BREXIT Fail

[old man emu]

Yonks ago when Britain exited the EU, I suggested that this would be a good thing for those Commonwealth of Nations countries who used to feed Britain, but were locked out when it joined the EU. With Britain free to trade with the rest of the World, Australian agriculture would see the return of that lucrative market. BUT NO!

 

The latest tax to hit the Australia's wine exports could materially impact its international export market. The new 10% tax increase in the UK applies to all wines. But it still could impact British demand for Australian vintages. And it comes atop a UK tax charged in accordance with alcohol content that comes into effect in August.

 

Britain’s Wine and Spirit Trade Association (WSTA) chief Miles Beale said the combined taxes would negate any price benefits delivered by the free-trade agreement (FTA) between Australia and the UK.

According to Beale (quoted by The Australian Financial Review), “The duty rise will completely overshadow any benefits of removing import tariffs, of between 6 and 9 pence a bottle, when the FTA takes effect later this year.” The new taxes will add something like one GB Pound per bottle.

 

Beale added that the latest tax “makes a mockery of the Department of International Trade’s promised big savings on Australian wine imports”.

 

I can almost hear the whines pouring out of GB already. Isn't that correct, Jerry?

 

[facthunter]

They'd never pay for the best Australian stuff. It was well known in the Wine industry here there was a barrier to above 10 quid in the UK and they market to that situation. Jacob's Creek is /was known as good stuff but there's plenty better. .   Nev 

[Jerry_Atrick]

I am in London today but will give a fuller answer when back at home. 

 

But, in line with many other countries where the bulk of the population earn less and spend more, there will be an upper limit. But when I arrived in '96/'97, I could go to my local wine shop and buy Petaluma (£20) Coldstream Hills reserve chards and pilot (around £15), and even Grange Hermitage (£100 give or take) and a myriad of others... and I wasn't the only one. For many years, the Aussie offerings thinned as producers chased the Chinese market. And, sadly the population here have adjusted. 

 

At the bottom end it is price sensitive, but at the mid-end it is value sensitive, the Brit has now largely lost the taste for Aussie boldness, the old world has modernised (the French own most of the big Aussie producers) and the demand is no longer there.

 

I would not have suspected the FTA would have helped much at that level.

 

I can get D"Arrnberg at Tesco, and decent Aussies at Waitrose, but it was not the import duties that were holding things back

 

Edited March 28, 2023 by Jerry_Atrick

[facthunter]

That 10 Quid may be a bit out of date. I knew plenty of exporting winemakers and their research is fairly constant in sensitive max price and even though many/some will pay it's a matter of targeting the best market to get the best overall returns. People have to recognise a brand they can trust and you have to have a solid presence in the particular market to do that.  The other stuff just won't be available unless someone makes the effort to import it specifically.  If the French own most of  the Aussie producers it's news to me. . Nev

[Bruce Tuncks]

Many of Roseworthy's best graduates finished up in France. Prior to about 1990, they valued "tradition"

over science. Well the wineries who did the opposite made more money, and so they all changed.

[pmccarthy]

There are really only two wine colleges in Oz. Wine got boring as a result. They are taught a standard way to make wine. You can buy a selection of a variety, or even of blends, and they can all taste and perform the same. Way back when, there were some  crap wines and some wonderful surprises.

[old man emu]

I heard recently that in the Hunter Valley there are vines that came from Europe a century and a half ago, and are about the only healthy examples of those varietal grapes in the World because the European ones got knocked out by Phytophthora root rot. Tose vignerons who have them in their vineyards are trying hard to protect what they have and propagate more vines from them, possibly to fire the wine made from them back at the Frogs and Huns, 

[facthunter]

One thing for sure is you can't make good wine using crap grapes. Good wineries often have their own yeasts  as well.  Where wineries won't pay a decent price from growers they use any kind of grape that has colour. Then that area gets a name for lack of quality. If the grape is not fully ripe it will be more acidic and be low on sugar.. Each winery has it's own winemakers with their own reputations. Nev

[Old Koreelah]

3 hours ago, old man emu said:

I heard recently that in the Hunter Valley there are vines that came from Europe a century and a half ago…

Some of the older Pokolbin vines are as thick as tree trunks. They include rootstock that’s poorly guarded family treasure, prompting Murray Tyrrell’s famous “Midnight Leap” range.

 

Our isolated continent has done a good job of preserving some foreign treasures.
German linguists have come here to study Old German, preserved by pioneers of the Barossa.

Australia is the only place in the world where wild camels still roam free.

 

[old man emu]

50 minutes ago, Old Koreelah said:

where wild camels still roam free

Dunno about a Camel. I'd rather have a red Capstan.

[facthunter]

Yeah. Just imagine knocking back an offered cigarette from one of your mates because it wasn't your BRAND.. Nev

[old man emu]

Frank Drebin: “Cigarette?”

Tanya Peters: “Yes, I know.”

[Bruce Tuncks]

Sorry to be so slow OME, but I don't understand the joke there. AND I never heard of phytophthera root-rot either...  please tell us more.

Edited March 29, 2023 by Bruce Tuncks

[Bruce Tuncks]

The Hunter Valley is too hot for grapes, which makes their winemaking even more impressive.

[facthunter]

3 consecutive days over 42 degrees will knock grapes especially with low humidity. The vine sheds them and saves itself.   Some parts of SA would be hotter and also Mildura. A good area of SA is near the Murray Moufh , Currency Creek area. and Clare is a bit of an oasis too.  Nev

[onetrack]

Bruce, it took me a minute or two to get the joke, too. It's from the TV show, "Police Squad", where Sgt Frank Drebin (Leslie Neilson) offer his blonde sidekick a cigarette - and as he proffers it, she says, "Yes, I know" (it's a cigarette). 

 

Leslie Neilson subtle humour at its best.

 

 

[facthunter]

Phytopthera Cinnamomum(sp) is a water borne  root disease mainly of rough barked gum trees. There was a grape vine disease which wiped out many vines at some stage here  (pre 60) and we have also the vine debilitating  critter that attacks  vines the name of which eludes me at the moment, There's also various nematodes more active in some areas than others and several  mildews, deadarm and of course BIRDS. Then you have Hail, cockatoos  mice, rabbits caterpillars and frost after budburst. Who would grow winegrapes?? Nev

[Jerry_Atrick]

A bit more of a fuller response to the original question, at least from my perspective.

 

Firstly, the new alcohol taxes already introduced won't have as big as impact on Australia relative to other countries as predicted, and to be honest, I think it is a fear campaign against the tax. I actually support the tax as, particularly reds, but now whites seem to be settling in at the 14% alcohol by volume. I am seeing reds from France and Italy coming in at 15% and 15.5%.. which is in the same territory as fortifieds. 

 

Nev, you're not too far off with £10 being the current price point for bulk table wines. Most people would consider £10 a fair whack for a bottle of quaffable (and some not so quaffables). In fact, bulk table wine prices have (up until about now) not really moved much in the 25 odd years I have been living here. Jacobs Creek was the best selling wine in the UK in the late 90's and early 2000's because it was around £6, was very quaffable, and was consistent. It was a bit like McDonalds; you know what you're getting. That same bottle of Jacobs Creek will cost you about £8 today (or about £6 on sale).  £10 is definitely a psychological threshold for bulk table wines. Though these days, a yellow label Wolfie Shiaz retails normally a bit over; I only invite him home when he goes on sale (sounds like a gigolo sort of thing).

 

However, tastes and incomes (up until the cost of living crisis) has changed - and as I mentioned, China sucked up a lot of the good supply. When I arrived here, there were two great chains of wine shops - Oddbins, and Unwins. Way back in early 1997, I stopped by an Oddbins to get a bottle to take with me to my now partners house for dinner. It was the first time I went into an Oddbins and you could have knocked me over with a feather when I saw how much Aussie wines they had. And I am not talking Jacobs Creel and McGuigan's., They had the decent Penfolds, but also had many smaller houses from various wine regions from Tassie to Margaret River. Pipers Brook, Scotchmans Hill, Coldstream Hills, Petaluma, Grant Burge (when they did decent wines), and the like are what I remember. They did have the token bulk wines. Unwins had similar variety, but different labels. Both were making money, but they were both taken over by a company that saddled them with debt, and they eventually folded. 

 

When I got back from Aus in about 2006, I noticed Aussie wine stocks were down. I went into my local Majestic (which is another great wine chain) and asked what was going on. They couldn't get stock. The sell into China had already started. Then, I think it was in 2013, the AUD appreciated to something like $1.45 to the pound, which was putting Aussie wine prices up like crazy (even though the contracts are usually written in USD). But also, like everything, tastes change over time, and people were going off the big bold Aussie reds, and the wooded chards. The smoother European varieties and the better quaffable new worlds (SAF, Argentina, Chile) and Spain was making a comeback. And Aussie wines led the way in terms of increasing the alcohol content. In addition, there were a few lean years from a climate perspective during the drought and one of my favourite Aussie Chards at the time - Coldstream Hills Reserve had stopped production as they couldn't get the quality of fruit. 

 

The other new worlds are now cheaper, and with the exception of SAF wines, they were comparable quality - although, I don't really like most of them and think you have to spend more to get a decent wine from them. And yes, the average British consumer is price sensitive - especially at the moment... with £10 being considered coming into the pricey bracket.

 

It's understandable that Aussie winemakers will do their research at the bulk end, because that's where the volume is, and if you can squeeze a reasonable margin, you can eek out a decent living. However, with the AU/GB Free Trade Agreement, I think this opens up opportunities to the market which is more value, or perception sensitive than price sensitive, and margins can be higher.  If we take the supermarkets as an example, we have at the low end, Tescso, CoOp and Morrisons. In the middle, we have Sainsburys and the high end we have Waitrose and Marks and Spencer. I am leaving out Aldo and Lidl for this. Even at Tescos, I can get than mainstay D'Arenberg Footbolt Shiraz for about £12, which it has been since I have been here. I can also get their Grenache  for about the same price. But, most of their Aussie wines will be Wolf Blass, Jacobs, McGuigan, and Hardy's. Rosemount Estate is hard to get here now (though their red label Shiraz is nice for the price).  There's a wine made in Griffith for the American and US market, can't recall it's name but has a Kangaroo on the label, and IMHO tastes like stale tea water. But, even the in-laws had a bottle of it (they normally go for French wines they buy on their frequent trips to France). Sainsbury's doesn't have much better than Tescos, but offers it's own label McLaren Vales which for about £8 are hard to beat. 

 

In Waitrose, I can still get some decent smaller and specialty Aussie wines and mid-range Penfolds (such as Max;s Shiraz £20 - £25), but the offering of Aussie wines is much less than it was. In Waitrose, there is not much under £10,  from all countries. I will spend about £12 - £15 a bottle. Though you do occasionally get discounts and those that are discounted empty out quickly, but they don't have to go below £10 to do so.  Majestic, which is the wine retailer, gives me Petaluma when it can, and there are some I don't really know, but it, too, used to have a full display of different Aussie wines, but now only has a couple of shelves. Come to think of it, I wouldn't think their ratio of those less than £10/more than £10 would favour one of the other. But they are more in the Waitrose market segment than the Tesco market segment.

 

Marks & Sparks white labels wines, and their Aussie stuff isn't cheap, but it is darned good quality. I would say it is probably from the bigger houses. I do get a £10 Chardonnay which is oaked (Brits have gone off oaked whites), and when I take it to [good] friends for dinner, they love it. But, at the moment, the big sellers are Sauvignon Blancs and Pino Griggio., with Pinot Gris coming a bit behind. 

 

So, there is plenty of opportunity for the boutiques to send stuff here.. If Australia exports good stuff, that market is good, and is not really too price sensitive. If they like it and it has a good write up in Parkers, or gets good reviews in Decanter magazine, they will sell. Of course, under EU rules, one of the pains was a) quotas, and b) labelling requirements. I am not sure where the latter is going under the FTA.

 

Getting back to the tax, the alcohol tax based on volume probably would have been a big deal, but especially the European bulk table wines level, the alcohol content is as high as Australia. So, I woudl think they will come under the same pressure. We then are competing like for like, as we will be exporting under a FTA in the same way Europe will be exporting under a FTA to the UK. The non-FTA countries will have to pay a 20% excise, and then VAT is added at 20% to the cost price + excise charge - double taxation. In reality, the price difference will probably not be that great then.

 

I am trying to make time to finish reading the FTA. I intend to bring more boutique products from Aus to the UK - especially wine. Also, intend to send some stuff from here to Aus.. Aus doesn't do dairy quite as well as the UK...

 

 

 

[Jerry_Atrick]

OK Nomad... That was a long post, so I wil lbreak it down:

• Nev is correct that £10 is a psychological limit for a bulk table wine (though Wolfie yellow label retails at £11, but you can get it on sale for £8)
• The alcohol tax (which taxes all alco drinks based on ther percentage of alcohol by volume) really won't have that much of an impact on the better and premiums, as the market is not price sensitive. And because most of the European wines are now at levels of alcohol that Aussies are, it really wont be an issue that the UK Wone person thingy was claiming.. (BTW, I have that on good authority of a wine merchant - you know - the people who work in the business.
• The new world wines are still lower alcohol content, but they will be subject to higher import dutes (20%), which are then added to the import price of which VAT (GST) is applled (another 20%). Somehow, I think under the FTA, Aussie wines won't lose their relative price competitiveness.
• The real issue for Aussie wines is that, with deciding to pursue the Chinese market, and with the shoret time the AUD was almost at parity to the GBP, the availability of Aussie wines dropped, and tastes here have changed. That is the real challenge.
• The FTA provides a great opportuinity for out premium and better wines to compete because they are not so price sensitive. Let the Chinese have the bult table wines.
• I intend to import some wines here myself.. And probably export cheeses from here to Aus (cheeses in Aus, I thought were the best, until I move here)

 

[nomadpete]

Well, having digested your executive summary, it seems the new hikes in GB wine pricing will  fail to bring about an affordable glut of nice local reds for me.

 

All the best with your efforts to bring some nice cheeses to the colony - I look forward to finding something nice to compliment a bold Aussie Red.

[Bruce Tuncks]

 South Australia is free from Philioxera, the nasty soil/insect thing which I reckon the prevailing westerlies help keep out. It decimated the area around Rutherglen over a hundred years ago.

I know a few growers, and they sure carry the risk of bad returns.

Personally, ten dollars a bottle is my figure, but it sure is getting harder to get good stuff for that price...  I call the difficulty " my drinking problem".

[facthunter]

Wines exported from here are exempt from the local VAT and are sold at below what we pay here to maintain the Market. American Oak was always too strong and French oak costs a monty.. The strong oak thing is pretty much over and was more a traditional thing than a selling taste thing. Its usually only added by Using "staves' not casks and are sometimes toasted.. Grenache is rare here but always had a good following in the  UK.  It's a very "soft' red and doesn't need to be cellared long . It's a good blend with Shiraz which will always be a more complex and satisfying red than Cabernet which I almost never buy  It's often grown in too hot areas for the deep colour.. One of the "must haves" of good quality is to have evenness of ripening which requires BALANCE of foliage to fruit quantity and light getting into the whole vine. Green berries or any mildew taint the taste of the whole  product.. The vines do NOT have to be old either. That's a MYTH. High output per acre is usually at the expense of quality. Vinyard soils don't need to be too fertile, just managed with trace elements (zinc) and water/nitrogen etc managed well and worms in the soil. makes nutrients more available to the plant. Nev.

Edited March 31, 2023 by facthunter

[old man emu]

Perhaps wine snobbery was something from an Age when transporting anything was time and money consuming. Really, what does a Frenchman of equivalent socio-economic status as yourself drink on a regular basis? Probably not a €100, more like an €10 like the rest of us. As for the snobbery of regionality, can the average consumer really tell the difference from wines made from the same variety of grape, but from different regions? 

 

For the sake (no pun) of something to sip on at the end of the day, I' satisfied with a glass from Le Chateau d'Fut en Carton.

[facthunter]

C'mon some of it's pretty ordinary and shouldn't even be marketed.  Less of better is a good path and have it with food. Wine tasting at shows is done blind. There's nothing to identify the sample to the tasters. If you encourage/ recognise quality you  will get it. When there's a surplus in the market, that stuff gets used for making spirits Like Brandy. where it's distilled and you get F all for it.  and might even have to tip it out. as it deserves..  Nev

[willedoo]

2 hours ago, old man emu said:

For the sake (no pun) of something to sip on at the end of the day, I' satisfied with a glass from Le Chateau d'Fut en Carton.

The funny thing is, some of the cheapest of cheap Chateau Cardboard brands are so tannin heavy that your lips almost stick to your teeth, but add a bit of water and they don't taste much different than some $10 per bottle wines.

Edited March 31, 2023 by willedoo