Who Buys Australia’s Fortified Wines?

The recent sale of Seppeltsfield and its stocks of fortified wines to Kilikanoon got me wondering about who buys these extraordinary but amazingly inexpensive wines.

As recently as 1966 fortified wines accounted for some 62 percent of wine sales in Australia but by 1984 it was only 16 percent. Sales fell even further to around 7% by 1993, and have continued to fall to the present day. In the 1993-94 financial year fortified wines were 8.4% of domestic wine volume and 2.3% of export volume. By 2005-06 domestic volume was 4.2 % and export volume accounted for 0.35%. Much of this drop in market share has been the result of enormous growth in sales of table and sparkling wines, although the volume of fortified wine sold in Australia has fallen steadily from 27 million liters in 1993-94 to 18.5 million liters in 2005-06.

Eighteen and half million liters seems like a large volume but with a population of 20,434,176 (July 2007 est.) that is less than a liter per person. That 18.5 million liters looks even more insignificant when its broken down by wine styles (Sherry, Port, Other) and wine containers (glass less than2 liters, soft packs, other). For 2005-06 fortified wine in glass (of less than 2 liters) made up 1.36% of domestic sales by volume with Sherry at 0.4%, Port at 0.87% and Other accounting for 0.085%. I’m assuming that "Other" includes Muscat and Tokay which (in glass of less than 2 liters) sold 366, 000 liters in 2005-06. Divided amongst 20 million people that is less than 20 milliliters/person. That is not even a fluid ounce!

With numbers like that its no wonder that the Chairman of the Muscat of Rutherglen group, Colin Campbell recently announced a $1.4 million (Aust) dollar project to transform all sectors of the Australian fortified wine industry. Campbell stated “We expect the outcome of the project will be a totally new approach to presenting our wines – in bottle shops, restaurants and cellar doors. The renewed focus on fortified wines will permeate all sections of the wine industry – distributors, retailers, restaurants, wine producers, and vocational and tertiary training institutions. We believe consumers will also embrace the changes.”

Part of the funding for the project includes a grant of $500.000 (AUD) from the Australian Government to aid the Australian fortified wine industry re-brand its products and increase access to European markets. But how much fortified wine is exported? Unfortunately not a lot but in contrast to the steady fall in domestic sales the volume of exported fortified wines has remained remarkably constant between 2 and 3 million liters; 2.873 in 1993-94 and 2.587 in 2005-06.

Where is Australia exporting these wines today?

In 2005-06 over 70 percent of exported fortified wine went to four countries; USA 20.8%, UK 19.6%, Canada 16.7%, France 15.2%. However in the first three countries fortified wines do not constitute a large segment of total exports. Fortified wines only accounted for 0.26% of exports to the USA even though they consumed 28.4% of total exports. Its worse in the UK where 0.2% of wine imported from Australia was fortified and they received 36.2% of total exports. Canadians have a greater appreciation for Australian fortified wines with 0.89% of the wine being fortified; Canada receives 6.8% of exported Australia wine. Perhaps surprisingly France shows the greatest attraction for fortifieds. Even though France consumes only 1% of exported Australian wine, they accounted for 5.2% of the fortified wine exports.

I'm not even going to try to figure out the consumption per person in these countries, but if you want to do part of the exercise put these numbers in your calculator. 539,000 divided by 300 million. Yes that right its less than 0.0018 liters per person in the USA. But let's look on the bright side. It can only go up from there, can't it?

Note: The definition of fortified wine used to collect these numbers is: Wine to which grape spirit, brandy or both has been added, thereby adding alcoholic strength and precluding further fermentation. Fortified wine must contain at least 150 millilitres/litre and not more than 200 millilitres/litre of ethanol at 20° Centigrade.

A Fortified Future for (Australian) Wine?

The Foster's Group, the Australia-based global multi-beverage company, agreed today (Aug. 27th) on the sale of the Seppeltsfield site in the Barossa Valley to Kilikanoon, a Clare Valley winery. The fate of Seppeltsfield has been haunting lovers of Australia’s most awarded fortified wines for months. The Seppeltsfield property was purchased by Joseph Seppelt in 1851. Today the 185 hectare property includes the National Trust listed historic homestead and approximately 100 hectares of surrounding vineyards and its blue stone cellars are home to 9 million litres of fortified wines including stocks of the 100 year old Para Liqueur Vintage Tawny; begun in 1878 when Benno Seppelt placed a barrel of the finest wine from that vintage in the cellar and decreed that it would remain untouched for 100 years. In addition to the 100 Year Old Para, the other fortified wines make up Australia’s most diverse and most acclaimed range as the listing below proves.

The most awarded wine of any style is the DP 90 Rare Barossa Valley Tawny which has won 14 Trophies and 59 Gold Medals in Australian Wine Shows since 1990.

DP 59 Rare Rutherglen Tokay, recipient of 4 Trophies and 48 Gold Medals in Australian Wine Shows since 1990.

GR 113 Rare Rutherglen Muscat, recipient of 9 Trophies and 35 Gold Medals in Australian Wine Shows since 1990.

DP 63 Grand Rutherglen Muscat, recipient of 5 Trophies and 24 Gold Medals in Australian Wine Shows since 1990.

DP 57 Grand Rutherglen Tokay, recipient of 29 Gold Medals in Australian Wine Shows since 1990.

"Seppeltsfield houses the world's greatest collection of fortified wines dating back to 1878 in an unbroken tradition. We are proud to become the next custodians of this priceless national treasure", said Kilikanoon CEO, Nathan Waks. "We will work hard to ensure that Australia's already fine reputation in this area is enhanced and to rejuvenate the Seppeltsfield Village over time through sympathetic wine-related redevelopment" (see Press Release)

The sale includes the Seppeltsfield winery, Cellar Door, approximately 100 hectares of surrounding vineyards, the majority of Seppelt fortified wine stocks currently on site, fortified brands names including Para, Solero, Trafford, Old Trafford, Mt Rufus and an exclusive license for the Seppeltsfield brand for fortified wine.

I among others feel tremendous relief that Seppeltsfield and its fortified wines stocks have attracted the attention of a buyer and may now have a future. With interest in these rare but extraordinarily inexpensive wines having fallen into a slump, it was always on the cards that they could just fade from Australian wine culture. However the future is not assured. Foster’s will “continue to retain ownership of key fortified wine stocks on site which will form the basis of Foster's fortified wines.” These wines appear to include Penfolds Great Grandfather and Grandfather wines, but with Foster’s record of bowing to profitability one wonders about their future.

The other concern is more practical. Kilikanoon, although they have an enviable reputation as makers of dry wines like their Oracle Shiraz, they make no fortified wines. So there are unanswered questions. The most important being - Who will be responsible for maintaining the wines already stored at Seppeltsfield and for the production of future releases and future vintages of the 100 Year Old Para? Putting up the money to buy Seppeltsfield is one thing, having the experience to continue the tradition is an entirely different wine game.

EDIT: Killikanoon is the principal of the newly formed Seppeltsfield Estate Trust. The Seppeltsfield Estate Trust will buy the assets. The owners of the Trust include Kilikanoon Wines, Janet Holmes à Court, Greg Paramor and Kilikanoon’s major shareholders Nathan Waks and Bruce Baudinet. (see bottom of Kilikanoon Press Release).