Family wine companies beat corporate giants

[Scanlon]

Family wine companies beat corporate giants
Article from: NIGEL AUSTIN, The Advertiser
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

[n4sir]

The article on AdelaideNow:
http://www.news.com.au/adelaidenow/stor ... 01,00.html

Repeating what I said as a reply in the above article, firstly I'd hardly call Peter Lehmann wines a 'family wine company' anymore - they're majority owned by the Hess Group of Switzerland (85% I think) after almost falling into the clutches of Lion Nathan a few years ago...

While people like to kick the two big corporate wine beasts while they're down - and believe me for some things they really deserve it - if they're in real trouble, the whole wine industry is in trouble. Where do you think Two Buck Chuck is getting his chardonnay from that he will flood the market with? Cleanskins or their equivalents being dumped by these guys may be good value for the consumer in the short term, but they will wipe out many (real) small wineries, particularly those that are heavily geared and were heavily reliant on the now collapsed USA & UK export markets. The heavy discounting that's going on everywhere (even many small producers are dumping stuff too) is a sign the industry is in big trouble from a massive oversupply, and the only real winners will be the big retailers here and overseas.

I agree with the other comments to go out and support your local small wineries, because the big picture is nowhere near as rosy as this (IMHO poorly written) article paints.

My 2c,
Ian

[Rawshack]

Well, I'm no economist and I have no idea what the impact of the 'big two' doing poorly will mean for the wider impact.If someone can lay it out for me in Rawshack terms (alla 'idiot terms') then please do.

However, two things I do agree with is that a) we still have an oversupply and b) supporting your small, local winery can only be a good thing, especially when the wine is good too

[Loztralia]

the big picture is nowhere near as rosy as this (IMHO poorly written) article paints.

I can't say much about the industry content but as a hack myself I can confirm that the article was dreadfully written and edited.

Just one example - the quotes are attributed as follows: "John Angove said", "Mr Angove said", "Mr Burge said", "he said", "Mr Burge said", "he said", "d'Arry Osborn, 82, said", "Mr Osborn said", "Robert Hill Smith said", "he said".

Just for the sake of professional pride you have to use an occasional "commented", "explained", "argued", "claimed" or "revealed". Personally I'd love to be able to drop in more Conan Doyle style "ejaculated"s but they don't seem to go down too well nowadays.

[malliemcg]

I wonder if Penfolds errrm FGL and Constellation's falling market share have anything to do with continually hoofing prices up and quality not necessarily being maintained in all cases. I must admit from a personal point of view my consumption (well purchases) have dropped off massively, pretty much in line w/ the crunchy credit/economic times, one job went pop, got a new one, but for now, all efforts are trying to build a safety net so wine spending halted, I see this mirrored somewhat amongst my work mates are in a similar boat and many of them too have just begun getting into wine and they've pretty much stopped also.

[Partagas]

I wonder if Penfolds errrm FGL and Constellation's falling market share have anything to do with continually hoofing prices up and quality not necessarily being maintained in all cases. I must admit from a personal point of view my consumption (well purchases) have dropped off massively, pretty much in line w/ the crunchy credit/economic times, one job went pop, got a new one, but for now, all efforts are trying to build a safety net so wine spending halted, I see this mirrored somewhat amongst my work mates are in a similar boat and many of them too have just begun getting into wine and they've pretty much stopped also.

I have to agree. The huge price hikes every year from the once used to be staple wines (Penfold’s etc) have become an absolute joke (would like to see the accurate figures on the percentage increases over the last few years). Are they passing on the extra profits to wine growers and alike? I first started drinking wine about 10 years ago and in this time I have seen a ridiculous amount of wine I used to buy become now almost unreachable (maybe only a few now to keep back).

So basically it’s their own fault for not giving a crap about good old consumer who put them there in the first place. I guess all this stuff we’ve heard before but am hoping these sorts of figures will bring a few snotty nosed company heads to maybe rethink their elitist thoughts and market a bit differently (I definitely wont hold my breath).

Sam

[ufo]

I wonder if Penfolds errrm FGL and Constellation's falling market share have anything to do with continually hoofing prices up and quality not necessarily being maintained in all cases. I must admit from a personal point of view my consumption (well purchases) have dropped off massively, pretty much in line w/ the crunchy credit/economic times, one job went pop, got a new one, but for now, all efforts are trying to build a safety net so wine spending halted, I see this mirrored somewhat amongst my work mates are in a similar boat and many of them too have just begun getting into wine and they've pretty much stopped also.

I have to agree. The huge price hikes every year from the once used to be staple wines (Penfold’s etc) have become an absolute joke (would like to see the accurate figures on the percentage increases over the last few years). Are they passing on the extra profits to wine growers and alike? I first started drinking wine about 10 years ago and in this time I have seen a ridiculous amount of wine I used to buy become now almost unreachable (maybe only a few now to keep back).

So basically it’s their own fault for not giving a crap about good old consumer who put them there in the first place. I guess all this stuff we’ve heard before but am hoping these sorts of figures will bring a few snotty nosed company heads to maybe rethink their elitist thoughts and market a bit differently (I definitely wont hold my breath).

Sam

100 % agreed.