Struggling to sell their grapes in this tough environment, more
and more grapegrowers are having their fruit made into wine,
rather than harvest the grapes and waste them onto the ground.
This means that there is a larger volume of wine sitting around in
tanks awaiting sale. At first glance the sales options for these
growers and other smaller wineries look pretty bleak.
The bleak outlook is due to the fact that the vast majority of
wine in Australia is sold by three entities: Woolworths, Liquorland
and Cellarmaster. Therefore as Woolworths and Coles continue to
acquire liquor stores, there are fewer independent liquor stores, all
being bombarded with wines from an ever-increasing number of
producers. This makes it more difficult for a newcomer to get
wines into any store.
Why it is smarter to head straight overseas First there is the Australian Trade Commission (Austrade).
Austrade is a Federal Government department charged with
helping Australian businesses develop exports. Austrade deals
across every Australian industry which exports. They are not wine
experts but rather business-facilitating experts. Austrade charges
for its services, however, for new exporters there is the New
Exporter Development Program (NEDP), which entitles the
approved applicant to up to 20 free hours of Austrade time.
Occasionally Austrade organises wine tastings in various
countries. It researches and then invites many, if not most, of the
serious players in that country’s liquor industry to come and try
wines from the participating Australian producers. The real benefit
of these functions, apart from giving potential customers an
opportunity to try your wines, is that Austrade then follow up with
these people after the event. The value of having someone “in
country” doing the follow up should never be underestimated. A
follow up email or phone call from Australia carries far less weight
than a one-on-one meeting in the prospective customer’s own office.
Whilst usually the NEDP free hours are used to help defray the
costs involved with an Austrade-organised wine tasting function in
the target country, they can also be used to have Austrade “check
out” potential overseas customers. If you get an enquiry from a
potential customer overseas, he or she will usually “talk up” the
size of the business and the company’s ability to sell your product.
They will talk in “container loads” for commercial to premium
wines and pallet loads for super premium wines. How are you to
know if they can deliver the goods or are just all talk? This is
where Austrade comes in. You can ask Austrade to check out your
potential customer and see where that business fits into the
grander scheme of the wine industry in the host country. It is
amazing the number of people who own one or two bottleshops,
who purport to be major importers of wine, or significant players
in their home wine market. Austrade can check these businesses
for you, and if they are not appropriate, they can usually find
somebody else more suitable. This is particularly true for emerging
markets. However in the traditional markets they may not be able
to help as much. For example nearly three years ago the Austrade
office in Copenhagen helped me find the winery I was then
associated with, a suitable importer. More recently talking to the
guys there, they advised that since that time more than 200
Australian wine brands had entered the Danish market, and they
really couldn’t assist new entrants as much as they had previously
Another incentive Austrade provide is the Export Market
Development Grant (EMDG) whereby it refunds up to 50% of
eligible expenditure on export market development above the
$15,000 threshold. As with all Government funding there is a raft
of rules, regulations and requirements that go with it, but luckily
there are service providers such as Stuart Mitchell, of Export
Solutions, who used to be the Austrade state manager-grants
SA/NT, and therefore can ensure that you do the right things to
comply with all the requirements.
A website helps
A good way to get enquiries from overseas buyers is to have a
website. As the reputation of Australian wines spreads around the
world, more and more potential importers seek information on
Australian wines. The simplest and most accessible tool for them
to use is the Internet. I know of one small winery that receives at
least five enquiries a week as a result of having a website. Most
end up being dead ends, but even if one in 10 work out, over time
you build up a good spread of countries to which you might export.
When you get what you think is a serious enquiry from
overseas, don’t be afraid to ask the company for details on its winery’s production. For example, I know of one producer
who ships on average one to two pallets a month to one of the
Caribbean Islands; another producer who ships to a supermarket in
Peru; and yet another whose wines are currently being assessed in
This is the time of the wine exporter! Right now the world is
beginning to discover wine drinking. Countries which have never
consumed wine before are starting to learn and understand about it:
Thailand, China, India, Vietnam, and Sri Lanka. Other countries are
becoming aware of the great flavours of Australian wines: Brazil,
Peru, Africa, Turkey, Russia, and the former eastern block of Europe.
So what are the options for someone just about to release his or
her first wine? Friends, acquaintances and even local restaurants
can only buy so much, thus to survive the new company needs to
find an alternative outlet.
I believe that the most viable sales vehicle for these
producers is export. Conventional wisdom has it that a producer
has to build up a strong home market before venturing
offshore. However, in these domestically-difficult times, this
is not a viable strategy unless the wine company has very deep
pockets. Therefore the new plan needs to reflect reality, which is:
it is relatively easier to sell Australian wine overseas
compared with domestically, especially when a company is just
business including annual accounts. Sooner or later this company
is going to ask you for credit, typically 90 days from bill of lading.
Incidentally, I firmly believe that the first order should be cash-ondelivery
to the wharf. This will ensure that the importer has the
financial resources to fund the purchase and also, helps minimise
the time that you are out of pocket on the transaction. Your bottler
won’t extend your terms to 90 days just because you are bottling
for an export order. This is the best way to sort out the “tyre
kickers” from the real players.
The Australian Wine & Brandy Corporation (AWBC) has a dual
role in wine exports. First, it has the regulatory role of ensuring
that all Australian wine shipped overseas is fit for consumption
and meets the regulations, and second, through the Australian
Wine Export Council (AWEC) its role is to promote Australian
wines overseas. AWEC has offices in most of the major wine
export destination countries such as UK, USA, Europe and Japan
and is currently investigating emerging markets such as China and
India. In the major markets not only does AWEC have people on
the ground, but it also has promotional programs in place to
promote “Wine Australia”. For a not insignificant fee, producers
can join the program and be involved in the events run by AWEC,
such as the “Australia Day Tastings” which are being held in more
and more countries.
Starting to export does not necessarily mean that you have to
employ extra staff. Any competent clerical person can, with a bit of
coaching, handle the documentary side of exporting. AWBC make it
easy for the first-time exporter, with assistance every step of the way
through the process of obtaining an export licence and getting the
wines approved for export. The AWBC system caters for mail, fax and
email, so that no matter how technologically challenged, or advanced
you are, you can easily communicate with it. The AWBC has a great
attitude, in that it is there to help and not hinder you, which makes life
so much more hassle-free.
Another good reason for going straight to export is that when a
potential retailer overseas is assessing your wine, it is more than likely
comparing your wine with those from other countries, as opposed to
the domestic retailer who will be comparing your wine to dozens of
other Australian wines. As Australian wines tend to be more fruitdriven
than those of most of the rest of the world, in my opinion your
wine has a much greater chance of being selected.
One final thing about exporting you must be aware of is the fact
that it all takes a long time to get started. It is not uncommon for
people overseas to take weeks to get back to you with their opinion of
your wines. Even when they say that they “want” to sell your wines,
it can be weeks or months before the order is actually placed. For
example, the Liquor Control Board of Ontario, Canada, usually takes
four to six months from acceptance of a wine, until the first order is
placed. So don’t expect that when they say, “yes we’ll take it”, you
will be shipping wine in the next few days.
Conversely customers overseas expect you to have stock ready and
waiting for their order, so that you can ship almost immediately.
Customers have no comprehension of the fact that you need to
produce new back labels or over-stickers carrying their importer
details, and apply these to your stocks; they just want the order to sail
also need to be aware that exporting will usually require
increased working capital, as most customers ask for 90-day credit
from bill of lading, thus requiring you to finance the sale for 30- 60
days more than a domestic sale.
Having sounded a few words of caution, I firmly believe that going
straight to export is the only viable solution for small and start-up
wine enterprises in present conditions.
There are hundreds of small niche opportunities out there, right
around the world, which the big wineries consider too small to be of
interest, and which could easily account for the majority of a small Australian potential exporters have excellent assistance resources
available and Australian producers have the wine. So what are you
Dan Traucki is the principal of Wine Assist Pty Ltd, wine industry
logistics and marketing consultancy. He started out as an accountant
before joining the wine industry 16 years ago. His involvement during
that time has included strategic positions of general manager of a
medium-sized winery and chief executive officer of a smaller winery.
Dan can be contacted on (08) 8382 4920 (phone/fax), 0408 801 795
(Mobile) or at email@example.com