Secret Vines Blog

The Success behind ‘the high-rise in Coomandook'

1st April, 2009

This is an article written by David LeMire MW, one of only 274 Masters of Wine around the world. He's a remarkable guy who knows the wine industry backwards. The article is a fascinating insight for those who like to delve a little deeper and one of the most honest snap-shots you'll read about the current state of the Australian Wine Industry.

Over to you Dave.....

Our industry seems more turbulent with change than ever at the moment. The much-anticipated season of ripening and harvest, with its familiar rhythms and routines, these days seems more than ever fraught with uncertainty and anxiety.

The fires in Victoria, with their tragic human cost, have also hit our industry hard, and will no doubt harden the resolve of our stubborn, uncompromising, and committed wine growers. Corporate hubris and mismanagement has come home to roost, with the sadly predictable ‘outcome' of reviews, write-downs, and sell-offs, along with the obligatory fresh batch of good intentions. The content of the Fosters review and direction makes some sense, but do they have the people or the structure to fix the business?

Former Mildara Blass MD Terry Davis has concluded that family businesses are the best fit for the wine industry, and it does seem to suit the nature of the business, in which it can take a generation to build the identity and value of a brand. But it is not just the freedom from shareholders' short-term profit demands that makes family companies a good fit for wine. I think it is also closely connected to the agricultural, intellectual, and cultural demands of building fine wine businesses.

What are the chances, for example, that the board of Fosters, the CEO, the marketing managers, the accountants, the winemakers and viticulturists, during their average say 6 year stints, can understand, protect, and enhance a fine wine business in the way that autonomous operators like Rick Kinzbrunner or Michael Dhillon or a Steve Lubiana can? It's certainly not down to any lack of talent over the years in the winemaking and viti departments. But enough of Fosters - I don't want it to take over this column, as the column's value would surely plummet.

The change I've been thinking on is the one so stark in the Nielson (data) reports over the last few years. The tower block represented by Sauvignon Blanc in the bar charts, next to the underground car park of the Chardonnay sales.

I like to avoid writing about topics that overlap with my business interests (I consult to several NZ wineries, one of which is a very visible Marlborough-based brand). Sauvignon Blanc, though, is the elephant in the bottle shop: hard to ignore, and making a little bit of a mess of the Chardonnay aisle.

Like many people, I've been musing about why Sauvignon Blanc has been so successful, when the growth will stop, and how it will behave when it does stop, as surely it must, if only when it reaches 100% of white wine market share.

There are plenty of good theories doing the rounds about why Sauvignon Blanc is selling so well. The first theory I hear is that Sauvignon Blanc is a highly distinctive variety, and therefore easy to recognise. That makes it identifiable, familiar, and reduces the risk of purchase. The second is that Sauvignon Blanc has a freshness that most Chardonnays lack, and the combination of freshness and flavour is winning people over from Chardonnay. I think these explanations both tell part of the story.

My favourite writer at the moment is Malcolm Gladwell, author of The Tipping Point, Blink, and Outliers. One theme in Blink (which Gladwell describes as "a book about rapid cognition, about the kind of thinking that happens in a blink of an eye") is the human tendency to jump to conclusions, to be "a bit too quick to come up with explanations for things we don't really have an explanation for." With that note of caution, there's another theory that I want to float for why Sauvignon Blanc looks like a high-rise building in Coomandook on the Nielsen charts.

Gladwell recounts the experience of a researcher, Sheena Iyengar, who set up a tasting booth in a supermarket with exotic gourmet jams. Iyengar varied the number of jams on tasting from six different jams to twenty-four different jams. As Gladwell explains, "conventional economic wisdom, of course, says that the more choices consumers have, the more likely they are to buy, because it is easier to find the jam that perfectly fits their needs. But Iyengar found the opposite to be true. Thirty percent of those who stopped by the six-choice booth ended up buying some jam, while only 3 percent of those who stopped by the bigger booth bought anything."

Too much choice was leading to paralysis. I think that the consistency of quality and style of Sauvignon Blanc has given consumers confidence and simplified the choice, in an industry that is saturated with choice. Consider the myriad styles of Australian Chardonnay, where factors like oak, malo, and region make it a complex category, and contrast that with the simplicity of Marlborough Sauvignon Blanc. Perhaps Sauvignon Blanc is an easier wine to buy "in a blink of an eye" and the need to pause and think that other wines demand is counting against them.

This is an article that was first published in Australia's WBM Magazine, a leading publication in the Australian Wine Industry (March 2009).

www.awbm.com.au

To check out more about David and one of his new projects La Linea go to http://www.lalinea.com.au/partners.htm