Dump or Die
Dump or Die
(Originally published in Diario Sur in Spanish)
AJ Linn
The recent announcement by Treasury Wine Estates that it has emptied US$32 million-worth of wine down the drain is unusual for several reasons. Unlike similar dumping exercises in the business, this wine was already bottled and stored in the warehouses of Treasury’s US distributors ready to be sold. Part of the Fosters Group, and with Penfolds as its flagship brand, Treasury selected the varieties intended for fast turnover that were selling too slowly.
Another US$37 million has been earmarked for discounting bottles on store shelves, although one can assume that private customers and restaurants that bought the wines prior to the announcement are just unlucky.
All in all Penfolds was over-optimistic about its US sales, and in Australia has even gone as far as rescinding contracts with grape suppliers to avoid future gluts.
There is a wine surplus wherever you look. France has always dumped wine, although last year was the first time it dumped quality stuff: 200,000 litres of the AOC-classification. Quite why France continues to produce the same amount of wine each year when exports are falling and the home market has shrunk by half in the last two decades, is not clear, but while growers receive compensation from Brussels, no-one really cares.
Maybe Spanish wine producers should care. After all it is from the taxes they pay that Brussels keeps France’s surplus winemakers competing with them. Spain’s home consumption has also dropped like a stone, although exports have managed to keep up.
However there is a lot of laughing behind hands when bodegas here announce they have sold their total year’s production. Pull the other one is the typical reaction in the trade.
The Australian surplus is huge, with a figure of 900 million litres being bandied about. Even US star, the Napa Valley, is having a tough time, and dozens of wineries are up for sale while others have gone into liquidation.
No wine-producer or wine-growing country likes to admit to a surplus, and for many years over-production has gone to distilleries to make alcohol. Quantities are currently so great worldwide that the next use may be bio fuel. It will be a pity though if the whole winemaking process has to be gone through to produce cheap energy.
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