Exports, tourist numbers, and cellar door sales have been disrupted in the past few months, putting some WA wineries under pressure.
Exports, tourist numbers, and cellar door sales have been disrupted in the past few months, putting some WA wineries under pressure.
Wine Australia acting chair Cath Oates said it was a surreal experience to drive up Caves Road on the Easter long weekend and not see another car.
She said the shutdown of South West tourism due to hard border closures and regional travel restrictions had an immediate impact on the Margaret River region’s wine sector, particularly given many wineries’ dependence on walk-in sales.
“The WA wine industry relies very heavily on inbound tourism, particularly in Margaret River and the Swan Valley to a certain extent, so there was an immediate cessation of that business,” said Ms Oates, who is also the owner of Margaret River winery Oates Ends.
Under phase two of the COVID-19 restrictions announced by Premier Mark McGowan last month, wineries are permitted to reopen if they provide a serving of food with any alcohol sales.
This requirement had precluded many operators from getting back to business, Ms Oates said.
Small producers relying on sales to bars and restaurants also took a hit, she said, and wineries were beginning to see the impacts of a slowing export market.
Data from Wine Australia shows a 7 per cent decrease in export value in the March quarter due to a decline in exports to China.
Burch Family Wines trade marketing manager Richard Burch said the impact of COVID-19 had been immediate and deeply felt.
“All our sales channels have been affected in some way, some more than others, but overall business is steady, it’s just not great,” said Mr Burch, who is the son of founders Jeff and Amy Burch.
Burch Family Wines is ranked fourth on the BNiQ wineries list (ranked by volume of wine produced), and owns well-known brands MadFish Wines, Howard Park Wines, and Marchand & Burch.
Mr Burch said online wine club sales had increased, but exports and on-premises sales in hotels, pubs and cafes had been affected.
Burch Family Wine brands are also sold in bottle shops, which Mr Burch said had not maintained the uptick in sales seen earlier in the pandemic.
“There was a period in March where there was a spike and I think that was definitely associated with panic buying, but it’s sort of fallen off and plateaued,” Mr Burch said.
“On the export side of things, we export about 20 per cent and that’s essentially stopped.”
China is Burch Family Wines’ main export destination, and Mr Burch said he was closely monitoring the current trade dispute.
“As a wine exporter, our biggest market, we are pretty nervous watching that, that’s for sure,” he said.
Other top wine businesses in the state include Accolade Wines (second on the BNiQ list), which owns brands such as Amberley Estate and Houghton Wines, and ASX-listed Treasury Wine Estates (third), which owns Penfolds.
Pack leader
Topping the BNiQ wineries list for the past few years is Fogarty Wine Group, which owns Deep Woods, Evans & Tate, Millbrook Winery and Smithbrook Wines in WA, as well as Lake’s Folly in NSW, Lowestoft Vineyard, Anon and Terra Verde in Tasmania, and Dalwhinnie in Victoria.
Proprietor Peter Fogarty said the impact hadn’t been too significant across his business.
“Online sales are up but at the same time, on premises and direct through restaurants and bars and so on is down, so it counters,” Mr Fogarty told Business News.
Mr Fogarty said 80 per cent of his wine was sold at Coles, Woolworths and Aldi outlets.
“We sell a lot of our product to a lot of the major retailers and they have all had pretty strong performances, so our sales have held up pretty well across the last three months,” he said.
Fogarty Wine Group acquired small Victorian producer Dalwhinnie earlier this year, expanding its already large footprint.
“Basically we are looking for what we classify as the ultra premium-type brands and brands that fit our model,” Mr Fogarty said.
He said the group bought land in Tasmania after five years of planning, including a 50 per cent stake in Tasmanian Vintners, because it had similar characteristics to Margaret River.
“It produces premium fruit, very good quality wine; it’s small enough that you can get a strong foothold in the market if you do it right,” Mr Fogarty said.
The group also purchased some of Sandalford’s vineyard in Margaret River, to have the capacity to plant more fruit.
Sandalford chief executive Grant Brinklow said about two-thirds of the roughly 520-hectare parcel sold to Fogarty Wine Group was uncultivated.
“We recognised that there was no business requirement for us to plant vines on that land,” Mr Brinklow told Business News.
“It was about right-sizing our investment in Margaret River because we were effectively like a land bank.”
The sale hasn’t affected Sandalford’s seventh-place position on the BNiQ list.
This year marks a significant milestone for Sandalford, which is celebrating 180 years since it was established, 50 years since its first vines were planted in Margaret River, and 30 years since Prendiville Group bought the business
Mr Brinklow said Sandalford had been focusing on direct to consumer sales in the past few years, last year hosting 200,000 paying visitors to its Swan Valley winery, with about half from overseas and interstate.
Given the international border closures, Mr Brinklow said the business set the goal of growing its online wine sales.
“The stated goal at the front end was to effectively deliver in a six-month period … more than double what we had ever achieved in the same space in a 12-month period previously,” he said.
Even though Sandalford has a restaurant and could open its doors, Mr Brinklow said it had chosen not to and would instead wait for the right time.
He said August was shaping as that opportunity, as June and July were typically quiet, and was hoping the long list of weddings and corporate events booked for September could go ahead.
Aravina Estate, owned by Perth entrepreneur Steven Tobin and Hayley Munro-Tobin, has also chosen not to open its restaurant for now.
“We can’t really do anything or provide great service with only 20 people when we normally might have 150,” Ms Munro-Tobin said.
The winery has accessed JobKeeper and staff members have been put to work pruning vines and tending to orchards.
The business’s online presence has been a critical part of its strategy during COVID-19, with its wine club subscriber list of 10,000 helping generate sales.
Wines of Western Australia chief executive Larry Jorgensen said if there was one thing to be learned from the pandemic, it was the importance of online sales and communicating with customers.
“Wineries are realising if they did put some work into it prior, how important that was, and if they didn’t put some work into that prior, how important it is,” Mr Jorgensen told Business News.
He said wineries that wanted to open in the coming weeks would need to distinguish themselves with a unique food offering to set them apart.
“People are busily thinking how to do a food offering that is a little bit different, is enticing and interesting and makes people want to come out’,” Mr Jorgensen said.
2020 vintage
Ferngrove Vineyards managing director Andrew Blythe said unusual weather had meant yields were significantly reduced this year.
“Across all of WA, we experienced anything from 20 to 40 per cent yield reductions and that was just lack of winter and spring rains that we had,” Mr Blythe told Business News.
He said the quality of red wines coming out of the 2020 vintage was going to be outstanding.
“For smaller producers it’s good, but for larger producers like us, yields play an important part of our business,” Mr Blythe said.
Weather has severely affected winery Latitude 34 Wine Co in recent years, which has dropped from 11th to 13th on the BNiQ list of wineries due to a loss of grapes.
