The Setbacks and Successes of the Tasmania Wine Industry

The Setbacks and Successes of the Tasmania Wine Industry

Tasmania began to witness an influx of wealthy and knowledgeable immigrants due to its reputation as a prime location for cold-temperature wine grapes. People moved to Tasmania in record numbers around the start of this century, enticed by the promise of successful winemaking in a relatively temperate environment.

When it comes to Tasmanian wine, specific names stand out above the rest: Stefano Lubiana, Andrew Hood, Peter Althaus, Andrew Vasiljuk, and Greg O’Keefe.[1] There was just one special case: Althaus. The other winemakers made significant contributions to raising the bar for professional winemaking in the state. However, Althaus was exceptionally knowledgeable about European wine and the well-connected industry.

While working for IBM in Switzerland, Peter Althaus looked for a change of pace and decided to turn his love of wine into a professional path. Along with his wife, Ruth, he traveled to New Zealand in 1988 to participate in a symposium on frigid climates while gazing toward the southern hemisphere. They ended up in Tasmania where they toured a few vineyards and sampled some of the region’s finest wines. In Switzerland, they discovered that Stoney Vineyard was up for sale, and it was a no-brainer for them to buy it when they returned to their homeland.[2]

Tasmanian Wine Industry: Successful Harvest

The year 1990 was perhaps the most successful harvest in the history of the business. The vinification process consumed 937 tons of fruit, and the average output per acre was 7.4 tons.[3] After three years of positive vintages, bank management received some reprieve and a general sense of confidence for the future.

Did You Know: Tasmania is most well known for their sparkling wines, Pinot Noirs, and Chardonnays.

In April, they demonstrated their confidence when they unveiled their new winery, built by Launceston architect Bruce Goodsir and equipped with the latest cutting-edge winemaking equipment brought from Switzerland by Alf Edgecombe’s family. Moorilla Estate Wine Centre, a restaurant and tasting facility in the heart of the vineyard, was formally launched in November by the Premier of Western Australia, Mr. Michael Field.

Tasmania’s VAT and the Tasmanian Development Authority had funded the company’s first official market study throughout the year. Many people working in the sector were not surprised by the findings. Customers thought the quality was excellent, but the price was too high, and the product was not worth the money. Although the availability was deemed satisfactory, advertising did not do it justice. Despite the product’s exceptional quality and high marketability, the research found a clear need for more marketing and promotion efforts.

Wine wholesale sales tax was increased from 20% to 31% by Treasurer John Dawkins in the 1993 federal budget to demonstrate gratitude for the success of the Australian wine business in overseas markets.[4] Since the tax was a percentage rather than a volumetric tax, the effect was expected to be more severe on the more expensive boutique end of the market.

Tasmania would have been impacted particularly hard in this situation. Producers from throughout the nation, including those in Tasmania, expressed their displeasure loudly and clearly.

Following the defeat of the tax increase in the Senate, a compromise solution was negotiated. To compensate farmers for the increase in wholesale tax, a three-year cash award program was established, but it was discontinued following the election of a Liberal government in 1996.

The massive Industrial Commission Inquiry into the Australian wine industry was to be completed no later than June 1995. It was to make recommendations regarding the future of wine taxation. The investigation was initiated in July of 1994, but there was considerable tension within the Tasmanian business community prior to its launch.

The first Tasmanian winery to go under due to the recession was Rochecombe in Pipers River.[5] Bernard and Brigitte Rochaix were in a challenging financial situation because of significant frost damage between 1991 and 1993. New state-of-the-art winery expenses and Alf Edgecombe’s departure contributed to this predicament.

Upon receiving a $300,000 loan demand from Westpac Bank in February 1994, Rochecombe searched for equity partners to settle the debt and build wind turbines to prevent further frost damage. Rochecombe was compelled to liquidate its assets when the vineyard was put into receivership later that month. Various machinery and equipment were scheduled to be auctioned off on April 19.

Investors might have lost faith in the industry if a well-known vineyard like Rochecombe failed. It was no secret that Bernard and Brigitte Rochaix invested $3.5 million in the Pipers River vineyard and winery for over a decade. When Bernard and Brigitte Rochaix founded these wineries, they had extensive expertise as vineyard managers. Before their arrest, the Rochaix family owed $900,000 in back taxes to Tasmanian Development and Resources.

They hoped that TDR would buy the equipment at the auction and provide extra cash to enable the vineyard to reach total production in 1995. Rochecombe announced only three days before the auction that the debt owed to the Westpac Bank had been bought by the company of local businessman Josef Chromy. As a result, Rochecombe would have to cancel the transaction.

Read: History of wine in Tasmania and New Zealand

The year 1993 may be recognized as a watershed moment in Tasmania’s wine industry when viewed historically. Cash flow problems were nearly unavoidable due to the unpredictable nature of the local environment plus its performance was reliant on the weather.

The fact that the economy was in a slump and lending rates were high meant that most wineries did not have enough cash to meet their basic operating expenses. Even if Rochecombe had been shut down instead of seeking a buyer who would keep it running as a going concern, the industry’s trust in the financial institutions that support it would have been seriously undermined.

That would have happened if the firm had not looked for a buyer willing to keep it running. A significant corporation entered the market for the first time, and Chromy’s investment came when the market was desperate for cash.

Regarding rainfall and temperature, 1996 was one of the wettest and coldest summers for the region. A considerable percentage of fruit did not reach full maturity. Therefore it was utilized to produce sparkling wine rather than being harvested at the customary time in most vineyards.

It was a sobering reminder that Tasmanians lived and worked in an uncertain and unpredictable environment after the great harvest of 1995. While the mainland had a lousy year in 1995, Tasmania had a good year in 1996 even though other states were experiencing a boom year. Reversing national trends looked to be taking hold in Tasmania.

THIS DAY IN WINE HISTORY

May 16, 1996: The Vineyards Association of Tasmania knew that local viticultural training was needed for a long time. Tim Barbour, the head of the horticulture program at the Launceston Institute of TAFE, had been the subject of the conversation. Twenty-three students took Level 1 and 2 viticulture programs in Launceston and Hobart, respectively, when the College began providing the nationally-recognized modules in 2013. As a result of this arrangement, a training vineyard was established on the Lilydale District High School’s farm.

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References:

[1] Walker, Anthony. 2012. Review of A History of the Tasmanian Wine Industry. Thesis, University of Tasmania. https://eprints.utas.edu.au/14809/2/whole-walker-thesis-2012.pdf.

[2] “Tributes to the Former Winemaker Peter Althaus.” 2021. ABC. January 7, 2021. https://www.abc.net.au/radio/programs/tas-country-hour/wine-tribute/13039466.

[3] Walker, Anthony. 2012. Review of A History of the Tasmanian Wine Industry. Thesis, University of Tasmania. https://eprints.utas.edu.au/14809/2/whole-walker-thesis-2012.pdf.

[4] Review of Sales Tax and Refunds: The Mutual Pools Case. 1993. Department of the Parliamentary Library. https://parlinfo.aph.gov.au/parlInfo/download/library/prspub/BTE10/upload_binary/BTE10.pdf;fileType=application%2Fpdf#search=%22ISSUES%20BRIEFS%20(LAW%20AND%20GOVERNMENT%20GROUP)%20SUPERSEDED%20PUBLICATION%22.

[5] Walker, Anthony. 2012. Review of A History of the Tasmanian Wine Industry. Thesis, University of Tasmania. https://eprints.utas.edu.au/14809/2/whole-walker-thesis-2012.pdf.