Monthly Report - May 2016
Reserve your seats…
After much mucking around we have finally got some dates for the release of the 2014 Reserve Merlot and 2014 Reserve Cabernet Franc. A series of free tastings presenting the wines will be put on throughout Australia and everyone is invited. The dates and times are as below:
Wed 8 June
Gangemi’s Fine Wines and Food
5.30 – 7.30pm
1288 Hay St
West Perth WA 6005
Sat 11 June
1.00 – 4.00pm
Level 2 / 175 Flinders Lane
Melbourne VIC 3000
Tues 14 June
Fix St James
5.30 – 7.30pm
111 Elizabeth St
Sydney NSW 2000
Thur 16 June
Cru Bar and Cellar
5.30 – 7.30pm
1/22 James St
Fortitude Valley QLD 4006
Please do let us know if you plan to come along so RSVP to email@example.com as soon as you can. We are ironing out some of the details still but the schedule above appears to be the best way to get all of this done and to fit in with my other working life which is chockers at the current. I am looking forward to catching up with as many comrades as possible and it should be a few enjoyable nights as there is always an opportunity to kick on.
Fortunately for me May is the month in which the vineyard can have a break from every activity and this has been well received as I am currently in the Philippines putting the final touches on some work which has taken a few years to complete. So my month off has been as busy as ever, but it means everything is still moving ahead and growing which is the aim of the game.
Wine Equalization Tax….
I know, I know. Such a boring topic that I guess you will skip to the weather, ensure that I am doing something next month, place your order for another dozen Blue Poles wine and call it a night. But hear me out here, as we finally have some detail from the latest budget and it is not good news for about 50% of the Australian wineries out there, and we have our “Peak” body the Wine Federation of Australia spruiking that this is good news.
No it is not, you suited simpletons.
The latest budget finally attempted to tackle the issue of the Wine Equalization Tax (WET) and the “up to” $500,000 compensation provided to winemakers in Australia (and unusually New Zealand) as a relief on this primary tax of their wine. The tax is 29% of the price of the wine sold, and then on top of that we (and the retailers) pay the 10% GST. So when you buy a $10 bottle of wine, there is about $4 worth of tax in there. So, we the little guy, sell our wine with the tax included in the price to either the retailer at wholesale rates or the customer at full whack, determine the value of the WET tax we have paid, give that to the government and then immediately receive a refund on that payment. And as you can imagine, we do not really get close to the $500,000 limit but it does provide us with a significant portion of our income.
Where the tax is being rorted is by single large companies suddenly referring to every wine “brand” they make as an individual winery and they could make multiple claims on the rebate, yet the funds end up in the same entity. Also unbranded wine in tanks could be sold with the tax applied and the seller could get the rebate, prior to sending it offshore. New Zealand wineries get the rebate as it is seen as an unfair advantage under the trade agreement between our two countries thus the advantage is needed to be given to both parties. Thus the whole point of the rebate, which was to help medium to small sized regional wineries in Australia to be competitive was being rorted by the groups upon which they are directly competing against … hardly good news for the tax payer, and hardly good news for little wineries like ourselves who have such a large series of outgoings into the regional centres in which they are based.
The government’s solution? After months of consultation? Well it is startling in its lack of understanding of the industry itself, and that it still favors the one group which possibly is the biggest abuser of the rebate – the large Australian wineries. What has been done is as follows:
The rebate drops from $500,000 to $350,000 this 30 June 2016 and to $290,000 the following financial year.
Unbranded wines immediately aren’t able to claim the rebate, and in 2017 you need to meet specific criteria which are that you own a winery or have the lease of a winery (not a vineyard, not a grape buying contract). A winery. A great big chunk of concrete and steel winery.
Now this is where it all goes pear shaped for about 30-40% of us little wineries who have invested their lives and savings into the growing of the grapes and the selling of their brand – we do not own a winery. We do not want to as we can use wine making facilities in the region in which we grow our grapes. We at Blue Poles get our wines made at Fraser Gallop Estate by Clive and Kate – FGE has invested well over a million dollars to build their winery, and to make it economic and so as to pay their staff they contract out winemaking services. So there are about 4-5 of us with our wines in at FGE – without them FGE would not be happy. And this simple example can be repeated 10’s of times throughout Margaret River, and also in other growing regions such as Tasmania, Canberra, Adelaide Hills etc etc.
Does this reduce the big companies’ opportunity to rort the system? Well actually no, and in fact they are the biggest winners all the way around here as they have the winery facilities, they will dodgy up some ownership / lease arrangements for their 10’s of brands and Robert’s your father’s brother. In fact they take more out of the system as little brands will be lost and they will take up a bigger market share – well done Aussie taxpayer you have just given a multi-million windfall to major booze companies that are in the process of shutting down all of their regional operations. It would be hilarious if it was not so criminal. The bulk wine market has lost out of course, but they were never meant to be in the system in the first place, and as for the New Zealand wineries? The jury is out as they may still have access if they can meet the criteria back in NZ.
The new WET rebate rules are now working against the reason why it was initiated in the first place – small regional producers have higher costs and higher level of employment than major wine companies, and as such the application of the WET is an impost on them but not the makers of cheap, shelf-filling goon. Some boutique wine producer’s will feel the pinch immediately as the reduction from $500,000 to $350,000 would equate to losing 2-3 employees to a mid-sized winery. And a further $60,000 reduction by the following year would mean another one goes.
The definition of a winery most probably will be altered to account for the 100’s if not 1000’s of us who are using contract winemaking facilities and own our vineyard or other such infrastructure. Our Wine Association in Margaret River has finally woken up to the fact that relying on the Wine Federation of Australia was a terrible mistake and we are now providing detailed information directly to government. But the group that will be thrown under the bus appears to be the group which purchase grapes and make wines in contract facilities. These tend to be the small, more “out there” labels making crazy “natural” wines for a description – they have tended to split the primary wine making community into accepting their presence, and not. I am happy with them being around as they create the buzz for wine that was missing in the 90’s and early 00’s and this loss of income would take out a large portion of the innovators out there.
But the outcome of all of this?
A rationalization of the industry to provide a reduced cost to the government and no change to the walls of goon and crates of pointless wines made from areas that are sucking the life out of the ground and the rivers that feed them. It does not address the abuse of alcohol of which wine is one of the major contributors due to the cheapness of a box of wine – cheaper than water. It does not address the controlling influence of the major wine producers in this country and how they will continue to monopolize the industry, with the WFA only too happy to help them do it.
I am over it really. The solution lies with a volumetric tax, but it will not be dealt with in a sane and sensible way so I am not even going to bother bringing up the ethics and morality of such a tax. I have discussed it too often in the past. We will watch the WET rebate scheme being kicked around the park and not score any goals or have any reason – an indictment of the industry really and those that think they “manage” it. Another sad chapter is being written and we can thank the corporates and the simpletons for this path we all now tread.
The change of season has truly come to an end with heavy rainfalls and cold nights becoming the norm. With the change of season comes the first set of storms ahead of the cold fronts that roll up from the Southern Indian Ocean – heavy winds and rains have lashed the state for the past two weeks as these fronts made landfall, giving good rainfall totals and a great start to the growing season for our inland farmers.
The numbers for the month and last year’s figures are provided below:
Avg Maximum Temp 18.7°C
Daily Max recorded 22.6°C
Avg Minimum Temp 10.3°C
Daily Min recorded 3.9°C
The maximum temperature and minimum average this month were a bit higher than last years, but not in a large excess. The rainfall total is also very similar providing a similar start to our wetter months – let us hope we have a wet winter to top up our regional aquifers and cause good cleansing river flows.
Avg Maximum Temp 18.4°C
Daily Max recorded 21.0°C
Avg Minimum Temp 8.8°C
Daily Min recorded 1.7°C
On the road…
Here we go! Out and about with a box full of wine and a few tasting glasses. I’m finishing off the tickets and rental cars etc and I hope everything runs smoothly and all comrades can see what the fuss is about. If I manage to find my way home I will crack on to a few Shiraz vines to give me some quiet time on the top of the vineyard. Hope to see you all soon.
As always if you have any queries about what’s been written or about wine in general, do not hesitate to contact us either by email or www.twitter.com/bluepoles and we’ll do our very best to answer any question.
Blue Poles Vineyard