The failure of Great Southern and their competitor Timbercorp will be mourned only by their investors and their greedy financial brokers. The Managed Investment Schemes (MIS) were a blight; an awful piece of government policy that fueled uneconomic plantings and helped tip the winegrape industry into chronic oversupply.

The artificiality of a scheme offering tax advantages unavailable elsewhere was always going to cause problems Everyone in the agriculture industry knows that a return on investment of 20%+ is extraordinary in these times. Yet MIS schemes were in the market projecting 25% plus for investors. Overlay substantial management fees, extravagant in some cases and ridiculous commissions for financial brokers; it just did not stack up. The Australian today covered the increases in executive salaries months before the collapse. I am so surprised.

Investors were either completely taken in or were 100% in it for the tax benefit. Why was the government in such a hurry to hasten plantings? They just distorted the economics of the agricultural industry and handed huge sums of money to rapacious and unscrupulous entrepreneurs. Who lobbied the government to implement these tax breaks? Now that these ill-conceived schemes have been exposed, there should be a parliamentary inquiry into how this all came about.

Pictured are John Young, who ‘earned’ a $2 million retirement bonus from the company last year, and Peter Mansell, a Great Southern non-executive director and former Chairman of West Australian Newspapers.

Having already suggested that the Australian Advertising Industry is generally clueless about marketing their own services on the web I thought to monster a couple of other industries. So I had a look at the web sites of 50 West Australian wineries – about 15% of the industry. I checked each for sensible use of Title and Description tags, site maps, animation and links. Here are the findings:

Comment: Some pretty sites; 3 Drops, Moss Wood, Beckett’s Flat and Matilda Estate; shame no-one is seeing them. Honestly, what’s the point if you’re not getting traffic?

Some fine examples of animation kitsch too by the way. If you’re into that sort of thing (then you’re as sick as I am): Amberley Estate, Brookland Valley…

Although my analysis here does not give the whole picture, it suggests a lack of web marketing sophistication, both in the area of web strategy and search engine optimisation.

The larger businesses were only better than the small businesses in one respect; more traffic and more incoming links. They showed no greater online marketing skills.

Businesses can improve their web rankings with a few hours’ work. Much can be done by adding text content that includes the keywords that people type into Google. If you’re selling ‘grenache’, make sure you have a web page, Title and Description tags that mention ‘grenache’. Yell out if I’m going too fast.

Companies wanting to make the web a serious part of their marketing mix should develop a web strategy. This may focus on particular export markets, distribution channels or niche market segments. In almost every case, it will require the company to develop content that is relevant/entertaining/useful to the reader.

The Fortified Sustainability Project; it should have been a warning that they might not come up with brilliant names.

The business of re-naming fortifieds that have used Spanish, Portuguese and Hungarian names for over a hundred years has begun – sherry and tokay are to be renamed apera and topaque. I read about it in The Age in an article by Lisa Port, who will shortly have to find herself a new surname.

Other names that were considered (I”m not making them up):

For sherry – Solzay, Solperi, Aperire, Alphrette

For tokay – Millifera, Russet, Muscadelle, Allirea

‘Millifera’ sounds like bacteria and ‘russet’ like something dogs get.

Naming by committee is problematic. In the case of ‘apera’ they’ve tried to allude to aperitifs, to position the wine as a pre-dinner drink. ‘Topaque’ just sounds like an awkward imitation of tokay; the “let’s just cross our fingers and hope they don’t notice” approach. Ironic that the Chairman of the Project, Colin Campbell, said they wanted names that “would invigorate those products because obviously we’re not looking to just sustain the sales, we’re looking to increase sales”.

He said they were looking for new names which are exciting, emotive and switch people on. Well let me belatedly volunteer a few of those:

Sherry: Spank, Viola, Gothic, Cheek, Curve
Tokay: Toast, Trick, Trouble

Because they’re not invented names you probably wouldn’t get a trade mark; do you desperately need a trademark? Champagne never had one.

And if you absolutely had to have the security of a trademark, could you not be a little more adventurous? What about Shhhh or Sh~*~? I haven’t decided whether that last question mark is part of the name.

The New World wine community has been completely done over by the Europeans. If the New World had cooperated and created international replacement names they could have seriously challenged in these categories. As it is, each country will determine their own replacement names and export marketing is doomed by fragmentation.

I don’t think a replacement name has been decided on for port. On current form, they’ll invent a short word that sounds like port with a European note: Fort or Forti.

But that does not deliver on “exciting, emotive and switch people on”. Trial. Quiet. Lounge. 100. Duel.

As one of the victims of Lake Shiraz (family has a vineyard) I thought I’d volunteer one of my ideas for the marketing of Australian wine. I have previously criticised Fosters for a lack of innovation in wine marketing. Strangely, they are not yet a client.

It’s well known that Asian consumers like their wine sweet. It’s also the case that there is a huge market in Japan for sake, a rice wine served hot. So a culture for drinking hot wine already exists. The discussion about sake in Japan parallels the wine snobbery that exists in western cultures. By which I mean, people appreciate the intricacies of the product.

Mulled wine is a delicious hot drink. Normally you make it by adding sugar, cloves, cinnamon and fruit to a dry red wine. Why don’t we manufacture such a drink, describe it as Australian Sake and launch it into the Japanese market?

Stay tuned to this blog. Next month I rescue the French language, the U.S banking system and the Fijiian Dairy Industry.

The resignation of Foster’s CEO Trevor O’Hoy, previously their CFO, was accompanied by an admission that the company paid too much for Southcorp wines. The rise of the Australian dollar was also mentioned. But I believe the company’s woes have more to do with a lack of dynamism in wine marketing.

New world wine-makers like Australia re-defined the business 20 years ago when they introduced the economies of machine harvesting and scientific principles into wine making. Victims of their own success: they made cheap wines better. Yellow Tail and Jacobs Creek became big brands in the US and the UK, and the market went ‘great! I can get quality bottled wine for US$5 dollars’. But that’s not where the profit is for wine makers.

So explain to me now why I should pay $20 a bottle for a better wine. That’s a hard sell. Let’s explore a few scenarios:

Marketer: You should pay $20 because this is an older wine, with more fruit intensity.
Consumer: It looks the same as the $5 bottle, just has a different year on it. How do I know it’s better?

Marketer: You should pay $20 because this is a better brand than the $5 bottle.
Consumer 1: It’s the same brand I buy for $5 a bottle. It just has a different bin number on it.
Consumer 2: How do I know that’s a better brand? I’ve never heard of it.
Consumer 3: There are hundreds of brands here. How the hell do you expect me to know which ones are better?

Marketer: You should pay $20 because this wine won a Gold Medal
Consumer: I bought a $5 bottle the other day; that won a Gold Medal too. Get a life! Most of those bottles over $20 don’t have any stickers on them.

Marketer: You should pay $30 because this is a restaurant
Consumer: Thanks very much for charging me $30 – I spend $8 when I buy the same wine in my bottle shop. It certainly demonstrates that paying more money gets me a better product.

If Fosters were a marketing-orientated company they would have picked up these attitudes and altered their marketing. They haven’t.

They needed to address the confusion over quality. As the owner of a portfolio of brands they could have introduced an internal ranking system and promoted that. Yes, the Penfolds Bin 389 won a Gold Medal in 2003. But it is only the 9th best shiraz we made that year. And it’s only drinking at 23/100 compared to the 1964 Grange.

And when I go to a bottle shop, instead of the 20%-off per case, which seems to be the only marketing promotion these guys ever use, why can’t I buy a vertical pack of the same variety? 2001, 2003, 2005. Let me see for myself how good the 2001 is.

I can see no evidence that Foster’s have used any social software to increase involvement of wine drinkers. Why can’t their consumers use the web and mobile technology to communicate with each other and the company about wine? Is this not a social product? Why have they not developed an International Wine Wankers Game?

And where is the packaging innovation? Why can I not buy single serve wine? I’d love to be able to go on a picnic and take two sachets of sparkling, one chardonnay, one riesling and a dessert wine instead of being locked in to one big heavy bottle. You can treat wine like a commodity and you’ll get commodity prices or you can look for a deeper understanding of consumer’s attitudes and the nature of the product. They will lead to more profitable product differentiation.

From the Foster’s web site: “We believe in placing the consumer and the customer at the heart of everything we do”. *Rolls eyes*. *Reaches for a drink*.

The price you get for winegrapes is one thing, but the other thing that really matters is what yield you get off that hectare of land. When you multiply the two together you can compare the worth of different varieties and different parts of the country.

So I recently came across a database of West Australian vineyards who are yet to sell their grapes. It includes full data on 33 blocks, including the price the buyer expected to have to pay the vineyard as well as the yield expected.

Sauvignon Blanc and Semillon are the two most lucrative crops, with Chenin Blanc close behind, because of its high yields. Cabernet Sauvignon and Merlot sit at the bottom. “Can’t go wrong planting cabernet or chardonnay they told us; premium varieties…”

Cabernet and merlot also had the widest range of prices; with some vineyards prepared to sell even low yielding grapes for $700 a tonne. This includes Margaret River fruit, one of the best GI’s in Australia and internationally rated. That price is not sustainable; those people will be selling up if it doesn’t change real quick.

Looking at the different regions shows a substantial spread; Margaret River blocks ranged between $9,000 a hectare and $13,000; no better than less prestigous areas like Manjimup and Pemberton. Land cost is of course much higher at Margaret River.

I guess the only other point to make is that operating costs for a vineyard run around $7,000 a hectare. Then there are overheads and capital items… If you’ve borrowed to plant a vineyard, the interest could easily be $6,000 per hectare. You do the maths.

By the way, I know where to get 160 tonnes of quality shiraz grapes in case you’re looking…

There should be only two brands in Western Australian wine marketing. Margaret River and Western Australia. Although it is possible to market your wine as belonging to your local area (appellation/Geographic Indication/GI) this is a marketing blunder and wineries located outside Margaret River should follow a different path.

Margaret River has done a great job establishing a brand. The small number of pioneers who won international awards generated momentum and attracted a larger number of followers. These included well established West Australian companies, behemoths like BRL Hardy, a string of smaller cellar door operators and many entrepreneurs. All up, a great mix of different talents. That’s enough about Margaret River. Now I’m going to talk about ‘West Australia’, by which I mean, non-Margaret River.

West Australian wines are not going to cut it marketing themselves with their GIs. Although they make some extremely good wines, theirs are small and unknown GIs nationally and internationally. They just do not have a critical mass for marketing purposes. A different marketing strategy is needed that lets them market themselves as a coherent entity.

The Wine Industry Association of WA understands this problem and with the help of some state government funding and support from some corporates has established a brand as an export marketing tool. There are two problems with this. One: the positioning is not right. “Dominion of wine” says nothing about West Australia and frankly, is pompous. And don’t get me started on Australia-West.

Two: most of the WA wineries continue to market themselves on an appellation basis, calling themselves for example a ‘Great Southern’ wine, a ‘Swan Valley’ wine or wait for it, ‘Peel’.

These two problems have an overlapping solution. The great advantage Australia has as a wine-making culture is its willingness to innovate. The great advantage WA has as a wine-making region is terrific diversity of styles. It’s partly explained by being really old geologically and really big in area. A tremendous soil diversity exists and this has consequences for wine styles.

The ’story’ of West Australian wines should be diversity and innovation, not life-style, beaches or natural environment. Here’s how this positioning overlaps the appellation issue: if you market yourself as ‘Western Australian’ you are allowed to blend wines from different regions and sub-regions in that wine. You can mix Swan Valley shiraz with cool climate shiraz from the Great Southern. This leads to a complexity you cannot get with a Swan Valley or Great Southern wine alone.

This should be the positioning of West Australian wines: Adventures in winemaking. A willingness to introduce complexity through regional diversity and a willingness to innovate with winemaking. That positioning works as well in domestic marketing as it does in export. It’s an easy-to-understand story and it gives people a reason to buy a West Australian wine.

WA’s iconic white wine, Houghton’s White Burgundy, is to be renamed Houghton’s White Classic. This is necessary because of the 1994 Agreement between Australia and the European Community on Trade in Wine, and Protocol (Wine Agreement). In signing this, Australia agreed to respect French Geographic Indications (GIs) including the name Burgundy.

You wonder why they’ve chosen a generic name. “Classic” is a pretty meaningless descriptor which signifies “blend”. Wines with this name account for progressively less and less of the wine market.

You wonder why they didn’t give the wine a distinctive name to mark it as a distinguished wine.

It’s a national brand but it’s known to come from WA. I would have been inclined to trade off that. Houghton’s WA White or if you must, Houghton’s WA Classic. Promoting WA as a sub-region is sound strategy for the parent company (Constellation Brands) as they dominate this state. In other states their competitors (Foster’s, Orlando, Yalumba) are much stronger.

Or consider this option: although a blend, the wine contains a generous amount of chenin blanc and Houghton’s could have used the renaming of the product to raise the profile of this varietal. Houghton’s White Chenin. You might think this invites competition from other chenins but chenin blanc is not widely grown outside WA (apart from the Loire where it is noted for exquisite sweet styles *my mouth is watering* where was I?)

By announcing to the world that the wine is chenin-based, Houghton’s would have had a new story to take to the trade and they would immediately dominate a “new” varietal.

The name “classic” is a marketing cliché. It is used by so many indifferent quality wines it has become meaningless. The moderately well-informed consumer knows that buying a “classic” is a lottery. It does not do Houghton’s White Burgundy justice.

A final alternative, since Greg Norman has missed the opportunity, it’s still possible to call it Houghton’s Great White.

Lots of press recently about the supposedly unspectacular Penfolds Grange release for the year 2000. Some wine critics are saying it’s no better than a $15 bottle of wine.

At one level the decision to release a 2000 Grange was a mistake. The cachet of the brand comes about because of a hard-earned reputation as the best quality wine in the country.

If you’re a wine company with only one brand you don’t have a choice, you have to release the product. But Grange is a tiny part of SouthCorp, a very large company about to get even larger. Penfolds would have generated GOOD publicity by simply not releasing a 2000 Grange. Sorry; this vintage not up to scratch. We’re tipping it out. That would have been my decision – it would have re-inforced the impression that Penfolds are obsessive about quality. The whole Penfolds range would benefit. Put the price of Grange up by 15% next year if necessary.

On the other hand, they generated ten times the publicity by virtue of the critical reaction to the release. This amount of publicity (even bad publicity) reinforces the leadership position the brand enjoys. The limited issue of the 2000 vintage will be snapped up anyway and will provide amusement for the minority of people who can afford to line up the various vintages and compare them.

What they did worked out okay. It’s hard to screw up a big brand.

Recently spoke to the head of one of the big WA wineries about their marketing. Like most wineries they spend all their money on trade advertising; personal selling into restaurants and bottle shops, talking up their quality and offering cut-price deals.

This is fine when you have the leading brand but long term it’s a very expensive way to promote your product. This company has a good “umbrella” brand (a name used for many products) but their volume seller is a sub-brand without much of an identity. Using the company’s well known name, it has the potential to be market leader but unless the current boss disappears it’s not going to happen.

Ask the man in the street café to name all the brands of West Australian wine he knows. Even in this high interest category, they will struggle to name six. If your brand is not one of them, you’ve got your work cut out.

You do not need to be on TV to create a brand. You do not need to spend millions of dollars. You do have to be creative and know what you’re doing. Special mention here for what I believe is one of the worst advertising campaigns on television: Wolf Blass. Shareholders money. Lots of it. Pissed up against the wall.

And an accolade to Poet’s Corner; a great job using outdoor advertising. Cost effective advertising.

It amazes me that wineries do not make more use of radio. I have just created a top-of-mind brand for a West Australian company in another category with a spend over two years of $80K . The leverage that being top-of-mind delivers is sensational. And at present in the wine market no-one is advertising on radio. You’d have it all to yourself.