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Business and Branding in the Barossa

Yesterday I visited the Wolf Blass Winery here in the Barossa and was absolutely flabbergasted by the size of the operations. I've always thought of Wolf Blass as a medium to large producer of wine, but the winery was easily the largest I've ever seen. I found out later that the facility covers about 85 acres with about 14 acres under one roof just for their bottling center and warehouse and another 18 acres of barrel storage. The place is monstrous. During the tasting the very friendly staff member mentioned that a lot of the space was actually Foster's Group's main Barossa facility. I knew Foster's owned a bunch of beer and wine companies, but didn't think much about it.

Today I took the tour and Penfolds and I noticed that they had no white wine production facilities, so I asked why. I was told that starting this year all of their white wines are being made at Foster's Wolf Blass facility. Hmm.

Tonight at dinner I happened to be seated next to a senior IT professional from Foster's and overheard a discussion he had with a possible IT outsourcing provider. He happened to mention that they were considering consolidating all of the port production in the Foster's brands at one winery (I won't mention which one in this public forum).

All of this got me wondering just how big Foster's is, and what all this means. So I went to their website (www.fosters.com.au ) and discovered that they own 62 different wineries around the world, with 43 in Australia and several in the States including three of my favorites: Stag's Leap, Chateau St. Jean, and (gasp) Etude.

So my question is, if the seven wineries in the Barossa that are owned by Foster's stop making all of their own wines and instead rely on their corporate siblings to help produce part or all of their product line, is it really their wine? Is the Penfolds label on their white wines enough to make them Penfolds when the wine was actually made by Wolf Blass? Or is it all just Foster's wine, and different brands? Does it matter?

I think it does matter. Not just because somehow as a consumer I feel like I'm having a fast one pulled on me, but also because we will eventually end up with a smaller variety of wine. I believe that in this their first year Blass is probably using the same vineyard sources and techniques that Penfolds used in making their white wines. (Though obviously the equipment and probably the personnel are different.) But I also know that the business demands of reducing variation and gaining economies of scale will eventually do away with this. I wouldn't be at all surprised if in 5 years the Penfolds Eden Valley Riesling is exactly the same as the Wolf Blass Gold Label Reisling, just with a different label. If I worked for them and was being rewarded for reducing costs, I'd sure think about it. And someday in the future will the liquid in a bottle of Penfolds Grange be exactly the same as in the Wolf Blass Black Label with just a difference in price of $300?

Foster's is a business and is probably a very well run business. Their shareholders will demand continuous growth and return. I suspect that they will end up buying up even more Barossa and South Australian vineyards and will further reduce the great variety of styles and flavors we have available today. All the more reason why I'm going to support as many family owned wineries as I can.

Posted by Bruce on March 9, 2007 3:53 PM

Comments

I like your comments and view of FOSTER’s consideration of depending upon corporate siblings for their white wines. I agree with you, no matter who owns the winery, the original source and producers label should be on the bottle. Not a ghost corporate owner.

FTJ

Posted by: Tom Jones on May 10, 2007 3:12 AM


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