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Chateau Chunder – Marketing Lessons from Aussie Wine

Kim Brebach - Friday, November 02, 2012

What you can learn from the Aussie wine decline

Rise and plummet. 

The ABC ran a documentary this week that charted the rise and fall of Australian wine exports to the UK. ‘
Chateau Chunder‘ was made by local production company Electric Pictures, in co-production with Brook Lapping, for the ABC and BBC. The title comes from the early days, when Aussie wine in the UK was called Chateau Chunder from Down Under.

In the nineties, Australian wine exports were exceeding forecasts by big margins, year after year. But, by 2006, it seemed that nobody wanted Australian wines anymore. ‘Australia’s fall from grace had a velocity I’ve never before seen,’ wrote Matt Kramer in Wine Spectator. ‘I can’t think of another wine country that, Icarus-like, flew so high and fell so far in so short a time.’

What went wrong?

Australian wine didn’t really get serious traction in the UK until the nineties, when a handful of conglomerates owned most of Australia’s iconic brands and made almost 4 out of 5 bottles. They were Southcorp, Behringer Blass, Orlando Wyndham and BRL Hardies. Orlando Wyndham (OW) was probably the most successful in growing the UK market for its Jacobs Creek brand.

OW did this by producing wines full of simple flavour that were easy to enjoy. Sunshine in a glass, that was the basic marketing message, and it worked. At the time, French wines in the same low price range (less than 5 pounds) were mostly vin très ordinaire, so the Brits took to Jacobs Creek like children to ice cream.

Building on the right foundation

By the mid nineties, Australia’s wine exports to Britain were exceeding all forecasts. The little Jacobs Creek in the Barossa Valley had grown into a sizable river, and more vineyards had to be planted to ensure supply. Virtually all the wine Australia exported to Britain was mass produced to a price, for the shelves of supermarkets, yet no one seemed concerned. Jacobs Creek had become a big brand, after all, so there was the stake in the ground.

Spurred on by their export success of cheap, cheerful wines, some of the big wine companies bought vineyards in France and installed young Aussie winemakers to show the French how it was done. Suddenly, we were the greatest. We had the best technology, and we understood modern wine-making better than anyone. The French, the Spaniards and the Italians were stuck in a time warp, and too arrogant to see it.

The harder they fall

Exports were still rocketing up, but profits were not. The focus had been on growing the market but, by the turn of millennium, the big guys wanted to see some returns. Priorities changed. Making wines that British consumers liked gave way to shifting cheap grog for a profit. The boom had reached the exploitation stage.

Since Australia’s export success was built on mass-produced wine sold at big discounts in large supermarkets, it collapsed as soon as Chile and Argentina began to export their wines to Britain. They were cheaper, and they were better. By 2006, Australian wine exports took a nose dive which has continued every year since.

Arrogance Aussie Style

It wasn’t just a fall from grace, but Australian wine was suddenly called names like ‘industrial’ plonk. Britain’s Jancis Robinson observed: ‘The sheer speed with which Australia has moved from being revered to being reviled is quite remarkable.’ Dan Jago from Tesco, the world largest wine retailer, told Aussie winemakers the truth: ‘For too long you have been saying “This is good because it’s Australian”.’ He added insult to injury when he said we should make lighter, more refreshing wines like those of the Old World.

That was too much. ‘He’s a wanker,’ was Bruce Tyrrell’s swift response. ‘He should go back to selling dog food.’ Tyrrell added that the Old World made wines that ‘tasted like cat’s piss.’ Mark Ritson from the Melbourne Business School wrote that ‘Australian producers are in grave danger of suffering from a fatal case of strategic amnesia. Only fifteen years ago, they were the beneficiary of French winemakers’ arrogance and stupidity.’

Quality: the missing ingredient

Even at the peak of our export boom in 2003, the average price for Aussie wine sold in the UK was $4.74 per litre. Yes, per litre. By 2011, that had dropped to $2.69 per litre. Quality wasn’t part of Australia’s export drive, nor was building consumer loyalty. Today, Australia is left with a bad reputation for producing cheap industrial plonk, an oversupply of cheap grapes, and a much stronger Aussie dollar. An impossible equation.

In the last few years, a new generation of Aussie winemakers have won some high ground in Britain with new styles of high quality Chardonnay. At the same time, white Burgundy’s reputation was tarnished with premature oxidation problems. At the recent Wine Futures event in Hong Kong, Jancis Robinson advised ‘canny and risk adverse consumers’ to consider replacing the white Burgundy in their cellars with Australian Chardonnay. That is the kind of stake in the ground you can build on with confidence.

Kim


Kim Brebach
Content Chief

Kim loves people and words. He is our lateral thinker, ideas guy and genius story teller. He can conjure engaging technology yarns out of thin air.


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