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Winemakers struggle with the net and WET

Opinion

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As newspapers follow the dinosaurs into the swamp, it’s confounding to watch the wine business trying to deal with the internet. The strange see-sawing counterpoint of wine’s clubby confidence with its awkward attempts to freshen up its frontline personalities must look damn stupid to the young.

In the 50 years in which wine columns were standard fundraisers for newspaper magnates, it was very easy for wine magnates and their stooges to influence wine writers over the odd lunch and a few bottles of their best with the newspaper magnate or his editor.

Since winemakers realised they couldn’t get away with selling sweet fortified rotgut forever, and eventually followed the likes of Max Schubert into the new world of dry table wine after World War II, they relied heavily on wine writers.  These were employed by the newspaper publishers, who paid most of them peanuts in exchange for guaranteeing them access to a life of free wine so long as they toed the line, promoting the new products and teaching people how to drink them.

 To paraphrase Yeats, things have indeed fallen apart, the centre has lost its hold, and mere anarchy is loosed upon the world

The newspaper magnates were encouraged by the pages of retail advertising which some winemakers convinced the biggest booze chains to place in exchange for lower wholesale prices and a contribution to the ad acreage.

Not quite rivers of gold, but quite certainly rivers of red and white, which took a nice gold lustre when blended with the associated advertising the winebiz provided.

Now the old model is in ruin: wine columns are disappearing with the newspapers.  Even the glossy gastroporn mags are dissolving into the digital chaos.  And the whole wine business, most of which has never planned or paid for a proper educational advertising campaign, ever, has little idea how to replace those compliant writers and the thirsty magnates of yore.  Those days are gone.  To paraphrase Yeats, things have indeed fallen apart, the centre has lost its hold, and mere anarchy is loosed upon the world.

So while this mess endures, it no longer seems strange that the Winemakers’ Federation of Australia (WFA), the organisation there to give “leadership, strategy, advocacy and support” to the winemakers of Australia, should deliver a solid dressing-down to a surviving, indeed leading magazine, which is utterly dedicated to supporting the industry that it services.

The WFA, commonly called The Woofer by its constituents, is in trouble with many of them as it struggles to tighten up or remove the Wine Equalisation Tax rebate, commonly called the WET.

This writer has disliked the WET since its invention – there must be better ways of assisting the little ivy-hung stone cellars upon which so much tourism depends.  Woofer heavies Brian Croser and Ian Sutton negotiated the rebate system with the Fed to protect small operators from the then unknown wiles of the goods and services tax.  It is a tax rebate.  To me, any tax which must be paid straight back is an inefficient mess.  But worse, the WET rebate always looked like a real easy thing to scam.

As it has never been “product-oriented”, the WET’s always been tricky for food and wine editors to explain. So they haven’t.

As the Australian Tax Office website explains: “WET is a value-based tax on wine consumed in Australia. WET applies at 29% of the value of the wine at the last wholesale sale (before adding GST).” Very basically, it is a rebate of up to $500,000 a year paid in certain circumstances to wine producers.

Strugglers.

I’m no businessman, but I can promise you it’s not very hard to avoid making a lot of money in the wine business.  Anybody can set up a winery, or several, in the trust that they’ll fail to make so much money that they miss out on that half million rebate.

They don’t even have to own a vineyard or winery.  Any mob can promise to pay a broke grower for grapes eventually, rent a tank on somebody else’s refinery slab, get some other mob to bottle it and somebody else to print the labels. Virtual wineries are rife, thanks to the WET.

In fact, that WET rebate is now the only profit many, perhaps most, small wineries get.  This is most perverse when you consider the varying efficacy of, say, a rebate being paid over and over to a Flash Harry with many failing companies, each with its own brand but no vines and no winery, versus the real need of a small family vineyard/winery/cellars that was set up in a century when wine and its taxes were very different.

Having invited a respected professional like Anthony Madigan, co-publisher and editor of Wine Business Monthly, to an “open forum” to discuss the WET with wine folks, it seems a little hamfisted that the Woofer would then bark at him, reminding him of section four of the Listening and Surveillance Devices Act 1972 (SA) which prescribes a $10,000 fine or two years’ imprisonment.

This happened after last Wednesday’s “open forum” in McLaren Vale.

It seems to me that (1) As a journalist Madigan was invited by the Woofer to attend an important open forum in his industry; (2) he was a few minutes late; (3) he sat down and turned on his recorder; (4) he decided not to write about some of the opinions he was hearing, and (5) he went back to his office.  Then (6) he apparently gets this burning arrow from the boss of the Woofer, Paul Evans, who claims that between (1) and (3) the president of the Woofer, Tony D’Aloisio, asked all media to leave the room.

Evans returned my call and denied “threatening” Madigan.  It all seems really silly to me.  I insinuated that perhaps the reason I was not invited to the McLaren Vale meeting was that somebody realised that as a journalist and wine critic, I would not take lightly to being told the discussions of a gathering were strictly off the record after I had bothered to arrange the time and transport to attend what the invitation called an “Open Forum”.

What I like is the Woofer attempting to unite the mob to stop the WET rebate ever going to virtual wineries or folks with no real vineyard or plant. They want to chop shady dudes who claim it over and over on many brands.  And they want to put an end to the $30 million or so which goes to New Zealand mobs who sell their Savvy-B here but manage to earn the Australian rebate.

Sure, this will make life very difficult for the many littlies who make better things from unsold fruit using other mates’ facilities, even if that be Woolworths giant Cellarmasters/Dorrien/Nuriootpa wineries in the Barossa. Whoever owns them, we sure do see a lot of small brands coming through those big doors.

Companies like Treasury and Pernod-Ricard’s Jacob’s Creek want the WET trashed.  They also happen to be sick and tired of the destruction the Woolies/Coles duopoly wreaks to their brands when they discount the hell outa them.  To a degree, this is why the local gossip following the Woofer’s series of Open Fora around the country seems determinedly to repeat the mantra that its proposed changes to the WET is a secret scheme to help the big guys (such as Treasury and Pernod-Ricard).

Which to me would seem to be a very good reason to let expert journalists write about it.  Like, especially after you’ve invited them, and all.  To an open forum.

Just by the way, Woofer: you’re reading this on the internet.

drinkster.blogspot.com

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