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The Australian Wine Industry
Thoughts on the Industry's 'Directions to 2025', Part 2
Thursday, 2nd April, 2009  - David Farmer

The main thrust of 'Directions to 2025' is to increase sales of premium wines which would lead to a more profitable industry for all wineries. This will involve making overseas markets more aware of our regionally distinct wines and the great number of fine wines. I thought it might be fun to do a SWOT analysis of the future that 'Directions' would like to happen. It might look something like this:

Strengths
Great historical story that stretches back to the 1820's.
A dozen distinctive premium wine regions with a good story to sell.
Strong research and teaching institutes.
Huge pool of winemaking talent.
Useful show system that offers possibilities in marketing.
Export judging scheme.
Pool of valuable old vines and rare vine clones.
Big companies give us presence and strength in the global scene.
Export culture is well entrenched.

Weaknesses
Much of the historical story is owned by Fosters who find it difficult to use.
On average we are producers of warm climate wines when fine wine has traditionally been seen as cool climate product.
A young sales force which thinks they are selling cola.
Big companies cannot handle complex ideas and dumb down our strengths.
Multi district blending is Australian to the core but does not appeal to overseas opinion makers.
The regionality story is undeveloped with no clear direction as to what to do.
Many new markets are not ready to understand a 'regionality' based campaign.
Moving into a period of grape over supply which can weaken price points.
The power of Woolworths and Coles.

Opportunities
Leverage off the popular brand Australian wines.
A world pool of wine writers who can be influenced with a good story and good wine.
Sophisticated, commercial, international wine judging competitions which draw attention.
A great base has been built over 20 years so we are well on the map.

Threats
Exchange rate variations.
Strong competition from reviving old world regions.
Negative views about Australian fruit bombs and high alcohol.
Australia seen as producers of basic wine varietals.
The power of overseas super market chains.
World oversupply of wine.

In Part 1 of 'Directions to 2025' the following points were made.

Where do well made multi-district wines that are not Regional Heroes and not good enough to be Landmarks belong?

Big companies will try to fit into this scheme but the reality is they will do what they want. Directions is really a blue print for small and medium companies.

One of the great selling points for the next stage of brand Australia will be to point out the long history of many of our companies, a feature not fully appreciated overseas. Will it matter that so much of this is owned by the one company, Fosters?

What relevance are Next Generation wines to a blue print that ties itself to regionality? Indeed what are Next Generation wines?

To sell regionality, terroir and typicite you need knowledge of what makes your region special in the way of soils and landscape. These are the elements that are of interest to visiting wine writers-after all they need something to write about. Sadly few of our vineyard owners, company managers, wine makers, local wine writers and others have any grasp of these elements. Many are very skeptical about terroir and rightly so yet it is what the overseas press currently sees as important.

We have a long tradition of multi-district blending and this is ingrained in our wine makers blood so how are we to convince overseas and local buyers that we are serious about expressing regionality.

Brands of Emptiness or FMCG's

Recently the English wine writer Oz Clarke addressing the Argentine Wine Awards spoke about brands of emptiness versus real wines which have a sense of place. I love the term 'brands of emptiness' and even though it is completely meaningless it's not hard to see where the finger is being pointed.

The U.S. publication Foodweek, June 15th 2007, lists the top 15 Powerful wine brands world wide. Australia does pretty well:

No. 2. Hardy's
No. 5. Yellowtail
No. 6. Jacob's Creek
No. 7. Lindemans
No. 10. Rosemount
No. 12. Penfolds
No. 13. Wolf Blass
No. 14. Banrock Station

I suspect a few of these would be seen as 'brands of emptiness'. It's a pity that they sell so well. This illustrates a difficulty for Australia as it could be argued that these brands, which make brand Australia, will make it hard to sell regionality. I take the contrary view and that they provide a platform to launch from.

These leading brands are what are loosely termed FMCG's or fast moving consumer goods. Passionate believers of how to sell and market these wines are now in key positions in our large companies. Many do not read wine magazines and are uncomfortable with wine jargon, and the general wine ethos. What they are passionate about is delivery high volume wine at the right price, beautifully packaged for big customer's world wide whose business is built around grocery, liquor, clothing and numerous other lines that are also FMCG's.

At a guess 75% of wine sold is from blends of regions to make FMCG's and to fit into the dynamic of modern supermarket trading and deliver marketing support is a business only the biggest can achieve.

There is a good argument to say we are doing pretty damn well so why alter anything? In fact my appraisal of our large companies is that they are moving further away from regionality. It leaves this area appropriately to smaller specialised wineries, which is what they can be good at. While the idea of regionality may be embraced by giants like Fosters I have my doubts that they should bother as it needs experts and a different way of thinking and marketing. The big should stick to what you are good at which is FMCG's.

If stamp labels, critters and beautifully packaged brands like Lindemans and Rosemount work I assume no one for a moment is suggesting that how these are sold should change. Let us hope they keep succeeding.

Marketing Our Wine Making History

A quick glance at my book shelf shows a good collection of the family histories of the wine pioneers. Some of these books cover Penfolds, Gramps, Seppelts, Lindemans, Hardys, Leo Buring, and Wolf Blass while another section includes company histories of Mildara, Kaiser Stuhl, and Orlando. There is a wealth and depth of interest in other old brands of which I have no book or pamphlet such as Stanley (Knappstein), Reynella, Wynns, Houghtons, Quelltaler, and Wyndham Estate (owned once by Penfolds). We are swamped with a rich history but the problem is the best of it is owned by our three large companies, Fosters, Pernod Ricard and Constellation. They try at times to use this in marketing but it fails to ring true and those who might buy the idea, the overseas and local wine writers know that the history has died. See for example our recent article on Max Schubert which shows what a hash they make of it.

This is a great pity as one thing you cannot create for a company is a long history. Those companies which control brands with a long history have not worked out how to use it and in any case are right to be cautious as the connection with that history was broken long ago and to use it now risks being seen as frauds. This is regrettable as a long history sells wine. The death of this heritage is one of a number of costs of the rampaging rationalising of the wine industry over many decades for which we are all now paying a great price.

Using Local Wine Shows and the Export Judging System

While those who run our wine shows and other judging panels largely focus on quality I cannot help thinking that using this professionalism in marketing brand Australia has been under utilized. The show system is well entrenched, highly regarded locally and no question is viewed similarly by overseas experts and some wine buyers.

This is a very fertile area to use to impress customers globally about the stringent quality control that underpins the industry. Ideas that imply; 'look what extra you get when you buy a bottle of Australian wine-a tasting guarantee', it works with direct marketing copy and will work to overseas consumers.

Selling Regionality - Selling Australia

What is meant by regionality? Is it a group of wines from a particular region or is it something deeper and broader. If the later then you have to think maps. It is no accident that the best selling wine books are Atlas's. They encapsulate a lot of information in a way that is transmitted easily. Wine buyers apparently like looking at maps. With maps go books on the wine regions and regrettable we have made no progress since Halliday's books on the Hunter, Clare and Coonawarra a long time ago.

Of course a great number of smaller makers have been promoting there bona fides about regionality for a decade or longer as it is their legitimate point of difference. For selling to the aspirational wine buyer I would rather have a Hill of Grace any day than a similar quality multi-district blend. The proposition of the later is just too hard to sell. I do not see a lot of regionality in the Wolf Blass web-site explaining the brown and grey labels

If we are serious about regionality we have a great deal of work to do. My own particular grump is the map on the back label of the Wynns wines. In 2000 I spent a couple of weeks mapping the Coonawarra and this study was published in 2001. I outlined in great detail the red soil and split it into boundaries that are accurate to a few metres or so. The Wynns map outlining the red soil, which I have a feeling is based on some earlier work I did, has been superseded by the 2000 study. Why then not alter the outline on the back label? I do not believe it is because they are stubborn it's just because the brand manager has no idea of the new information.

Let me give you a few more examples. A few years ago (2003 or 2004?), although it may be a regular event, the wine makers in Mornington Peninsula had a seminar that highlighted the local differences between vineyard sites. Real terroir stuff. I understand they talked about soils and possibly the influence of the geology. What I do know is they invited no one from the Victorian Department of Mines which has a number of very talented scientists who would have been able to give the wine makers an excellent discourse on the landscape history of the Peninsula-after all it is their job. Talking about your landscape and how it was formed sells wine.

Before Xmas I was in Margaret River and visited a great number of wineries and talked to lots of makers and general wine enthusiasts. To tell the story of your region you need knowledge of its history of formation and this is best presented by large aerial photos and maps. Not one person was aware that two profoundly important maps exist that display the Margaret River landscape in beautiful detail: these are; Regolith-Landform Resources of the Cowaramup-Mentelle 1:50,000 sheet (published 2000); Regolith-Landform Resources of the Karridale-Tooker and Leeuwin 1:50,000 Sheets (published 2002); both covering the heart and soul of this beautiful region.

The big gap in our regionality armor is that the story we have to tell is not just the local and personal one. Nor is it all about the wine taste and its special qualities. It is not only the history of that particular winery and its blocks of vineyards but it embraces a much bigger idea-the origin of the district over time and the story of that time can go back as far as you like-naturally as long as it remains interesting to the wine buyers.

I notice that one of the taskforce members on Directions to 2025 was Dr Jim Fortune Executive Director of the GWRDC. In 2004 I approached the GWRDC for a few thousand dollars to support my regional landscape studies of the wine regions of Australia. Dr Jim Fortune saw no merit in this and my offer was declined. I would like to ask Dr. Fortune, does he know what regionality means or is it just a slogan?

Our wine makers and marketing people cannot talk about regionality if they do not know what to say. Some progress has been made with this in S.A with a series of very useful simplified geological maps of wine regions produced by the S.A. Department of Mines and Energy.

This type of information needs to be tightened and taught to those who want to sell wine so that we are all singing the same big picture before the unique differences of a particular winery and its wines is presented to the wine buyer. This type of detail I can assure the authors of Directions to 2025 will sell wine.

Selling up market wines in this case the Regional Heroes and Landmark Australia means you have to tell a story. The story has to evoke a reason to buy and one of these is the wines exclusivity, then the wines authenticity and it must also weave a credible picture. I know this because it says in Directions; "One of the mega consumer trends identified is Indulgence/premiumisation with subsets authenticity, exclusivity, sophistication."

An investment in a few people producing data of the type discussed will I suspect do much more for selling the Australian wine brand than an investment in more scientists unraveling the molecules that make up wine.

Those who support Directions to 2025 need to think carefully how they will implement their remark; "this can only be achieved by raising awareness and expectation of an Australian wine story founded on an international reputation for regionally distinct fine wine production."

Part 1 of Directions to 2025 can be read here.

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Friday, 30th October, 2009

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Goodbye Trevor O'Hoy

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Thursday, 15th November, 2007

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A Review Full of Compliments

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A Surprise from the Lion Nathan Wine Group

Monday, 6th August, 2007

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Monday, 30th July, 2007

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Friday, 27th April, 2007

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Thursday, 26th April, 2007

Another Belated Sceptical View of Fosterís

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The Family Name Changes Hands

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The Slow Sale of Seppeltsfield

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Thursday, 7th December, 2006

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Thursday, 9th November, 2006

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Monday, 6th November, 2006

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Friday, 27th October, 2006

The Mysteries of Preparing a Wine for Bottling

Friday, 20th October, 2006

A Label Story - Zontes Footstep

Wednesday, 7th September, 2006

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Tuesday, 29th July, 2006

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Tuesday, 29th July, 2006

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Monday, 24th July, 2006

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Friday, 21st July, 2006

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Friday, 14th July, 2006

Seppelts and Seppeltsfield and a Correction

Tuesday, 11th July, 2006

The Quiet Repositioning of the Rosemount Brand

Friday, 7th July, 2006

Reflections on a Seppelts Fortified Dinner

Wednesday, 5th July, 2006

Fosters Continues the Easy Part - Chopping Out Costs

Sunday, 2nd July, 2006

The Boundary of Coonawarra, Part II

Monday, 19th June, 2006

Slow Progress on a Nervy Business

Thursday, 15th June, 2006

Another Hurdle Jumped in E&T Survival Race

Wednesday, 14th June, 2006

The New Wines of Coonawarra

Tuesday, 13th June, 2006

Bad News for the Export of Premium Australian Wines

Wednesday, 7th June, 2006

Crisis in the Vineyards and a Solution

Tuesday, 6th June, 2006

Brian's Okay, Thanks to Macquarie Bank

Wednesday, 31st May, 2006

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Wednesday, 24th May, 2006

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Wednesday, 24th May, 2006

How Did Coonawarra Lose Its Way?

Monday, 22th May, 2006

The Big Box Liquor Battle - An Update

Monday, 15th May, 2006

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Friday, 12th May, 2006

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Tuesday, 18th April, 2006

WA Export Record for Palandri

Thursday, 13th April, 2006

A Dose of Reality from Hardys CEO David Woods

Wednesday, 5th April, 2006

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Wednesday, 8th March, 2006

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Wednesday, 8th March, 2006

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Tuesday, 7th March, 2006

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Saturday, 25th February, 2006

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Friday, 24th February, 2006

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Thursday, 16th February, 2006

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Thursday, 16th February, 2006

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Thursday, 16th February, 2006

Houghton to Help Along Premium Sales in the USA

Thursday, 9th February, 2006

The Ups and Downs of Domestic Sales

Monday, 6th February, 2006

Grape Surplus Not Just an Australian Problem

Saturday, 28th January, 2006

Where Australian Shiraz Began

Saturday, 28th January, 2006

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Tuesday, 3rd January, 2006

Evans and Tate Buys Time

Tuesday, 3rd January, 2006

Dromana to Raise New Capital

Tuesday, 3rd January, 2006

AUSTRALIAN WINE INDUSTRY ARCHIVE 2005
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Wednesday, 21 December, 2005

Unwins Into Administration: Where Goes Dromana?

Tuesday, 20th December, 2005

Dromana Estates a Casualty?

Friday, 16th December, 2005

Outback School a McGuigan Victim

Thursday, 15th December, 2005

Wine Investment Horror Continues

Thursday, 15th December, 2005

Hop Into Wooloomooloo

Thursday, 15th December, 2005

Seven Long Years Ago

Monday, 12th December, 2005

Grape Growers Consider Legal Action

Monday, 12th December, 2005

Worthless Contracts With McGuigan

Monday, 5th December, 2005

And the Cash Drain Goes On

Friday, 2nd December, 2005

Storage Shortage in California and Australia Too?

Wednesday, 30th November, 2005

A Global Gamble at Four Tenths of a Cent

Wednesday, 30th November, 2005

Simon Gilbert Expands with Cassegrain Purchase

Tuesday, 29th November, 2005

The Liquid is 35 Cents a Litre

Tuesday, 29th November, 2005

Laying the Foundation for an Explanation?

Thursday, 24th November, 2005

McGuigan Signals Even Tougher Times for Grape Growers

Thursday, 24th November, 2005

Farewell White Burgundy, Welcome White Classic

Tuesday, 22nd November, 2005

An American Takes Charge

Tuesday, 8th November, 2005

Stocks on the Rise

Tuesday, 8th November, 2005

Taking the Temperature of Jacob's Creek

Thursday, 27th October, 2005

So Far So Good for Barossa Vintage

Wednesday, 26th October, 2005

Taking a Gamble on McLaren Vale

Thursday, 20th October, 2005

Grapes Priced at Less than Production Cost

Monday, 17th October, 2005

Receiving a Risk from Foster's

Friday, 7th October, 2005

A Zork in the USA

Thursday, 29th September, 2005

Brand Launches Aplenty

Thursday, 29th September, 2005

Contract Price Lowered

Friday, 23rd September, 2005

The Xanadu Remnants Just Lingering On

Monday, 19th September, 2005

A Bird Wine But Will it Fly?

Thursday, 15th September, 2005

Dividend Cut at Cockatoo

Thursday, 15th September, 2005

Bad News Not Over Yet

Wednesday, 14th September, 2005

The End of an Export Profit Bonanza

Wednesday, 14th September, 2005

A Hard Year Ahead at McGuigan Simeon

Tuesday, 13th September, 2005

A Prediction Fulfilled

Saturday, 10th September, 2005

Vale Southcorp

Saturday, 10th September, 2005

Becoming Like Godot

Saturday, 10th September, 2005

Foster's Continues the Tidy Up as Growers Stay Nervous

Saturday, 10th September, 2005

An Expanding Success Story

Friday, 9th September, 2005

Showing the French How

Thursday, 8th September, 2005

Giving Wine the Status of Soft Drink

Tuesday, 6th September, 2005

Settlement Reached On Long Flat Brand

Monday, 5th September, 2005

Waiting for Evans and Tate

Saturday, 3rd September, 2005

Mixed Responses to Foster's Result

Wednesday, 31st August, 2005

So Far So Good at Fosters

Tuesday, 30th August, 2005

A US Listed Property Developer Enters the Wine Game

Monday, 29th August, 2005

What a Difference Five Months Make

Saturday, 27th August, 2005

No Report from Evans & Tate but a Special on its Premium Wine

Saturday, 27th August, 2005

Consumers Disagree with Wine Experts

Saturday, 27th August, 2005

Woolworths has Bolted - Coles a Distant Second

Thursday, 25th August, 2005

Tailgating With the Adelaide Crows

Tuesday, 23rd August, 2005

Up to the Governor

Tuesday, 23rd August, 2005

A Million Penguins

Friday, 19th August, 2005

A Non Speaking Chairman and No Wonder

Wednesday, 17th August, 2005

One Small Step for Lion Nathan Wine

Thursday, 11th August, 2005

Barking up the Wrong Tree: The Retreat from Cork Gathers Pace

Thursday, 11th August, 2005

Two Giants Judge Port

Tuesday, 9th August, 2005

Knife and Fork Wines

Thursday, 4th August, 2005

Tough Going for Wine Industry Minors

Thursday, 4th August, 2005

Solid Growth Continues for Jacob's Creek

Monday, 1st August, 2005

More News on the South Australian Grape Crisis

Monday, 1st August, 2005

Tough Time to Start but First Little Sign of Improvement

Tuesday, 26th July 2005

A Shift from a Sellers Market to a Buyers Market

Sunday, 24th July, 2005

A Stamp of Approval

Wednesday, 20th July, 2005

Deloitte Finds Losses Aplenty

Wednesday, 20th July, 2005

Take a Risk With a Good Name

Tuesday, 19th July, 2005

Should the Grange Have Been Made and Henschke's Barnyard Character

Friday, 15th July, 2005

One Small Step - New York Changes

Friday, 15th July, 2005

Tallarook Use Old Ideas for New World Wines

Tuesday, 12th July, 2005

Sometimes We Are Just So Silly

Thursday, 7th July, 2005

The Disappearing Barramundi

Wednesday, 6th July, 2005

A $222 Million Loss of Value in a Year

Monday, 4th July, 2005

The Wine Investment Scandal: An Update

Monday, 4th July, 2005

What Australia Drinks: the Spirits Come Back

Tuesday, 28th June, 2005

Xanadu Hardly Idyllic for Shareholders

Tuesday, 21st June, 2005

Export of Sommeliers Needed

Tuesday, 21st June, 2005

Yellow Tail the Trendsetter

Wednesday, 15th June, 2005

Cleaning Corked Wine

Wednesday, 15th June, 2005

Stelvins for Adelaide

Wednesday, 15th June 2005

Straight Talking By the Man From Thomas Hardy

Tuesday, 7th June, 2005

The Downward Price Vortex Gathers Speed

Sunday, 5th June, 2005

Trying Until the End

Wednesday, 2nd June, 2005

What a Difference a Year Makes to SGARA

Thursday, 19th May, 2005

Holding up Well Ė All Things Considered

Tuesday, 10th May, 2005

One for the Brave Investor

Sunday, 8th May, 2005

We Talk with U.S. Importer Peter Weygandt

Friday, 29th April 2005

Ned Kelly Rides In

Wednesday, 27th April 2005

More on that Disappearing Wine

Tuesday, 26th April 2005

Wine Investment Takes Another Knock

Friday, 22th April 2005

Let the Hard Work Begin

Friday, 22th April 2005

Will a Desperate Company do a Desperate Thing?

Wednesday, 20th April 2005

Nearly Half are Yellowtails

Tuesday, 19th April 2005

The Smell of Death

Thursday, 7th April 2005

Fake Medals to Go

Thursday, 7th April 2005

An Update on Australian Wines in the U.K.Market

Saturday, 2nd April 2005

A Peep Behind the Wine Show Door

Thursday, 17 March 2005

Downward Wine Price Pressure Continues

Thursday, 17 March 2005

Make Me Some Clean Skins

Wednesday, 16 March 2005

The Fosterís-Southcorp Game of Bluff

Thursday, 10th March 2005

Greg Norman Back on the Winning List

Tuesday, 8th March 2005

Bridget Jones Enters the Wine Marketing Lexicon

Saturday, 12th February 2005

Mine is Bigger than Yours

Friday, 11th February 2005

Bridget Jones Enters the Wine Marketing Lexicon

Saturday, 12th February 2005

No Surprises from Foster's and Southcorp

Wednesday, 9th February, 2005

Jacob's Creek and Wyndham Estate Feel the Pressure

Saturday, 5th February, 2005

A Wine Merchantís Warning

Monday, 31st January 2005

Drinkers Will Smile and Investors Frown

Friday, 28th January 2005

Great News For Southcorp Shareholders - the Bid is for Cash

Monday, 17th January, 2005

A Record to Inspire Confidence?

Friday, 14th January, 2005

A Terrible Botch at Takeovers

Thursday, 13th January, 2005

AUSTRALIAN WINE INDUSTRY ARCHIVE 2004
Doctors Keep Pressing for Increased Wine Tax

Saturday, 25nd December, 2004

Wine Comes to the Big Screen

Wednesday, 22nd December, 2004

American Journalists Must be Wine Drinkers

Tuesday, 14th December, 2004

Memories of 1905

Tuesday, 14th December, 2004

ABARE Report Shows Meagre Returns for Grape growers

Monday, 15th November, 2004

The Value of a Brand

Tuesday, 9th November, 2004

What Governments Give...

Thursday, 28th October, 2004

Hot Weather to the Rescue

Tuesday, 26th October, 2004

The Battle for Pubs

Tuesday, 19th October, 2004

Back to Being a Cash Cow Good News for Investors

Tuesday, 19th October, 2004

Another $70m of Embarrassment for Fosterís Group

Wednesday, 13th October, 2004

A Good Idea at the Time

Friday, 1st October, 2004

How do You Grow a Wine Company While Cutting Vineyards and Stock?
The Answer is:

Tuesday, 2nd September, 2004

Glug visits the Adelaide Wine Show

Friday, 8th October, 2004

The Price Of Being One Industry

Tuesday, 29th June, 2004

Cork Amnesty Ė The Move to Screw Tops Continues Apace

Thursday, 16th October, 2004

Coming to a Bar Near You?

Wednesday, 8th September, 2004

Andrew Garrett Goodbye?

Tuesday, 24th August, 2004



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