doing well, because wine is very capital-intensive, suffers from the vagaries of agriculture and very high stock holdings are required."

Mr Burge said he is annoyed by the big companies blaming harsh economic conditions for the wine industry's problems.

"I'm grumpy because wine has traditionally been a family-based industry," he said.
"You have to have a long-term view, the wine industry is no place for public companies with fast-buck approaches, because you need to constantly reinvest."

Mr Burge said the long-term players need to sort out the problem of oversupply or it will create the wrong message around the world about Australian wines.

"It's a disgrace, really, because they've got all their numbers wrong - they've invited growers to grow grapes and now they're walking away from them," he said.

d'Arenberg Wines managing director d'Arry Osborn, 82, said his business is stronger than ever nearing its 100th anniversary in 2012. Approaching his 67th vintage, he said continuity was a great thing in the wine industry, along with a personal approach.

Mr Osborn said the recent launch of the First Families of Wine, with old, established families such as his own, Henschke's and Yalumba, had provided an opportunity to tell the world that Australia has family wineries going back a long way, with hand-made wines produced with love and care.

At Yalumba - Australia's oldest family winery - managing director Robert Hill Smith said the middle-sized, family-run wine businesses have focused hard on relationships and quality.

"We've been in the business a long time and we've stuck to our knitting - and remained true," he said.

A GOOD DROP
Top 10 wine companies

1. Foster's Group - 21.2 per cent market share
2. Constellation Wines - 13.5 per cent
3. Small manufacturers - 10 per cent
4. Pernod Ricard Aust. - 10.2 per cent
5. Supermarkets private label - 5.6 per cent
6. Yalumba - 4.6 per cent
7. De Bortoli - 4.6 per cent
8. McWilliams - 3.8 per cent
9. Brown Brothers - 3.4 per cent
10. Fine Wine Partners (Lion Nathan) - 2.9 per cent
Source: AC Nielsen

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