Building Extensions from Down Under -Beware Marketing Statistics!

I like reading newsletters from generic wine organisations. They give us good market statistics and a view of our market ‘from the outside’. This morning I glanced at a Wines Australia News February 2016. It was titled, ‘UK wine trade delight in Australia Day Tastings’. This seemed interesting as Wines Australia had a Fair here last month also. Let’s see how it went in the UK.

The newsletter began with a large sidebar that told us, ‘We kicked off the New Year in style with our headline Australia Day Tastings, which for the first time included Dublin and Edinburgh alongside our annual blockbuster event in London’. Odd. We’ve had Aussie Wine Fairs here for years. It got worse. In the body of the newsletter we are informed that, ‘The Dublin event, which has been held annually since 2014, took place on 27 January and offered more than 200 wines. A consumer tasting was also included for the first time and Chardonnay and Shiraz were featured at two focus tables’. So, it’s not the first time but it is the first time as an ‘Australia Day Tasting’? Does it matter? Not really until we read that, ‘Our Australia Day Tasting in London has long been the pre-eminent tasting for Australian wines in the UK, and its success prompted extension to Ireland and Scotland’. Now I have a problem.

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Steingarten Riesling by Jacobs Creek

Ireland has embraced wines from Australia for many, many years. Along the way we have supported, promoted and sold Australian wines with enthusiasm and vigour. Wines of Australia had an annual budget for promotion in Ireland and indeed employed on a semi part time basis a really excellent representative based in Ireland. He organised, and we attended, brilliant tastings plus a fabulous annual Wines of Australia Fair. The Fair was held in its latter years at Croke Park.

Wines of Australia pulled its marketing budget out of Ireland.

No more excellent tastings.

Now we are ‘an extension’ of the UK ‘blockbuster event’!! Are we? They showed 1000 wines this year in London – 200 in Ireland.

Wines of Australia seem to have a memory that only goes back to 2014 as far as Ireland is concerned. What happened to all of our very good work on their behalf way before that? Indeed, why are we expected to now accept tiny promotions – the Dublin Fair is a small one folks and only takes in a few hours in the afternoon – and promote premium wines on their behalf?

This is all a bit cheeky in a market where Australian wines sit in second place to Chile and are available in every outlet throughout the entire country. This is a story being spun from an office in London that doesn’t really understand that we are no longer an extension of the UK market. Indeed, it has been a long time since we have been!

As I say. I like reading newsletters from generic wine organisations. You never know what little nuggets of info you’ll find hidden in them.

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Wine Australia’s recent Export Report December 2015 shows that the value of Australian wine exports increased 14% to $2.1 billion – its highest growth by value since 2007. Indeed, it was also the very first time that Australia recorded value growth in each of its top 15 markets. That is a fantastic result. Mind you, headline numbers like these can hide many things. The press release only gave us a breakdown of the FOB (Free on Board) values of wines valued at $10.00 and above. That’s quite a narrowed scenario. In a wider context the ‘UK’, Australia’s biggest overseas market by volume, only increased its value by 0.2% to $376m. The second was the USA – up 4% $443m. By comparison China rose by 66% to $370m! 66%!!!! That might be worrying and could be scary. Mind you, they are rising rapidly from a very low base.

So if the biggest overseas market by volume has only increased its shipped value by 0.2% how do we arrive at the Very Big Headline number of a 14% increase to $2.1b?  Is it a case that the UK is still bringing in vast volumes of the cheaper stuff? Maybe that’s why the press release has concentrated on the $10.00 and above?

How does Ireland fit into this? Well, the Press Release on the recent wine fairs quotes The Irish Times’ wine correspondent John Wilson suggesting that Australian wine is making a comeback in Ireland: ‘I think Australia’s been through a difficult period in Ireland in the last four or five years but I can see it coming out of that. I think it’s a combination of currency and style but I think Australia has risen to the challenge and is actually primed to do very well in the next four or five years,’ he said. This is interesting only in so far as Australia was Number One in Ireland but, as it needed to focus on a value offering, ie more expensive wines in order to help the industry survive back in Australia, it has slipped back to Number Two. It has no intention of trying to knock Chile off its perch – it just doesn’t have the wine. So, one presumes ‘coming out of a difficult period’ means that it is now selling better quality wine again after Ireland’s internal fiscal difficulties ie everyone was broke and switched to Chile, Aldi and Lidl! Now there’s an interesting one. Lidl bonds in England and not in Ireland. Aldi brings theirs in from Germany. Wine Australia figures are for exports out of Australia. In this case ‘our wine’ is often in the UK and German statistics! Does this mean our numbers for inexpensive wines from Australia are seriously under reported?

FACTCHECK: Look up export figures to Ireland …. Value up? Volume up? Wine Australia tells us the following for Ireland’s direct shipments:

2014    3,149,562 ls     $11,454,380     average value $3.64

2015    3,587,066 ls     $13,228,271     average value $3.69

This gives us a 1% value change year on year BEFORE taking into account any volume shipped from the UK and or Germany both of which are likely to bring the average value down and not up.

What’s the real news?  The headline really should read: ‘Australian Wines Slip Back into Second Place in Ireland, behind Chile, and Continues to Record No Change in Value.’ So, in real terms both value and volume are down. What’s Australia doing about it? Not a lot. The wine Fair is sub-standard and there is very little else is in the calendar for 2016.

Are we now impressed by the headlines, that were carried by many of the press in Ireland, telling us that it’s all rosy and on the way up for Australian wines? Not really – unless we’re an extension of China also!

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Sunset in the Barossa

All of these views are my own and if I am wrong then please point my mistakes out to me. I will be glad to clarify. I have the highest of respect for Australian wines and Australian wine makers many of which are among the best in the world. Ireland continues to be a very important export market for Australian wines and it should not be lumped in with something as vague as a UK marketing platform. Finally, John Wilson is one our best ever wine writers and I hold both his writing and integrity in the highest regard.     Kevin

How to ‘Get Into’ the Wine Trade!

Among all the questions I am asked at tastings this one pops up again and again:

How do I get ‘into’ the Wine Trade’?

 Answer: Get a Job: Import Wine: Sell Something.

The Wine trade is no different to any other profession. It’s cut throat and viscous and often controlled by business heads who have no interest in wine at all. So, can you sweep the floor? Work in a wine shop at the weekends – for fun!

Get a reference and voila you are now ‘experienced’ and can apply for a sales assistant job.

You’re In!

 But no one wants to do that any longer. They want to be the store manager right from the get go. Well, maybe retailing isn’t for you after all.

No problemo. Ireland is a small place and even if ALL of our importers quadrupled their listings there would still be a world of wine out there looking for someone take their wine on. Get an import licence.

Buy some wine. Bring it in. Sell it on. Make a profit and buy some more.

You’re In!

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The late and great Christy was IN! with his own label from Portugal

 Well, maybe not. You have to finance this and at over €130 excise per case of twelve bottles (plus Vat!) you might begin to think that sweeping floors is a better option. Then there’s the little problem of ‘making a profit’. Even if you buy a bottle overseas at less than €3.00 you will have to sell it here between €13 and €15 bottle. It all mounts up …… shipping, warehousing, delivery, insurance……Excise…. VAT….. Remember, someone has to buy it from you. You have to sell it to someone. How many friends do you have? How many of these might prefer to spend less than a tenner down at the local offie? You might have to give samples out just to keep your friends onside …. and you’ll have to finance the samples …..

No problems. The wine trade is a forgiving place. There’s loads of room for accountants, marketing graduates, warehouse managers and the like. You don’t like that? OK. You want to be, ‘In The Wine Trade Proper’. I’ve never really understood this one! I take it to loosely mean ‘having a great time working with wine and getting paid at the same time’. Are these the ‘experts’ who bore the pants off people with age old stories or those who write wine columns without ever seeming to attend tastings at all? Maybe, but don’t fool yourself. They are seldom paid and if they are it is small pittance. The best of these have actually worked for a long time in the trade and do know what’s what. The others are soon exposed!

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Nope, what’s left is to supply the existing trade with Stuff, Gadgets and Gizmos. This is a cheaper option and, perhaps surprisingly, will get you into tastings and places of interest. ‘Stuff’ I define as day to day useful things such as straw for displays or even displays themselves.  ‘Gadgets’ are useful items that sell every now and then – corkscrews, greeting cards, aerators, glassware, wine savers (even the fabulous and best Gadget of all time – the Corovin!) ‘Gizmos’ are ephemeral items that arrive with great fanfare and are forgotten about before sunset – ‘Magnets to Instantly Age Wine’ and ‘Scratch and Sniff Wine Tasting Cards’ come to mind!!

UK_plaatje1_1501VacuVin aerator/pourer – a Useful Gadget

So, grab some Stuff, Gadgets or Gizmos and sell them in.

You’re In!

 Of course if you have stacks of cash in the first instance – You’re Definitely In!

 ‘Best way to make a small fortune in wine is to begin with a large one ……