James Halliday's Top 100 Wines of 2014

An introduction

Disclaimer: I wish it to be known I have written this year’s Top 100 without any knowledge of any of the advertising placed in conjunction with this article by retailers, wineries, or any other wine-related business.

This year 1582 wines were submitted for the Top 100. Of the 80 table wines selected, 25 came from Western Australia, Margaret River contributing 17 of these; 20 came from Victoria, 12 from the Yarra Valley; South Australia contributed 19, evenly spread across its regions; the Hunter Valley produced nine of the New South Wales total of 13; and three came from Tasmania. If the eight sparkling wines are included, Tasmania’s share increased to seven. All up 29 regions and 13 varieties featured in the top 88.

Simply to complete this overview, the wines came from 504 of Australia’s best wineries. There were 177 whites wines under $20, 376 white wines over $20, 229 reds under $20 and 716 reds over $20. In all 41 varieties were on show, the lion’s shares to chardonnay (186), shiraz (383), riesling (91), pinot noir (104), cabernet sauvignon and blends (196), semillon or sauvignon blanc or blends (171) and 84 sparkling wines.

What do those statistical tea leaves tell us? Well, for openers, Australia’s wine offer is more diverse than that of any other country, even without the inclusion of the magnificent fortified wines of North East Victoria and the Barossa Valley.

Yes, I hear you say, but are they as good as those that initiated the export boom? Does the disastrous decline of the past 10 years in the volume and value of exports reflect a decline in quality or failure by Australian winemakers to listen to what the markets wanted? Or have we failed to keep watch on the moves made by our export competitors to adapt their wine styles to ours, and – having done so – beat us on price and marketing expenditure?

None of these questions can be answered independently of the others, for the ground shifts radically if you are focusing on commercial wines on the one hand, or super-premium on the other.

Outrageous generalisations provide short answers. Our super-premium wines are, without question, better than those of prior decades or prior generations. And compared to equivalent quality wines from Western Europe or the Americas, they are underpriced – and grossly undermarketed through want of marketing dollars.

As the financial demands of the UK to lower prices continued year in, year out cost minimisation and efficiency became all important for the commercial wines that had driven Australia’s initial success, quality was relegated to second place. Then came the perfect storm of the GFC and the soaring Australian dollar.

Throughout all this the domestic tax on wine remains anomalously high compared to our competitors in the export market, and significantly impacts on domestic consumption. Professor Kym Anderson of Adelaide University’s Wine Economics Research Centre presented a paper on 1 October comparing the wholesale tax for commercial premium wines per standard drinks of Australia and that of its export competitors. The Australian tax is 22 cents compared with zero in Argentina, 3 cents in South Africa, 5 cents in the US, 6 cents in Canada, 1 cent in France and zero in other Old World producing countries.

It is true that Australia’s exports are not taxed, but this is also true of our competitors, so the comparative disadvantage remains. Export markets are expensive to maintain, and stifling domestic consumption (and profitability) clearly hinders the overall viability of wineries trying to establish or continue export markets.

Which brings me to the very large Elephant in the Room: China, and broader Asian markets. In last year’s introduction to the Top100 I wrote ‘The sheer speed of the rate of growth into a market that is newborn should sound a large alarm bell. It is quite certain tears will be shed, and financial blood will be spilt over the next few years.’ And this is precisely what has happened as a result of the edict by the Chinese government banning lavish gift giving, allied with some decline in consumer confidence.

The only exporter to China to avoid a decline in the 12 months to July 2014 was Chile, which has a free trade agreement, and operates in the lower half of the price pyramid. Australia’s decline of 8% by volume compared to 13% for all countries, with France particularly hard hit. Moreover, other key Asian markets showed solid growth by value, Hong Kong up 21.1%, Singapore 28.9%, Malaysia 9.7% and Taiwan 13.5%. The unexpected performance was that of the United Arab Emirates, up 24.6% to 15.6 million litres.

What are the reasons to expect a resumption of growth of sales to China? In the 12 months to 31 July 2014, 771,000 Chinese visitors arrived in Australia, up 11.6% on the prior year, and more than any other nation except those crossing the ditch from our seventh state. Research by Tourism Australia shows that Australia is China’s number one ‘must visit’ country, and for outbound Chinese visitors beaches and coastal life style were the most appealing generic features, food and wine the most appealing specific attraction. This prompted Tourism Australia to launch its multi-million dollar tourism programme Restaurant Australia.

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Wines considered to offer special value for money.