The worldwide recession has turned one of Australia's premier appellations—Barossa Valley—into a tale of two valleys. Challenging times are putting the squeeze on some wine companies, while others are reaching record sales figures. While some are struggling to stay afloat, others are innovating and trying new approaches and new markets.
Australia's wine glut is taking its toll in the Barossa. The country has an oversupply equal to 100 million cases, big Australian Shiraz is no longer the flavor of the month, and the value of exports to the United States has shrunk by 14 percent in the past year.
"We're in a massive oversupply at the moment, and a lot of reputable companies have had to be opportunistic to compete in this market," says Adrian Hoffman, a sixth-generation Barossa grapegrower. "Many growers are processing fruit and holding it for 18 months in the hope of selling it offshore in bulk for a couple of dollars a liter."
The average price for Barossa Shiraz grapes dropped by 3.6 percent in the 2010 vintage. As much as 20 percent of Barossa's grapes are being sold at unsustainable prices, according to Sam Holmes, Barossa Grape & Wine Association CEO. "Some growers are being paid less than their cost of production, and we need to respond to this by decreasing the costs or increasing the price of the fruit, or they will tip over," he says.
Others have embraced the changing market to better position their brand. "We've worked hard in the U.S. in the past 12 months and have actually recorded sales growth," says winemaker Ian Hongell of Peter Lehmann Wines. Many Australian brands have pulled out of the U.S. market, increasing opportunities for those that remain.
Meanwhile, domestic wine tourism is booming. Producers who have found creative ways of attracting guests are reaping the benefits. "We built a kitchen out the back and recently served 800 meals in two hours at our Stew & Shiraz weekend," says Whistler Wines co-owner Chris Pfeiffer. For the first time, many of Whistler's wines will sell out before the new vintage is ready to release. Now he's looking into sourcing more fruit from outside the family estate.
Charlie Melton celebrated the 25th anniversary of Charles Melton Wines recently by shuttling his top 250 clients to a weekend in the Barossa. He spent a fortune treating them to food and wine, but they returned the favor by buying plenty of his wines and his neighbors'. Sales were so strong at one nearby cellar that the winemaker dropped a carton of beer on Melton's doorstep the following week to say thanks. "The weekend was a big expense, but if you divide that out over 25 years of goodwill, it's worth it," says Melton.
For Wayne Dutschke of Dutschke Wines, the secret to growing the market lies in diversifying Barossa wine styles. His new wine, Cab Mac Barossa Valley Shiraz, is the first 2010 Barossa Shiraz to reach the market. It's a low-alcohol wine made using carbonic maceration in the manner of Beaujolais.
St. Hallett Wines has just released a new Old Vine Grenache 2009 from early-harvested fruit treated with the sensitivity of Pinot Noir. The result is a refreshing, aromatic, low-alcohol wine. "It's all about trying to redefine the style of traditional Barossa Grenache," says winemaker Toby Barlow. Wines like these carry the potential to create new markets for old Barossa varieties.
Success, it seems, is coming not to the lucky but to those who take the initiative to build relationships with their markets, invest in goodwill and, above all, make good wines.