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(CNN)   Australia's biggest winery to pour $30 million worth of wine down the drain because Americans just aren't drinking enough of the cheap stuff. Farkers: Challenge Accepted   (money.cnn.com) divider line 127
    More: Sad, Australians, Americans, vineyards, excess capacity  
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2711 clicks; posted to Business » on 16 Jul 2013 at 11:37 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



127 Comments   (+0 »)
   
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2013-07-16 02:56:07 PM

FrancoFile: Generally, there is no formal, legal oversight, but these people have known each other for generations and usually won't go out of their way to fark with each other.


Refreshing to hear that. Here in North America, companies in all industries will stop at pretty much nothing to gain another 1/4 percentage of market share/stock price increase.
 
2013-07-16 02:58:21 PM
Meanwhile in Australia

thecrushpodcast.com
 
2013-07-16 03:03:56 PM
I don't drink imports. Who wants wine that's been sitting on a cargo ship for weeks or months when you can get fresher wine from your local farmers.
 
2013-07-16 03:07:05 PM

vudukungfu: Idiots.
That is a lot of wine/vinegar/sugar/water.
That all could be put to good use.
You could let it go to vinegar, and pickle free watermelon rinds, and make a tidy profit with a warehouse full of specialty pickled rinds.


The get a rebate on any excise taxes they paid on wine they destroy, which might have a lot to do with the "dump it" decision
 
2013-07-16 03:08:35 PM

plcow: If you are pouring it down the drain, it is NOT worth $32 mil.  If it was worth $32 mil then you would sell it for $32 mil.

See how that works?


The value is whatever their CPA firm lets them write off as business losses.
 
2013-07-16 03:09:14 PM

Nexzus: FrancoFile: Generally, there is no formal, legal oversight, but these people have known each other for generations and usually won't go out of their way to fark with each other.

Refreshing to hear that. Here in North America, companies in all industries will stop at pretty much nothing to gain another 1/4 percentage of market share/stock price increase.


Don't kid yourself.  They are as much a cartel as the publishing and banking industries are.

I said they don't fark each other; they can still fark their customers.
 
2013-07-16 03:09:33 PM

Lost Thought 00: I don't drink imports. Who wants wine that's been sitting on a cargo ship for weeks or months when you can get fresher wine from your local farmers.


Since my son has worked in the summer in a local vineyard, I approve this message

/Virginia Wine-it doesn't ALL suck
 
2013-07-16 03:20:00 PM

FrancoFile: proteus_b: Magorn: Some wines, like say Zinfandel, have a very limited shelf life. Some, like burgundies or Bordeaux can age for decades. Though for most wines, any advantage age gives them stops the moment they are bottled. In the cask, aging is doing all sorts of interesting things to the wine's chemistry. In an air tight sealed bottle, not so much.

That sounds quite plausible, but nonetheless, when people boast of having a "Chateau de Chacery, 1954", the understanding is that it was bottled in that year. Also, do you know <i> why </i> aging in a cask is different than aging in a bottle?

No.

It was HARVESTED in that year.

Aging in a barrel has several external factors going on
1) Contact with the lees (varying levels, depending on racking and stirring practices)
2) Contact with wood
3) Percolation of oxygen through the wood
4) Temperature

Aging in the bottle has
1) Oxygen percolation through the cork
2) Light through the glass (which is almost always bad)
3) Temperature


All those factors can accelerate, retard, or modify the ongoing chemical reactions, that are running at a very slow rate, in any organic solution like wine.


Those are probably the killers in this case.  Tons of cheap moscato in clear glass sitting in a non-climate controlled warehouse is just asking for spoilage.  Hell, I can't drink Yuengling at my parent's golf course club when  visit because they store it in a brightly lit soda fridge.
 
2013-07-16 03:22:42 PM

impaler: NkThrasher: Temperature fluctuations matter a lot for beer, you want it to go through as few cold/warm transitions as possible

No they don't. It's not the "fluctuation" it's the temperature. Taking a beer to 70 to 39 to 70 to 39 in one hour won't do anything appreciable. Though taking it to 70, and keeping it there for a week might.


Yes, but consider a warehouse.  Now you're taking that beer (or wine, in the case of FTA) from 70 at night to 90-110 during the day.  That's going to fark that poor bottle right in the flavor-can
 
2013-07-16 03:24:40 PM
dudefoods.com

Plus

t3.gstatic.com

= A fine vintage pruno
 
2013-07-16 03:27:59 PM

I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.


If it's from Australia, it's not a Bordeaux.

My guest bedroom:
i58.photobucket.com
 
2013-07-16 03:39:23 PM
Headline reminds me of the hundreds of barrels of Jack Daniels that had to be dumped some years back... Just sad
 
2013-07-16 03:40:50 PM

Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]


One side of my cellar.  I have a max capacity of about 1200 bottles.

farm4.staticflickr.com
 
2013-07-16 03:45:03 PM
Can you hear, can you hear the thunder?
 
2013-07-16 03:52:37 PM

Where wolf: impaler: NkThrasher: Temperature fluctuations matter a lot for beer, you want it to go through as few cold/warm transitions as possible

No they don't. It's not the "fluctuation" it's the temperature. Taking a beer to 70 to 39 to 70 to 39 in one hour won't do anything appreciable. Though taking it to 70, and keeping it there for a week might.

Yes, but consider a warehouse.  Now you're taking that beer (or wine, in the case of FTA) from 70 at night to 90-110 during the day.  That's going to fark that poor bottle right in the flavor-can


So much this. Now, as to why these wines didnt really sell ? Salespeople rarely push Aussie wines anymore. I put a lot of blame in DIageos' corner- they have been buying up a lot of California wineries and pushing "new " brands very hard the past 2 years.
 
2013-07-16 03:53:13 PM

FrancoFile: Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]

One side of my cellar.  I have a max capacity of about 1200 bottles.

[farm4.staticflickr.com image 500x374]


Amateurs...my personal cellar at BevMo is always fully stocked.
images.onset.freedom.com
 
2013-07-16 03:54:31 PM

Stone Meadow: FrancoFile: Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]

One side of my cellar.  I have a max capacity of about 1200 bottles.

[farm4.staticflickr.com image 500x374]

Amateurs...my personal cellar at BevMo is always fully stocked.
[images.onset.freedom.com image 600x450]



Good luck finding a 95 Bordeaux or 97 Barolo in there...
 
2013-07-16 03:58:18 PM

FrancoFile: Stone Meadow: FrancoFile: Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]

One side of my cellar.  I have a max capacity of about 1200 bottles.

[farm4.staticflickr.com image 500x374]

Amateurs...my personal cellar at BevMo is always fully stocked.
[images.onset.freedom.com image 600x450]

Good luck finding a 95 Bordeaux or 97 Barolo in there...


Actually, this is more my style...
i.huffpost.com
 
2013-07-16 04:08:06 PM

FrancoFile: One side of my cellar. I have a max capacity of about 1200 bottles.

farm4.staticflickr.com


Nice.  Home made or kit?

Looked into that style, was trying to maximize bottle capacity per linear foot and bottle capacity per dollar spent.
 
2013-07-16 04:14:39 PM

Nuclear Monk: If no one is buying it, than how do they arrive at the $30 million value?


Their accountants are former cops.
 
2013-07-16 04:25:03 PM

Satanic_Hamster: FrancoFile: One side of my cellar. I have a max capacity of about 1200 bottles.

farm4.staticflickr.com

Nice.  Home made or kit?

Looked into that style, was trying to maximize bottle capacity per linear foot and bottle capacity per dollar spent.


Homemade.

Dad and I are both engineers.  We did internet design sessions in 92, he pre-cut some lumber and brought it out with the drill press and a fixture he constructed for the shelves (which are freely removable).  Built the whole thing in a week, including re-routing plumbing, running electric, putting in walls and insulation and custom 5" door, mounting shelf brackets, and testing the first couple of shelf units.  Then I built shelves as I had time.  Kind of funny to have the drill press and workmate bench in front of my townhouse, along with a big bucket of screws, turning out shelf units.

Key dimension is 4" - that's the horizontal separation between bottles.  The shelves are ~5.5" center-to-center vertically- they are made of 1x2s on edge to form a rectangular frame, with 2x2s sliced diagonally on top as bottle separators.  The longest shelf I have is 18 bottles (6 feet).  That's pushing it for strength of 1x2 - they sag about 1/2" when fully loaded.

The shelves work fine for standard Bordeaux, Burgundy, and Champagne bottles, as well as for half-bottles.

The shelves you are looking at are 12 bottles wide x 2 deep - I have 2 stacks of those.  The other stack is 18 bottles wide by 1 deep, one stack on the left side that you can't see.

If I did it again, I'd make the shelves 14" and 28" deep, instead of 12" and 24" -- tall Alsatian bottles stick out just a bit.  I'd also make a purpose-built section for large-format bottles.

If you know where to go to buy lumber, and have the appropriate equipment, it's not very expensive.  We probably spent almost as much on insulation, framing, panelling, and the door as we did on the shelving.  And it's hard to beat the cool factor.
 
2013-07-16 04:28:38 PM

jst3p: [dudefoods.com image 484x648]

Plus

[t3.gstatic.com image 259x194]

= A fine vintage pruno


sphotos-a.xx.fbcdn.net
 
2013-07-16 05:10:53 PM

I_Am_Weasel: It's true!  Americans just don't appreciate a good Australian wine.

  A lot of people in this country pooh-pooh Australian table wines. This is a pity as many fine Australian wines appeal not only to the Australian palate but also to the cognoscenti of United States.


A lot of people in this country poo poo anything that they heard another person poo poo and decide that sharing that opinion will make them look cool.

Also, for whatever reason many Americans seem to favor big heavy oaky type wines as opposed to fruitier or cleaner options.  I'm cool with that though as I can't stand most Cabs or Zins.
 
2013-07-16 05:11:57 PM
The company is also offering up to $40 million AUS in discounts and rebates to its distributors to ensure it can get its excess capacity out to the thirsty public as quickly as possible.

This is an advertisment; it's the vineyard's version of "BIG GOING OUT OF BUSINESS SALE!  ALL INVENTORY MUST GO! PRICES ARE BEING SLASHED!!"  disguised as a news article.
 
2013-07-16 05:12:40 PM

Nuclear Monk: If no one is buying it, than how do they arrive at the $30 million value?


That is how much they are writing off of their taxes.  It's like when you donate that $50 pair of old jeans to Good Will. ;)
 
2013-07-16 05:14:20 PM
This may have been asked earlier, but doesn't wine get better with age? Why throw out aged wine?
 
2013-07-16 05:22:47 PM

jst3p: [dudefoods.com image 484x648]

Plus

[t3.gstatic.com image 259x194]

= A fine vintage pruno


Course it's shank or be shanked..
 
2013-07-16 05:23:01 PM

Bashar and Asma's Infinite Playlist: This may have been asked earlier, but doesn't wine get better with age? Why throw out aged wine?


Presuming you're serious, not all wine ages well, and even the stuff that does doesn't improve infinitely. It still hits a tipping point where it will start going bad.
 
2013-07-16 05:37:14 PM
Pour it out?  POUR IT OUT?  At least distill it into brandy
 
2013-07-16 05:52:34 PM

Smeggy Smurf: Pour it out?  POUR IT OUT?  At least distill it into brandy


Probably doesn't have enough acidity to turn into decent brandy.  They don't list the varieties involved, but I'm suspecting low-tier Pinot Grigio, Sauvignon Blanc, Riesling, etc. - which are all made for a female palate that wants sugar and no detectable acidity, plus lower alcohol.

Not to mention that these have all been bottled.  Are you gonna pay somebody to unglue the cases and twist off the screwcaps for umpty-hundred-thousand bottles of over-the-hill wine in order to produce some indifferent spirits, that will then require barrel aging to turn into (debatably) drinkable brandy?

The stuff shouldn't have been bottled and sent to the US in the first place.  They misread the market (or had some bastard long-term contract with messed-up incentive clauses) and they are stuck with it.  At this point, it's slightly-polluted water and should be treated as such.  "Dude, don't waste beer" is for college students, not multi-million-dollar wine importers.

Other than the timescale, it's no different from the grocery chain that goes big on watermelons before the 4th of July picnic season and has to toss them from the warehouse when it rains for 2 weeks.
 
2013-07-16 05:58:34 PM

FrancoFile: Smeggy Smurf: Pour it out?  POUR IT OUT?  At least distill it into brandy

Probably doesn't have enough acidity to turn into decent brandy.  They don't list the varieties involved, but I'm suspecting low-tier Pinot Grigio, Sauvignon Blanc, Riesling, etc. - which are all made for a female palate that wants sugar and no detectable acidity, plus lower alcohol.

Not to mention that these have all been bottled.  Are you gonna pay somebody to unglue the cases and twist off the screwcaps for umpty-hundred-thousand bottles of over-the-hill wine in order to produce some indifferent spirits, that will then require barrel aging to turn into (debatably) drinkable brandy?

The stuff shouldn't have been bottled and sent to the US in the first place.  They misread the market (or had some bastard long-term contract with messed-up incentive clauses) and they are stuck with it.  At this point, it's slightly-polluted water and should be treated as such.  "Dude, don't waste beer" is for college students, not multi-million-dollar wine importers.

Other than the timescale, it's no different from the grocery chain that goes big on watermelons before the 4th of July picnic season and has to toss them from the warehouse when it rains for 2 weeks.


Still...  it could have been brandy...  it's a sad day
 
2013-07-16 06:15:49 PM

Lunchlady: Had an Australian girl in Vienna tell me over wine that she tried a California wine once that even though she thought all American booze was shiat it was "quite good." Then followed up with "I didn't even know they made wine in California!"


Not sure if you've heard this, but America was founded by people who were smart enough to get out of England, while Australia was founded by those who were thrown out!
 
2013-07-16 06:56:47 PM

nocturnal001: Nuclear Monk: If no one is buying it, than how do they arrive at the $30 million value?

That is how much they are writing off of their taxes.  It's like when you donate that $50 pair of old jeans to Good Will. ;)


Close, part of the value is that they already paid the taxes.  I work in a winery, and we have to pay taxes on wine before we sell it.  (sales tax is separate).
When you donate the jeans, you declare the value.  In this case, the value is  in taxes (at least part).  Now, what they get to write off as a loss is different, and may make up some other portion of the equation.

And this actually ties in close to the "why not distill it?" question.  The price per gallon they could get for selling it to a distiller was less than the taxes they paid on the wine already.  By dumping the wine, they get the taxes back or can apply it to another wine.  The returned taxes are a greater value than the distillation value, so it gets dumped.  Also goes to show how much taxes on alcohol are.  I guess it might be possible to get the taxes back when sold bond to bond to a distiller, but I am not sure on that point.  I don't sell to distillers.
 
2013-07-16 07:01:20 PM

proteus_b: Lunchlady: Had an Australian girl in Vienna tell me over wine that she tried a California wine once that even though she thought all American booze was shiat it was "quite good." Then followed up with "I didn't even know they made wine in California!"

Not sure if you've heard this, but America was founded by people who were smart enough to get out of England, while Australia was founded by those who were thrown out!


Technically speaking, both Aus and the US had both voluntary and involuntary folks. And no, I am not referring to slave shipping.
 
2013-07-16 07:04:49 PM

AmbassadorBooze: nocturnal001: Nuclear Monk: If no one is buying it, than how do they arrive at the $30 million value?

That is how much they are writing off of their taxes.  It's like when you donate that $50 pair of old jeans to Good Will. ;)

Close, part of the value is that they already paid the taxes.  I work in a winery, and we have to pay taxes on wine before we sell it.  (sales tax is separate).
When you donate the jeans, you declare the value.  In this case, the value is  in taxes (at least part).  Now, what they get to write off as a loss is different, and may make up some other portion of the equation.

And this actually ties in close to the "why not distill it?" question.  The price per gallon they could get for selling it to a distiller was less than the taxes they paid on the wine already.  By dumping the wine, they get the taxes back or can apply it to another wine.  The returned taxes are a greater value than the distillation value, so it gets dumped.  Also goes to show how much taxes on alcohol are.  I guess it might be possible to get the taxes back when sold bond to bond to a distiller, but I am not sure on that point.  I don't sell to distillers.


Maybe there could be an exception to the tax when selling surplus to a distiller? (or vinegar maker)
 
2013-07-16 07:08:26 PM
Ozzy wines and grapes are ok.  It's not like I seek it out when filling the chiller however.  If you give me a lifetime pass to Dry Creek in Sonoma, well now, you're talking. I've had all kinds of  wines in all kinds of price ranges and the single best bottle of wine I've ever tasted was a 35 dollar bottle of Dry Creeks 2009 Gold Chardonnay at Trulucks Stone Crab.  It was a limited bottling and it was fantastic. And you can't buy in retail. Bastards.

/not a wine snob
//just like good hooch
 
2013-07-16 07:08:40 PM

Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]


Sooo...would you say you have a drinking problem?
 
2013-07-16 07:13:59 PM

Nuclear Monk: Satanic_Hamster: I_Am_Weasel: For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

If it's from Australia, it's not a Bordeaux.

My guest bedroom:
[i58.photobucket.com image 850x637]

Sooo...would you say you have a drinking problem?


Not if he:
1. Drinks
2. Gets drunk
3. Falls down

No problem.
 
2013-07-16 07:38:25 PM

I_Am_Weasel: It's true!  Americans just don't appreciate a good Australian wine.

  A lot of people in this country pooh-pooh Australian table wines. This is a pity as many fine Australian wines appeal not only to the Australian palate but also to the cognoscenti of United States.

 For example,Black Stump Bordeaux is rightly praised as a peppermint flavoured Burgundy, whilst a good Sydney Syrup can rank with any of the world's best sugary wines.Of the sparkling wines, the most famous is Perth Pink. This is a bottle with a message in, and the message is 'beware'. This is not a wine for drinking, this is a wine for laying down and avoiding.

Another good fighting wine is Melbourne Old-and-Yellow, which is particularly heavy and should be used only for hand-to-hand combat.Quite the reverse is true of Château Chunder, which is an appellation contrôlée, specially grown for those keen on regurgitation; a fine wine which really opens up the sluices at both ends.Real emetic fans will also go for a Hobart Muddy, and a prize winning Cuivre Reserve Château Bottled Nuit San Wogga Wogga, which has a bouquet like an aborigine's armpit.


Good reviews, Bruce!
 
2013-07-16 07:52:01 PM
Not a vintner, but my understanding of vintage is that it means the wine was made with grapes from a single year, that's it. Many wines are blends bottled from a range of years, in order to create a consistency from year to year, vintages are not.

/the best part of this thread are the people refuting a Monty Python skit. I haz a chuckle
 
2013-07-16 08:03:58 PM

GRCooper: Not a vintner, but my understanding of vintage is that it means the wine was made with grapes from a single year, that's it. Many wines are blends bottled from a range of years, in order to create a consistency from year to year, vintages are not.

/the best part of this thread are the people refuting a Monty Python skit. I haz a chuckle


Very few wines are blended across years.  Other than Champagne, Port, and Sherry, <2%
 
2013-07-16 08:22:54 PM
The least they could do is donate it to homeless shelters
 
2013-07-16 08:26:26 PM

alienated: Technically speaking, both Aus and the US had both voluntary and involuntary folks. And no, I am not referring to slave shipping.


I know that but what's a little fun between the oceans?
 
2013-07-16 08:32:33 PM
Maybe there could be an exception to the tax when selling surplus to a distiller? (or vinegar maker)

As far as I know, there isn't, but the margins on wine destined for distillation or vinigar (not including wine made specially for distillation eg: brandy) is so small that maybe the distillers couldn't give them the $1.10 per gallon or whatever it was worth tax wise.  Also, in the end someone has to pay the taxes if it becomes a commercial product.  The Government will get the money somehow.

A winery close to me shut down a few years ago, and the sold the wine to a vinegar maker.  They only ended up with 10 or 11 cents per gallon over the taxes.  And this was before the economy tanked.

What the take away should be, is that this Australian company is making the best decision money wise.  If there were no considerations for taxes, then they would have sold the wine to a vinegar plant or distiller (assuming transport cost etc, would not have eaten up the profits).  I'm not at my proper desk right now, but I think that the taxes on the wine itself is around $1.10 per gallon (depending on class, it can be much more).  On cheap wine, a significant portion of the cost is packaging and taxes.
 
2013-07-16 08:46:16 PM
I'm doing my part. I bought a couple of bottles of Jacob's Creek on Monday. Doesn't get much cheaper than that.
 
2013-07-16 08:52:50 PM

plcow: If you are pouring it down the drain, it is NOT worth $32 mil.  If it was worth $32 mil then you would sell it for $32 mil.

See how that works?


For an USA tax deduction you can claim your cost.  So that's the cost to produce the wine and get it to market not some made up selling price.
 
2013-07-16 09:22:28 PM

MaudlinMutantMollusk: Overpriced roo urine

/we got Two Buck Chuck


Penfolds is actually pretty good stuff. Bin 28 is my favorite!
 
2013-07-16 09:25:28 PM
we got Two Buck Chuck

step up in class to "Blue Fin", only $3.49 at TJs and much better quality
 
2013-07-16 10:03:15 PM
Meh.

Been going on for years...

Link

Also...
Link
 
2013-07-16 10:08:05 PM
Hey wine experts, what's a good way to learn about wine without spending a lot of money?
 
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