Thursday, August 21, 2008

Exiled to Wine Siberia

The last post on Shiraz noted that forums were discussing the news that wine importer The Grateful Palate (TGP) was trimming it portfolio of Australian wines. At that time it was not clear which producers would be affected by the reorganization. The lists of who is still in and who is out were revealed by Dan Philips in letters to his distributors (August 7th) and suppliers (August 14th).

Those still in:
Ashton Hills Vineyard, Ballycroft Vineyards, Battley, Buckshot Vineyard, Burge Family Winemakers, Clarendon, Glaymond, Greenock Creek, Hare’s Chase, Hazyblur, Hobbs Wines, Kalleske/Pirathon, Kay Brothers Amery Vineyards, Lengs & Cooter, Lillypilly, Loan Wines, Majella, Noon Winery, Paringa, R Wines, Red Edge, Ringland Vitners, Rudderless, Samuel’s Gorge, Schutz Barossa, Tim Smith Wines, Trevor Jones, Tscharke, Whistling Eagle, William Downie, The Willows Vineyard

Those out:
Betts & Scholl, Cape D’Estaing, Clos Clare, Digger’s Bluff, Geoff Weaver, Gibson, Henry’s Drive, Hutton Vale, Lashmar, Longhop, Lunar, Mclean’s Farm, Nurioopta High School, Old Plains, Oliver’s Taranga, RBJ, Rockford, Rusden Wines, Scarpantoni, Shirvington, Silesian, Teusner, Torzi Mathews, Troll Creek, Two Way Range, Wild Duck Creek Estate

Philips notes that TGP’s portfolio now consists of “about 25 producers including R wines”. This is a considerable reduction from the zenith of some 70 producers in 2004, and does suggest that the market for Australian wine in the United States has contracted significantly over the last few years. The possible reasons for this loss of interest have been discussed ad nauseam on wine forum and won’t be repeated here. However Dan Philip’s communication to his distributors is worthy of examination because it smacks of a superiority which could lead one to think that Dan Philips has more control over the Australian wine scene than just his current portfolio.

Writing about the wineries that are no longer part of his portfolio Philips noted, “Some of these departed months ago, others in the past days or weeks, but all have been exiled to wine Siberia and will no longer enjoy life in the Distributor Collective of Fine Wines at The Grateful Palate.” Reading this I was immediately struck by three things. The references to loyalty suggested that producers may have left TGP, rather than being purged. And what did he mean by producers being exiled to wine Siberia, and what was this Distributor Collective? Then there is the reference to “party official Robert Farver”! Is Philips trying to establish his own little egalitarian experiment in the world of wine? Does being exiled to wine Siberia mean that producers outside of the collective can expect attempts to freeze them out of the US market? Or is it just an attempt at humor? If the latter is the case then it really is a joke that is in poor taste. Through TGP Dan Philips has been responsible for a considerable growth in imported Australian wine, but that has not come without some criticism. A number of the wines imported by TGP (and others) experienced significant mark-ups on the US market, especially if they received high scores from wine critic Robert Parker. Because of the three tier system in the US its highly questionable whether the Australian producers of these wines received a fair remuneration for their wines. Those profits would have been more likely to go to the importer and distributors with most retailers having to compete amongst themselves to sell wines being offered at, often, ridiculous prices. It is no wonder that the portfolio reduction came about “due to market conditions and a very clear message from virtually all of our distributors”; that reads to as “we have overpriced these wines and so the ones that you can’t distribute we’ll just dump”!

There is something else here that is a little worrying. Through TGP Dan Philips is very generous to those individuals who sell the wines he imports. Its not unusual for him to take a large group of individuals to Australia to explore the wine regions and to taste wine. There is nothing wrong with this. But there is a perception that he is too friendly with some wine critics, particularly a wine critic that has always claimed that his organization always pays it own way and avoids conflicts of interest. There are also rumors out there in the wine world that if you leave TGP then the scores you receive from a certain wine critic may not be all you expect. You have to wonder just how big that wine gulag is in Siberia? It will be interesting to see what scores the critics give to the wines that have ended up in Dan Philips’ wine Siberia. You can be certain that there will be more than just a couple of people following that story.

Fortunately all is not lost for the producers that have been exiled. Some, like Rockford, can’t even satisfy their Australian consumer base. Others have begun new relationships with importers and have seen significant increases in sales. What is more telling is that Australia has over 2,000 wineries and so if you only have 25 of them in your portfolio you might be more out in the cold than you think.

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