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Why viticulture in South-Eastern Australia needs to change

24 July 2024 By Patrick Schmitt

Viticulture in South-Eastern Australia needs to change if the region is to put an end to its current oversupply, believes former CEO of Accolade Wines, Paul Schaafsma.

Drawing attention to the well-publicised problem of excess grapes in Australia’s biggest source of bulk wine, the Riverland region (pictured), Schaafsma said that growers and companies were failing to find a market for their fruit and wines because of the way the vineyards are managed.

Schaafsma, who is currently MD of Benchmark Drinks – a business that specialises in celebrity-backed wine brands – has held top positions in a range of companies with a strong base in making and selling affordable Australian wines, from Hardys’ owner Accolade Wines to Australian Vintage – the company behind McGuigan Wines.

Commenting on the current oversupply affecting Australia, and the troubles being faced by some of the country’s biggest wine producers, including Pernod Ricard, which has decided to sell off its wine business – which includes Australia’s well-known Jacob’s Creek brand – Schaafsma stressed that the issue was structural, and not related to any short-term shifts in demand.

“There is a stylistic problem with eastern Australia,” he told db during a meeting in London earlier this month. This issue, he said, relates to the climate and the way viticulture is organised in the Riverland region, which accounts for around one-third of the country’s wine production.

Speaking about the conditions, he said that increasingly-prolonged periods of intense heat was making it hard to produce wines with freshness unless there was an alteration to the way the vines are managed.

“You might have five to six days of 40 degrees in a row, and your baumé can go from 8 to 15 in a week, which means you can’t get all the fruit off [before it gets baked by the heat],” he said.

“So you need to look at ways of managing the vineyard through trellising so you have the foliage to protect the grapes from hot days,” he said, before commenting that without more shading from the vine’s canopy, growers were in danger of producing fruit that was overripe and sunburned.

“It’s important to maintain freshness [in wines], and consumers are looking for bright, not stewed fruit,” he said, pointing out that raisined flavours were out of sync with drinkers’ tastes.

But also key to the Riverland’s problems is the way growers are paid, which Schaafsma said was “set up based on tonnage”.

This means that the vineyards are being managed to produce the maximum amount of grapes, rather than the best quality possible.

“The challenge is how can companies interact with the growers to ensure that the canopy is managed differently; they need a more quality or stylistic-based commercial arrangement, not one just based on tonnage,” he said.

Continuing, he said, “If that can be achieved, then the Riverland and eastern Australia can evolve.”

Speaking about sources of demand, he said that “China coming back on stream will help, but it’s not everything.”

Indeed, he noted that it would more likely prop up the “premium end” of Australia’s wine industry, while there is “a lot of work to do at the commercial end”, he said.

“I’ve worked in the Australian wine industry for 25 years and I’ve seen people make a lot of money out of using the Riverland for large volumes of inexpensive grapes, but now those grapes are stylistically-inappropriate,” he said.

Schaafsma stressed that “the fault is not with the growers”, pointing out that “they are just trying to make a living, and if the contract with them relates to tonnage, then they will produce just tonnage.”

Looking to the future, he said that businesses such as Riverland’s CCW co-operative, which is the country’s largest, producing around 200,000 tonnes of wine grapes annually, “needs to recognise that maintaining existing contracts is not going to be in their long-term benefit; it needs to be a collaborative approach [between the growers and producers] that delivers a sustainable living and grapes that are stylistically appropriate.”

While there are boutique producers in the Riverland making fresher wines from old vines and heat-resistant grapes that are trained and trellised to protect them from sunburn, the high-volume grape growers need to re-consider their approach, according to Schaafsma.

Summing up, he said, “Australia needs to sort its vineyards out.”

In contrast, he observed the success in terms of sales and awards for the wines from Western Australia, where he said that a cooler climate was responsible for “bright fruit, which is what the premium wine consumer is looking for.”

While Western Australia accounts for just 7% of the nation’s total vineyard area, Schaafsma noted that it produces 28% of all the medals awarded to Australia at international wine competitions.

He also said that he had “relaunched” Western Australian wine brand Mad Fish in the UK three years ago, “and now it’s the third largest premium brand from Australia in the UK,” he said, behind 19 Crimes and Wolf Blass.

“Mad Fish has gone from £760,000 to £9.4m in three years in terms of retail sales in the UK – and we are growing at 32% year-on-year,” he said.

Continuing, he recorded, “95% of all Australian wine growth in the UK comes from Western Australia,” which he credited to the increase in sales of Mad Fish and wines from Howard Park in Margaret River, while telling db that 40% of UK retailers Australian own-label SKUs come from Western Australia.

Such success he said was because the wines “are stylistically-appropriate”.

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