There’s a bit of a kerfuffle in the Australian wine industry about a tax rebate both Australian and New Zealand wineries receive.
Pernod Ricard-owned Premium Wine Brands and Treasury Wine Estates have called for the Australian federal government to reform the Wine Equalisation Tax (WET) rebate, claiming it is sustaining the country’s glut.
In its submission to the Australian federal government, Premium Wine Brands said it “believes that existing wine tax arrangements are distorting market forces by sustaining the 20 per cent of vineyards, which the industry…found to be surplus to market requirements and incentivising the production and sale of cheaper wines, contrary to the industry endorsed strategy of value building through premium, branded products. We believe that tax reform would end these distortions and allow normal market forces to address the structural oversupply issues.”
What is the WET rebate?
It’s a bit technical but WET is a value-based tax paid on both New Zealand and Australian wines consumed in Australia. An agreement between the two countries, allows both domestic and Kiwi producers to claim an annual tax rebate of 29% up to a maximum of AU $500,000 and was originally intended for the purpose of smaller producers. Interestingly, Australian wines sold in New Zealand get no tax relief.
It is estimated that AU $900 million is collected as WET each year, and more than $200m is returned to producers as a rebate, of which $30m goes to New Zealand producers.
Is reform necessary?
The Winemakers’ Federation of Australia has been working with the government for two years on reforming the wine rebate, admitting it needs some adjustment. It seems some industry members have been abusing the system. The Federation agrees the rebate is unintentionally helping growers to stay in the industry, when their business is unsustainable.
Stephen Strachan, head of the Winemakers’ Federation of Australia told rebeccagibb.com, “The WET rebate is not intended for bulk wine but growers have been producing surplus grapes and converting it to wine to sell through certain retail outlets at discounted prices. In these cases, the WET rebate is keeping the producers in the market and hitting the pace of reform.”
The likes of Treasury and Premium Wine Brands have submitted documents to the federal government in advance of its tax summit next week but Strachan added, “The Australian treasurer has indicated he is not having alcohol discussed at this summit”. Thus, is this all a storm in a teacup?
A New Zealand perspective
And what does this mean for Kiwi producers? Should they be worried? Well, the Closer Economic Relations (CER) trade agreement between Australia and New Zealand would have to be torn up if they were going to abolish the WET rebate for Kiwi wines sold in Australia. Which is unlikely.
Strachan admitted that while it was frustrating New Zealanders benefitted from this, he added “The only way we can cut out New Zealand would be to cut out a lot of the legitimate Australian wineries. The Australian government can’t distinguish against New Zealand because of the CER.”
I asked Philip Gregan, head of New Zealand Winegrowers, what the impact would be if the WET rebate was abolished. He answered, “There is around $20-$30 million coming back to the New Zealand wine industry each year from the WET rebate so it obviously has an impact. Wineries can do many things with that money”.
But, I’d like to hear from producers – what does the rebate mean for you? Do you care? Do you think it’s unfair?
Tony Bish, winemaker and silver fox from Sacred Hill is in town and agrees to do his 60 seconds on Unfiltered. So, who’s going to win the Rugby World Cup and who would he go gay for?
Flavour culture has a nice ring to it. It sounds like the title of a book. Perhaps I should put pen to paper. In fact, it’s a term Sacred Hill’s winemaker, Tony Bish, has coined for their new Sauvignon Blanc-making method.
Instead of “bucket chemistry”, as Bish calls it, adding one tank here and one tank there, the producer has introduced a new technique for blending in a bid to make a Sauvignon Blanc that isn’t another me-too.
Bish says, “This year, we made a scorecard for every wine with things like thiols, palate weight, palate length, texture, intensity and scored each wine one to five on each attribute.” This was no small feat with 75 tanks of Sauvignon Blanc to choose from for a 10,000 case batch.
They then created a computer-generated spidergram using those numbers and blended according to the blend’s profile.
“So, if it was missing some passionfruit, we would then look at the spidergrams and know which parcel we should use for the blend.”
And the process can be used to improve future vineyard practices too. “From the spidergram we identified what was in the vineyard. If it was excessively herbaceous, we then asked did we leaf pluck enough? Could we make it less green next year?” He adds, “We are farming flavour.”
This year the blending was based on sensory analysis to create the spidergrams but next year Bish reports they will be using laboratories to undertake chemical analysis for aromatic components and thiols to map each wine more carefully.
The new 2011 release, retailing at NZ$19.95, does show a nice level of restraint. Yes, there’s the passionfruit and gooseberry and it all seems well integrated, and it’s good to see 12.5% alcohol on the label. Perhaps there’s something in this flavour culture.
Would you like a glass of wine with your Domino’s, sir?
Thursday 22 September
Should you have an Italian Barbera or a Chilean Chardonnay with your pizza? It’s a big decision but don’t fret – help is at hand! Staff at online wine trader Virgin Wines have partnered up with multinational pizza chain, Domino’s, to help hungry customers select the best match with their takeaway.
Wine Advisors at Virgin have matched each pizza from the Domino’s new Gourmet Range with one white and one red wine ‘to offer customers a luxury dining experience in the comfort of their own homes.’ The Rustica pizza has been paired with a Barbera and a Sauvignon Blanc ‘to bring out the flavour of the smoky bacon and sweet sunblush baby plum tomatoes’ while a Shiraz Cabernet Sangiovese or a Gewürztraminer are recommended for its ‘spicy Firenze’.
Domino’s customers are also offered six bottles of Virgin wines for £25 when they purchase a pizza. That’s £4.16 a bottle, so I’m not sure about the quality of the booze although Domino’s pizzas aren’t exactly the best I’ve ever had either.
Simon Wallis, sales and marketing director at Domino’s Pizza, gushed about the new promotion in a press release: ‘Our new Gourmet range has been developed to appeal to a wider pizza eating audience. This promotion will enable us to reach out to more potential pizza eaters, while also offering added value for our existing Gourmet customers.’
In addition to its venture with Virgin Wines, Domino’s is also the official partner on low-brow reality TV show Big Brother’s eviction night. Customers get a free bottle of Coca-Cola with their pizza on those evenings. Excuse me if I don’t rush out and order…
There are currently 638 Domino’s outlets in the UK and more than 9000 worldwide.
Alas I am no longer the current Louis Roederer Emerging Wine Writer of the Year. That’s what happens with annual awards. You’re soon so last year!
But congratulations to Gabby Savage, deputy editor at the Drinks Business taking this year’s crown. Well deserved. She came to Harpers magazine when I was features editor on a work experience placement. A few months later, a staff writing job came up at the Drinks Business and she got it. She was quickly promoted to deputy editor when Jane Parkinson left the team, and she’s had her nose to the grindstone since. Well done. Spend your winnings unwisely!
Nice to see a few international writers getting on the winner’s podium this year. The competition has been accused of being UK-centric so it’s good to see US writer and natural wine supporter, Alice Feiring becoming online columnist/blogger of the year, Max Allen wine wine book of the year for The Future Makers: Australian Wine for the 21st Century and fellow Australian Tyson Stelzer win the Champagne writer of the year for his Champagne Guide 2011 eBook.
The other winners were…
The Artistry of Wine Award
International Wine Website of the Year
Tim Atkin M.W. for timatkin.com
International Wine Publication of the Year
The World of Fine Wine
Regional Wine Writer of the Year
Liz Sagues for the Hampstead & Highgate Express
International Wine Columnist of the Year
Victoria Moore for articles from the Guardian/ the Telegraph
International Wine Feature Writer of the Year
Andrew Jefford for articles from The World of Fine Wine and Decanter
I had my first opportunity to try the newly-arrived 2008 Bordeaux vintage last week, and I was pleasantly surprised. I admit, I’m no Bordeaux expert – the world has enough of those – but they were attractive wines.
Retailer Glengarry charged $79 to try seven wines with a retail value of $1800 and, astonishingly there were only around a dozen of us attending. If we had been in Hong Kong rather than Auckland, I’m sure the room would have been packed to the rafters. Still, it meant we were able to have seconds of our favourites!
Inevitably, the wines were all very tight even seven hours after decanting. Most were oak dominant with bags of vanilla or hazelnut on the nose and palate. However, there is a lovely freshess of fruit and a lightness on the palate despite great concentration coming from low yields. The wines all had lovely balance that comes when the fruit is not overripe with moderate alcohols and medium to fresh acidity.
Wines of the night were Chateau Pontet-Canet, a fifth-growth (and a so-called Super Second) from the village of Pauillac, practising biodynamics. It’s a seamless wine, dense and powerful yet only medium bodied. It’s a masculine wine style with firm yet fine, drawn out tannins. Black cherry and pencil lead aromas with lots of vanilla oak. Fresh with focus and drive. (19/20)
When you write that many descriptors plus a lot more I won’t bore you with, you know you’ve got a complex and fabulous wine on your hands. That’ll be why it’s NZ $280. If only I were a doctor or lawyer I’d have taken a case.
I really enjoyed the Leoville Barton, a second-growth from St Julien. A completely different wine to the Pontet Canet, it is much more feminine, silky and delicate. It doesn’t have the power nor the tannic structure of St Estephe or Pauillac. It is nicely focused on the mid palate and displays great balance. My note ends ‘A powerful wine wrapped up in soft silk’ (18/20). And at $90 cheaper than the Pontet Canet and $30 cheaper than Lascombes, which was a little bit strange for a Margaux, it represents good value.
Cos D’Estournel and Haut Brion’s second wine, Le Clarence, were both structured, powerful wines worth recommending too (I didn’t spit so they must have been smart!)
Disappointment of the night was the St Emilion estate Pavie Macquin. It was what I call ‘worked’. The winery had extracted the grapes to within an inch of their life and the fruit flavours and tannins were overextracted and a little bitter. If you paid $190 for it, you would feel robbed. Ah, but isn’t that Bordeaux for you?!