HCC/Taste/Wine Update

First have a read of my earlier post about the Hobart City Council selling wine at Taste and my open letter to all the Alderman.

I have had some responses:

Bill Harvey called me within an hour of sending my letter.  We had an in depth discussion about my concerns regarding this issue.  He said that the sale of cleanskin was a poor choice and he would not want it to happen again.

Marti Zucco emailed a reply:
"The council Officers will provide you with the details below.
I will be as blunt as I normally am.
This will NEVER happen again! Well I will fight to ensure it NEVER happens again!
Hope that answers any future concerns"

Ron Christie emailed a reply:
"Dear Alderman,
What Mr Smart (me) has said below quote "I'll get back to you" should read "Response on the way". His email was forwarded to Director and Taste staff as per below in red on same day.  A response will be forwarded to Mr Smart in due course. However, feel free to respond (personally) if so desired."

Helen Burnet emailed a reply:
Thanks Paul - I have similar concerns and do not want to be tarnishing the tas "brand" but importantly not competing in this bizarre way with the winemakers and industry.  We'll work to make it better - this is certainly not the way to recoup money.
Happy to talk some more.

Other Alderman were not forth coming in a reply, and being fair, were probably on holidays.

So now I wait for the council officers to get back to me but what will anything achieve.  I feel like attending the next council meeting to air my concerns. Stay tuned

Dear HCC, A Tasty Question

I have sent the following email off to the Alderman of the Hobart City Council:


Dear The Mayor, Hobart City Council Alderman and members of the Taste Committee,

I am writing this open letter to you concerning the recent sale of "Taste" branded wine by the HCC at the Taste festival.

I have emailed Ron Christie (30/12/2011) with the following questions with the only response being "I will get back to you" on the same day.  I was wondering if someone else could please answer the following questions:

• Was the wine that the HCC sold at the taste Tasmanian?
• Where was the fruit sourced from?
• Who was the winemaker?
• Was this contracted (ie buy the grapes, make the wine under HCC direction) or was the wine bought  bottled?
• Were the other wine stall holders aware, prior to their application, that the HCC would be selling wine?
• How does the HCC selling wine fit in with the Taste objectives, and what are those objectives?
• How much wine did the HCC sell, and how much money did you make?

Now that the event is over I would like to look to the future event and perhaps persuade the HCC to not sell unbranded wine at the Taste.  I can understand that you need to recoup some costs of the event, but I think you can look for other avenues. 

 

As a producer of wine my biggest problems with this issue are:

• It is in direct competition to other fee paying stall holders, you didn't need to pay the fee to setup
• It is not the same as selling Cascade branded beer.  The major sponsor Cascade would be loving the fact that there is one more stand selling their product.  Try selling "Taste" brand beer and see if they like that.
• None of the other wine stall holders will kick up a stink because they do not want to jeopardise their future applications.  
• Will you setup a stand selling Coles cheese on Coles crackers, with a Coles sausage sizzle? It sounds absurd but that is the same as selling unbranded wine..

I would love to get a response to this, in fact I would love to have a chat about this.  The Taste is a great festival, lets make it better.

 

Cheers

Vineyard Paul

The Taste/The Trough

My plan yesterday was to head down to the Taste festival, grab a few plates, take some photos, write a flowery blog post on how great and wonderful Taste is. Plan B.

If you do not know, the Taste is week long festival on Hobart's waterfront featuring Tasmanian Food and Wine.  It is a showcase of the great things Tassy can do, or at least that was its original intention.

(Deep Breath)

The Taste does not promote great food and wine.  I feel that it now should be called "The Trough".  It is full of people queueing up to dig in to fish and chips. Serious.

The most popular stands, with queues 20 deep, were Flathead, Mures and Fish Frenzy.  This is for food that I can get anytime.  Great Tassy food?

And I am only getting started.
(Deep Breath)

The design of the interior is poorly thought out for the flow of pedestrian traffic that this event now commands.  I think that perhaps the HCC need to rehire Jan Gehl to remap the shed layout.  It is impossible to walk the length of the shed.  Impossible.  Just to prove it I have recorded a lap of the shed, end to end.  I finished it in 1 min 53 sec.  Try to beat that!



With the extra seating outside why not remove one row of seating inside and increase the walk way areas?  Why we are at it, why not rope off the queues, that way they don't stand in the walkways?

(Deep Breath)
I could not find any free water, but plenty of bottled water for sale from Hartz, a major sponsor.

Now my big bone of contention
(Very DEEP Breath)
Merch.  The Hobart City Council are now selling merchandise.  What great marketing hairbrain scheme is that.  I dont want a "Taste" hat.  Your kidding aren't you?  And they have mobile trolleys hawking the stuff.  I really don't want to be interrupted when eating my expensive fish and chips with a "would you like to upsize that with a hat"!

And...AND... the Hobart City Council are selling "Taste" branded wine, formerly known as clean skin wine. This is in direct competition to the wineries who paid a small fortune to be there.  This is the worst idea of all.    If I were a winery at this event I would have walked out and asked for my money back.  It is outrageous for the Hobart City Council to ask stall holders to pay serious, and I do mean serious (~$12,000 for a corner stand), money to attend, only to have the owners of the event compete with them.

What is next from the HCC.  Will they start a sausage sizzle with homebrand snags, as well as selling some Coon on crackers?

Alderman Ron Christie was contacted for a response about the HCC selling wine at Taste, with no reply.

Maybe I have gotten Taste all wrong.  Maybe it is just an event to hang out at, get some grub and get slowly pizzled in the sun?  I don't actually know what the objectives are or mission statement is.  Do you?

There were some positives though:

• The new outdoor seating and the taking over of Salamanca Lawns. Big Tick

• An impromptu barbershop Happy Birthday for our friend from roving buskers, sweet

The Taste is no longer what I am looking for in a Wine and Food event.

I will save my money for Savour Tasmania.

That WET Debate, Rebate, Part 2.0

The Rebate is not Married to the Tax

You may have or not read my previous post on the Wine Equalisation Tax and may agree or disagree with my view that the small winemaker will not be affected much by changing the tax on wine from Ad Valorem to Volumetric.

After chatting with many boutique operators I always get the same response:

"But if the WET goes I won't get my rebate"

I want to analyse this phrase and break it down in to what we are talking about.  There are actually 2 separate parts to the current wine tax system, but for some reason they have become "married".  They are:

1. A tax on wine. Currently a Wine Equalisation Tax (WET) of 29% then GST of 10%
2. A rebate.  For the first $1,000,000 of sales you get the WET tax back

How does changing the Tax change the Rebate?  The fear is that "if the Government change the tax system, it will all go".  Maybe, but what if it doesn't.  Why can't the tax system look like this:

1. A tax on wine. Volumetric tax at the rate of $0.16 per standard drink
2. A rebate.  For the first $1,000,000 of sales you get the Volumetric tax back

I would love to see the divorce of the thinking that to "have a rebate you have to have a WET". And with this new system, every small winemaker (below $1,000,000 of sales) would pay exactly the same rate of tax, the GST 10%.  

It is right for the wine industry to have a tax rate based on the volume of alcohol, as it can be such a damaging drug in the wrong hands.  I want this debate to continue.

Thoughts?

Dr Don Martin Sustainable Viticulture Scholarship

So..

The $10,000 Don Martin Sustainable Viticulture Fellowship was initiated to commemorate influential Tasmanian viticulturist, Dr Don Martin. The Fellowship is available to Tasmanian-based practicing professionals working in Tasmania's wine sector to encourage research across viticulture / oenology. Its intent is to provide an individual with the opportunity to undertake national or international travel for study or practical activities that will benefit the Tasmanian wine sector through innovation, sustainability and best practice.

The Fellowship was possible through a generous bequest from Dr Martin to the Alcorso Foundation, a great friend of Claudio Alcorso both of them sharing a passion about improving wine grapes grown in Tasmania.  Through this fellowship Dr Martin's bequest provides valuable opportunity for individuals in the Tasmanian wine sector to explore leading sustainable practices outside Tasmania and share that knowledge for the benefit of the broader Tasmanian wine sector.

And the inaugural winner is ... me.

So the proposal that I have put forward is that I will:

• Attend the workshop “The Biocontrol of Plant Disease” hosted by the International Organisation for Biological Control. This will be in Reims, France, 25-27 June 2012
• Complete 2 -3 stagiares with producers from Burgundy and Alsace. Each placement would be of 1 - 2 weeks duration.  

It is a great opportunity for me and an honour to be an ambassador for the Tasmanian wine industry.


I was presented this award by the Premier of Tasmania, Lara Giddings, at the annual Alcorso Foundation Dinner.  And boy what a dinner it was, with guest Chef Nicolas Poelaert of Melbourne's famed Embrasse.  Here is the menu:


Lightly steamed Tasmanian salmon, smoked olive, nettle juice, old way pickles, cereal bread

Braised beef cheeks in ink, burnt carrot puree, asparagus, rice vinegar, pomme croquete

Praline mousse, desiree potato, nougatine, sheep's milk yoghurt, banana 

And desert was amazing, it was plated at the bar.  Before I tell you what it was, here is the sequence photos.

And the desert was simply called Embrasse Restaurant forest floor

Here is a copy of my thank you speech:

I would first of all like to thank the sponsors Wine Tasmania, Plasdene GlassPak and the Wine Business Magazine for their generous support.  Without support of organisations like these, awards like this cannot take place.

I would like to thank the Premier for presenting this award.  The Tasmanian Wine Industry is in a unique position, with demand outstripping supply, and amazingly high quality.  With the Governments continued support the Tasmanian Wine Industry can be truly cemented as one of Australia’s great wine regions.

I would also like to thank the Alcorso Foundation for this scholarship.  It is a huge opportunity for me and I understand that it comes with a huge responsibility that I will dutifully uphold.

Thank you goes also to my 2 referees, my boss Greg Melick, and my uncle Dr Richard Smart.  I don’t know what you said in the application about me, but it must have worked.

But my biggest thank you goes to my wife, Greer Carland.  You are my muse.

Thank you

The State of the Tasmanian Wine Industry

On tonight's Booze an Nosh show we chatted with Sheralee Davies of Wine Tasmania and Dr Bob Dambergs of the AWRI's Tasmania cluster.  It was a great chat about where the industry is at and the direction it is heading.  I am really luck that I make wine in this state as we are in a great shape.  When other regions are facing low demand/high supply problems we seemed to be blessed with the flip side of the coin.  As a region that produces only half a percent of the national crush, we seem to keep batting well above our weight division.

But where is the future?  Will our success bring massive amounts of investment with expansive plantings, driving growers premium prices down?  Or will sensitive investment bring an opportunity to reach more customers at lower price points?

I think the time is right for starting the discussion, about where the future of the Tasmanian wine industry should aim for.

Audio of the show here

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That WET Debate, Rebate

Small Wineries and the WET Rebate

The Wine Tax issue is coming to a head at the moment.  It seems that everyone (Drinkster) is talking about it, including myself, but it seems to be that it is all just a lot of ranting.

Lets set the scene first.  When GST came into effect in on July 1, 2000, it abolished a lot of taxes, duties and levies and claimed it would simplify the tax system.  This would also abolish the current Wholesale Sales Tax on wine (41%) and potentially reduce it to the GST 10%.  "We can't have that" says the government, and it adds in a 29% Wine Equalisation Tax.  This plus the GST 10% on top resulted in an effective tax rate of 42%, thanx.

Well what happened from here is that some of the smaller guys started to hurt.  They asked the Winemakers Federation of Australia (WFA) to help and they came in guns blazing and lobbied for a rebate.  This is a refund of the WET (29%) on the first $1 Million of wholesale sales.  Ka-ching.

What has this resulted in?

1. An Ad-Valorem tax system, one that is based on value.  Cheap wine pays less tax than expensive wine
2. Cask wine is now the cheapest taxed product, per standard drink, with around $0.05 tax per standard drink, whereas mid-strength beer is around $0.32 per standard drink

Cask wine is now identified as one of the leading products used by alcoholics.  How do we protect against it?  What the government always does, increase tax.  But raising the WET would proportionally hurt the smaller guys more, as there wine costs more.  And also we are one of the most taxed wine countries in the world.

Well there is another method, one that has been used by the other categories of beer and spirits.  It is an excise based on alcohol content, the more alcohol, the more tax, independent of value.  The basis for a Volumetric Tax is that the cheaper cask wine would then be adequately taxed and reduce harm.

All very well and good, I am all for the reduction of the harm and evils of alcohol, but what about the small guys?  The fear is that if the WET goes, so does the WET rebate, which is helping prop up these little guys.  Well lets work out an example.  Lets take a 4L cask at $12, a bottle at $10 and a bottle at $30, all at 13% alcohol. Currently the 4L cask pays $0.06 in tax/StD, the $10 bottle pays $0.27 in tax/StD and the $30 bottle pays $0.80 tax/StD.  Assuming that the $30 guy is getting his full refund for being boutique, then for every direct sale he pockets $21.14 plus the WET to give $27.27.

Now Treasury Wine Estates have made calls for the volumetric tax to be set at $12.50 per litre of alcohol, which equates to a tax of $0.16 per standard drink.  This is a "revenue neutral" level, in that the overall revenue to the government would not change.  Now lets apply that to our three wines, but lets assume that they keep their shelf price for marketing reasons.  They all pay the same tax per standard drink, but the value to the owner changes a little.  The value of the $30 wine to the little guy has gone from $27.27 (including his WET rebate) to $26.05, the $10 has changed from $7.05 (without rebate) to $7.87 but the cask wine has changed from $8.46 to $4.41, almost half the return of previous.  

As you can see the change to the little guy is not going to massively affect them, and if the WFA could wheel out Brian Crosser and Ian Sutton (they originally secured the WET rebate) to negotiate an excise rebate on the first $500,000 worth of sales, then everyone could be happy? Right?

Wrong.  There is one guy who is going to hurt.  He is already bleeding from every orifice and does not need much more pushing to drive him over the edge.  He is the bulk wine grape grower with unsecured contracts. His prices will be driven down further, or worse, no one will want his grapes.  It will drive grape growing out of the hot irrigated areas.  And this would be devastating for many families and communities.

And does this fit in with what Wine Australia is promoting?  Quality wines with regional distinction as opposed to a wine lake of questionable cask quality? Hmmm.

I think a volumetric tax would be great for the future of the Australian wine industry but it will come with some pain, pain that may be needed. Like ripping a bandaid off quickly!

<End Rant>