Fire and brimstone – Australia’s

A long road to recovery

THE DRINKS INDUSTRY HAS HAD ITS FAIR SHARE OF THE DROUGHT, BUSHFIRES AND COVID-19 PANDEMIC. HANNAH SPARKS INTERVIEWED SEVERAL BRANDS, ASSOCIATIONS AND A RETAILER ABOUT THEIR JOURNEYS AND THE ROAD TO RECOVERY.

A heavy-hearted Prue Henschke stood in a blackened Lenswood Vineyard days after the Cudlee Creek bushfire swept through and destroyed all 25 hectares - about 25 per cent of Henschke’s total grape production including some of Adelaide Hills’ oldest pinot noir - sheds, machinery and equipment.

“It was a devastating sight,” the longtime viticulturist said.

This was not the happy start to the Christmas season Prue’s family or any of the winemakers and grape growers whose vineyards were caught in the fire imagined and things were only going to get worse.

Fire and smoke damage would amount to a loss of about four per cent of the country’s average annual grape harvest, around 60,000 tonnes by the end of summer, according to Wine Australia’s estimates.

Week after week from December through to January wineries in south-eastern Australia were blanketed by smoke from the fires.

“We hoped the smoke wouldn’t do as much damage as it did,” Clonakilla chief winemaker and CEO Tim Kirk.

Lenswood Vineyard destroyed by bushfire.

Above: Fire burning to the south of Canberra. Photo by David Reist Below: Canberra wineries screen for smoke taint. Photo by Chrissie Smith

“The cost of staying shut for a good-sized country pub or corner hotel in Sydney is about $35,000 per month,” Australian Hotels Association CEO Stephen Ferguson.

Winemakers such as Tim Kirk at Clonakilla in the Canberra District watched the situation with hope but braced for the worst.

“We hoped the smoke wouldn’t do as much damage as it did because most of it came before the grapes had gone through veraison when they start ripening. However, sure enough, when we sent the samples off to the Australian Wine Research Institute (AWRI) and Vintessential Laboratories they came back with really high numbers of smoke compounds. It was good in the sense it gave us a clear answer - we wouldn’t make any wine from fruit from NSW in vintage 2020,” Tim said.

Down the road from Clonakilla is Mount Majura Vineyard where winemaker Frank van de Loo organised a collection point through February and March for the region’s grape samples to be sent to AWRI for smoke taint assessment.

“We ended up with heaps of samples and samples from other regions. Unfortunately, the results were quite high for a lot of people,” Frank said.

Following a workshop with AWRI on how to conduct a sensory assessment for smoke taint in wine Frank established a local tasting panel.

“Some people were fairly insensitive to it while others were more reliable tasters. There are some tricks to tasting smoke taint because it lingers on the palate for a long time, so if you’re tasting wines closely together you could confuse a wine for having smoke taint when in fact it’s lingering from the previous wine,” Frank explained.

While vineyard owners can’t mitigate the risk of smoke taint, the research done by AWRI and tasting panels such as Frank’s can help wineries decide whether or not to use the grapes.

At the time of writing, Frank was due to sample a wine Mount Majura had made from grapes exposed to smoke.

“It looks clean so far but we’re going to taste it every month or two to see because smoke taint can come out with time in the bottle. However, if the wine still looks clean in months to come, then next time we have a bad year we might think about making more,” Frank said.

Fortunately, Clonakilla and Mount Majura were able to source grapes from other regions to make some wine in vintage 2020. While they would have preferred to make wine from their vineyards, it was a vital step to provide cash flow for the businesses and ensure customers weren’t left empty-handed.

Four Pillars co-founders Cameron MacKenzie, Matt Jones and Stuart Gregor

“No matter how much hand sanitiser you make, it can’t account for losing all of your global travel retail or all of the restaurants and bars that shut,” Four Pillars co-founder and Australian Distillers Association president Stuart Gregor.

At Henschke, while nothing could be picked from the Lenswood Vineyard and other vineyards were impacted by smoke taint, some were saved.

“Fortunately, our Innes Vineyard pinot gris at Littlehampton was untouched by the fire and was not impacted by smoke taint. Our Eden Valley and Barossa Valley vineyards, as well as the winery and cellar door, were some 60 kilometres away, so a long way from the fire front,” Prue said.

Most varieties are recovering well in the Lenswood Vineyard, however, they will require patience with most vines predicted to take two years to recover and three to four years for others, Prue said.

PANDEMIC HITS

As wineries began to recover from a horror summer, another storm was brewing. The first confirmed case of COVID-19 was identified in Australia on January 25 and lockdown measures began on March 20 when the borders were closed to non-residents.

By March 23, 70,000 people had been stood down or let go from the hospitality industry, according to Australian Hotels Association CEO Stephen Ferguson.

Cellar doors, restaurants, cafes, pubs, clubs and hotels were quickly forced to close and the price the industry paid was high.

“The cost of staying shut for a goodsized country pub or corner hotel in Sydney is about $35,000 per month because

there are insurance, electricity and phone network charges to pay; many also have hire equipment, maintenance, interest on borrowings and rent. When they open up again there’s an extra $15,000 for turning on fridges, so gas and electricity go back up, fees for television broadcasting and music licensing, workers compensation, wages and cleaning. To cover all of those you need scale in the business,” Stephen said.

It’s easy to understand when looking at the numbers why so many premises remained shut even after the federal government permitted patrons of ten.

JobKeeper was available to impacted businesses, however, Stephen said publicans had to borrow money to pay staff until the scheme kicked in.

At the time of writing, the AHA was lobbying the federal government to extend JobKeeper until the New Year.

With much of the on-premise shut, 4.5 million litres of beer was destined for the drain, according to Brewers Association of Australia CEO Brett Heffernan.

Some breweries such as Lion Beer Australia recalled kegs and credited venues to provide some relief. In total, Lion provided $30 million worth of credits for 107,000 kegs to venues nationally, Brett said.

Companies such as Casella Family Brands also took stock back from on-premise customers.

“Some kegs may be salvaged, checked for quality depending on their production dates, with others used to generate gas for future production but the sad reality is much of the beer will go to waste,” Brett said.

Major breweries saw a 35 per cent drop in sales while small breweries experienced 70 per cent declines during the pandemic, according to the latest figures from the Brewers Association.

Meanwhile, brands who could make hand sanitiser did so to keep staff employed and support health workers under pressure.

One of those was Four Pillars in the Yarra Valley, which made 25,000 litres of hand sanitiser from the heads and tails of the spirit, which are usually discarded or redistilled.

While the hand sanitiser provided useful work for staff after Four Pillars’ cellar door closed in March, it wasn’t enough to arrest t he sales decline, brand co-founder and Australian Distillers Association president Stuart Gregor said.

“No matter how much hand sanitiser you make, it can’t account for losing all of your global travel retail or all of the restaurants and bars that have shut,” Stuart said.

No distillery was immune to the impacts of the pandemic and another challenge still lies ahead, according to Stuart.

“There’s going to be a spike in unemployment, a real decline in gross domestic product and a recession. That means consumer spending and confidence will be down and if you’re making a luxury product, which most Australian spirits are, you’re going to have to fight harder for consumers to spend the same amount of money as they did previously,” Stuart said.

Calabria Family Wines was also able to divert its resources into making care packages for vulnerable seniors in the Griffith region and reallocated grape spirit destined for its tawny and muscat wines to create bulk hand sanitiser to donate to local health centres and hospitals.

“We felt we needed to contribute to the community, that’s something Mum and Dad always instilled in us and we weren’t sure what was going to happen with our business because we had to close our two cellar doors in the Barossa Valley and Riverina,” Calabria Family Wines sales and marketing manager Andrew Calabria said.

There was another saving grace for some brands and that was the bottle shops that managed to stay open through the pandemic and enjoyed an uplift in sales while consumers were panic-buying.

Liquor Barons Claremont owner Bernard helps a customer

“Higher taxes right now are the last thing punters and publicans need,” Brewers Association of Australia CEO Brett Heffernan.

“In WA there was extraordinary panicbuying, but it was just for a handful of days. During panic-buying there was a flight to safety, to big brands, so from a business point of view while we enjoyed some higher volumes our profitability wasn’t all that great because we were selling lower value products,” Liquor Barons banner group general manager Chris O’Brien said.

Then the WA Government restricted alcohol sales to reduce panic-buying.

“That had a significantly negative impact on our sales, particularly on wine and lasted about two to three weeks,” Chris said.

Thankfully, sales lifted again when the restrictions eased and gatherings of two people increased to ten.

“At that point, we started to see small gatherings taking place again - dinner parties and barbecues. Alcohol is often consumed around occasions and this scenario absolutely drove that home. We saw a change in purchase behaviour, that flight to safety and value disappeared overnight and people began to pursue the purchases they wanted and seek out those alternative brands,” Chris said.

However, like others, Chris is prepared for when JobKeeper ends and purchases of premium brands will likely subdue again.

Wine Australia CEO Andreas Clarke said premium wines would be impacted by an economic downturn.

“People will still like to drink during this period but they will possibly come off a bit in terms of their preparedness to spend,” he said.

The Brewers Association is preparing for another beer tax increase in August and was lobbying the government at the time of writing for a freeze on the twice-yearly consumer price index hike.

“Higher taxes right now are the last thing punters and publicans need. This is all about jobs and keeping costs down for punters while giving hospitality a much-needed boost in rebounding post-shutdown,” Brett said.

While no one was immune to the drought, bush fires or pandemic, the industry has adapted, innovated and shown resilience.

“If we get through the immediate tough period we’ll get through to the other end. Customers value their local producers and they’ll want to support them. By no means are these happy days but I’m optimistic,” Andreas from Wine Australia said.

Casella Family Brands general manager of sales Mark Churi had this final piece of advice for the industry: “Talk to your customers, find out what’s changed and work with them to adapt to that change.”

Michael, Elizabeth and Andrew Calabria of Calabria Family Wines pack hand sanitiser.

A pub shuts during the COVID-19 pandemic. Photo by Hannah Sparks

“Talk to your customers, find out what’s changed and work with them to adapt to that change,” Casella Family Brands general manager of sales Mark Churi said.