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Speaker 1: Welcome to Fear and Greed Sunday feature. Oh, Michael Thompson,

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Speaker 1: We're obviously at the end of Melbourne Cup week now,

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Speaker 1: but you can't blame me for just trying to stretch

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Speaker 1: out a little bit longer because today's feature interview gets

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Speaker 1: into champagne and some of the luxury brands that are

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Speaker 1: associated with racing season. Now. This interview is from exactly

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Speaker 1: two years ago Melbourne Cup Week in twenty twenty two.

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Speaker 1: Sean Aylmer is speaking with Brian Fryer, the chairman and

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Speaker 1: CEO at Perno Recard Winemakers, which is behind some of

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Speaker 1: the most recognizable wines in the country, including Mom, the

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Speaker 1: official champagne of the Melbourne Cup. It's a really interesting

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Speaker 1: chat about champagne, about wine, about exporting to China and

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Speaker 1: to other markets. Remember this is twenty twenty two, when

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Speaker 1: crippling tariffs from China were still in place, and about

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Speaker 1: Australia's changing tastes as well. A great conversation. I hope

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Speaker 1: you enjoy it.

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Speaker 2: Welcome to the Fear and Greed Interview. I'm Sean Aylmer.

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Speaker 2: Australian wine makers have had a tough couple of years

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Speaker 2: China's decision to impose crippling tariffs on our wines saw

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Speaker 2: total exports fall almost twenty percent in value to do

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Speaker 2: just a bit over two billion dollars. But considering exports

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Speaker 2: to China fell from one point one billion dollars annually

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Speaker 2: to just twenty five million dollars, it shows the industry

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Speaker 2: has been very successful at replacing China with new markets.

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Speaker 2: Brian Frye is the chairman and CEO of Pernau Recard

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Speaker 2: Wine Makers, the wine making business that sits within the

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Speaker 2: Panou Recard Group. The company owns famous Australian brands like

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Speaker 2: Jacob's Creek and Saint Hugoes. Brian, welcome to fear and greed,

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Speaker 2: and welcome back to fearing greed. I should say thank you,

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Speaker 2: Sean Sat Hugoes. Why is it so good? I'm like,

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Speaker 2: I'm not a huge wine kind of sur but i

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Speaker 2: try really hard to remember great wines and I've got

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Speaker 2: to say Saint Hugo's continually turns out good wines.

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Speaker 3: Yeah. Well, I think our winemakers would be pretty happy

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Speaker 3: to hear that, because that's that's what they set out

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Speaker 3: to do every day. So yeah, Peter Munro, who is

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Speaker 3: our chief one meta for Hugo, that's pretty much his

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Speaker 3: brief is to get people like you saying things like that.

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Speaker 2: So right, he's done his job exactly.

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Speaker 3: We believe that at the price point it's one of

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Speaker 3: the best value wines in the country, so thank you

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Speaker 3: for saying that.

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Speaker 2: Actually, I think that's it. It is one of the

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Speaker 2: best value wines in the country, without a doubt. So

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Speaker 2: let's get onto the industry itself. It's been an incredible

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Speaker 2: couple of years for the industry imposed a bit because

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Speaker 2: of what China decided to do. How do you think

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Speaker 2: the industry has responded and do you think it's done

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Speaker 2: a good job in finding new places to sell wine,

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Speaker 2: recovering from COVID etc.

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Speaker 3: It's a great question because we're going to unpack it

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Speaker 3: a fair bit in terms of what's been going on

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Speaker 3: before and after the China tariffs. So China was definitely

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Speaker 3: a great market for Australian wine, dominated by red wine,

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Speaker 3: of course, and as you read out the numbers, that

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Speaker 3: wine market pretty much doesn't exist for us now. So

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Speaker 3: that's an enormous amount of wine that needs to be reallocated.

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Speaker 3: It can't be reallocated overnight. It's going to take a

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Speaker 3: lot of time. But also before China, we did have

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Speaker 3: a few other issues, and particularly the generally historic decline

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Speaker 3: in our market share in the United States, which is

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Speaker 3: quite a large and important wine market. It's actually in

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Speaker 3: terms of value, it's probably more important than the Chinese

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Speaker 3: wine market globally. So it definitely has put some big

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Speaker 3: headwinds for the Australian wine industry. And also it's put

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Speaker 3: a situation where we have a oversupply, particularly of red

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Speaker 3: wine at the moment in the country, so it requires

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Speaker 3: us to be pretty resourceful a lot of times go

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Speaker 3: back to basics in terms of getting out and establishing

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Speaker 3: new markets or reinvigorating existing markets.

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Speaker 2: Now, creat me if I'm wrong, but I think those

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Speaker 2: latest figures showed that the US exports the US are

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Speaker 2: actually picking up. Is that right?

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Speaker 3: They have a bit definitely on more talking about if

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Speaker 3: you look at the past ten years.

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Speaker 2: Yeah, okay, okay, So what is it that we should

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Speaker 2: be doing then to establish those or re establish those markets.

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Speaker 3: Well, I think it's a couple of things. Firstly, it's

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Speaker 3: about being able to get back into the markets. So

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Speaker 3: there's no doubt that during CODE when all the borders

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Speaker 3: were shut and couldn't fly anywhere people can come here.

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Speaker 3: The ability to actually get out and put glasses in

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Speaker 3: people's hands, particularly new buyers, particularly new wholesalers and customers

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Speaker 3: was quite constrained. So this last year is now open,

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Speaker 3: so it's given us the opportunity to get back overseas.

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Speaker 3: And I know myself, I think I've been overseas every

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Speaker 3: eight weeks at the moment to new markets, So I

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Speaker 3: think that's the first thing is we've got to get

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Speaker 3: back out there and develop our relationship with our customers.

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Speaker 3: We need to focus on building brands that consumers want

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Speaker 3: and then also opening up new markets. So there is

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Speaker 3: opportunities in places like of course India there's opportunities, and

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Speaker 3: our Africa there's opportunities, even in places believed like Kazakhstan,

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Speaker 3: where we've start to see a bit of a pickup

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Speaker 3: with the wine market there. So it's not sticking to

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Speaker 3: the judictional markets. It's about trying to build your business

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Speaker 3: in those markets, but also explore penetration into new markets.

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Speaker 2: It sounds like there's a lot of shoe leather involved

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Speaker 2: really getting out there and meeting people. Where does the

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Speaker 2: Australian wine industry sit on the spectrum relative to other

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Speaker 2: wine countries. Obviously, you know you have some of those

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Speaker 2: European countries are at the top of the pile, but

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Speaker 2: I'm just interested where Australia sits in that.

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Speaker 3: Well. I think we definitely are seen as I mean,

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Speaker 3: we're part of the new world wine producers is the

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Speaker 3: word they use, and we're definitely seen as a very

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Speaker 3: credible wine producer globally. There's no doubt that we don't

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Speaker 3: need to establish our name as being a wine country.

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Speaker 3: Probably our achilles here, I would say, is that we've

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Speaker 3: often been most successful at probably low price points, so

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Speaker 3: under tenuist dollars or under sort of six pound fifty

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Speaker 3: in the UK, and that's probably somewhere where we need

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Speaker 3: to actually move above those price points and probably establish

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Speaker 3: ourselves in a more higher value context.

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Speaker 2: Okay, just before we leave the export discussion, where are

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Speaker 2: Panau Recards wines now sold overseas? I mentioned a couple

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Speaker 2: of the brands there earlier on sent Hugos and Jacob's Creek.

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Speaker 2: Where are you Where do you sell overseas?

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Speaker 3: Yeah, I'd be a while just going through it all.

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Speaker 3: So we have we have seventy affiliates in perno card groups.

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Speaker 3: So that's basically markets where we control our own distribution,

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Speaker 3: and of those, I would say that we have good

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Speaker 3: wine penetration about forty eight of them.

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Speaker 2: Wow, okay, diverse. Yes, stay with me, Brian, we'll be

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Speaker 2: back in a minute. I'm speaking to Brian Fryer, chairman

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Speaker 2: and CEO at Pana Recard Wine Makers. Let's talk to

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Speaker 2: the domestic market. Now, pretty important time of the year

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Speaker 2: because of course it's champagne season being the racing season,

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Speaker 2: and your brand is a partner of the Melbourne Cup carnival.

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Speaker 2: Have you spent a lot of days at the track?

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Speaker 3: Yes, a great sponsorship which we started in twenty thirteen,

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Speaker 3: and of course this year is the first year we've

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Speaker 3: been able to get back and activate the brand. So yes,

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Speaker 3: I've been down for the Derby day and I was

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Speaker 3: down on the Cup day as well, so unfortunately the

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Speaker 3: weather could have been more generous, but we did have

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Speaker 3: a good turnout and some great support.

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Speaker 2: Okay, So you have the Moon brand of course, which

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Speaker 2: is the partner of the Melbourne Cup. We just mentioned

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Speaker 2: that you've recently launched mom Tasmania. What is it about

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Speaker 2: Tasmania that makes it so good for sparkling wine.

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Speaker 3: Well, it's a great question, and it's actually a slightly

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Speaker 3: bigger context because of course we have J. J. Mulman,

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Speaker 3: the Champagne House, which is doing most of the activation

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Speaker 3: around Melbourne Cup and it's actually the second biggest market

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Speaker 3: in the world outside of France is Australia.

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Speaker 2: Wow.

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Speaker 3: But it's actually a house where the style of champagne

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Speaker 3: is very dominant in terms of pin and wa being

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Speaker 3: the main varietal. So what happened a few years ago

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Speaker 3: is the Chef de carb Mum and our wine makers

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Speaker 3: at Penercot Winemakers decided that we'd look at creating great

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Speaker 3: sparkling wines from the great pin and noir regions of

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Speaker 3: the world. So we released a Mum Sparkling Marlborough two

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Speaker 3: years ago. We already have a Mum Nappa in the

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Speaker 3: US and the newest edition is a Mum Tasmania. And

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Speaker 3: again because we believe the quality of the product and

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Speaker 3: the quality of the sparkling that we get out of

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Speaker 3: Tasmania is at a very very high standard, so we're

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Speaker 3: super excited and the response rate has been excellent.

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Speaker 2: Okay, talking about is kind of new varieties. Where are

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Speaker 2: Australian consumers what are they drinking more of? Now? So

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Speaker 2: you're talking about a sparkling pino there, that's obviously something

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Speaker 2: that your confident Australian consumers wind. What are they drinking?

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Speaker 3: Yeah, it's interesting. So of course we've got the traditional

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Speaker 3: charazas and chardoneys and things like that, but we've seen

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Speaker 3: in the last few years there's probably been some interesting

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Speaker 3: trends coming through. The first is definitely a move to

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Speaker 3: what i'd say is a higher quality sparkling wine, very

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Speaker 3: much in the vein of mum Tasmania, which is generally

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Speaker 3: a method traditional so it's a wine that is aged

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Speaker 3: on leaves for eighteen months before release. Then we're also

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Speaker 3: seeing a lot of interesting i would say, lighter style

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Speaker 3: reds that can be chilled. So we've seen the resurgence

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Speaker 3: in grenash pinos that can be chilled but also drunk normally.

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Speaker 3: And we're seeing some interest of course in Italian varietals

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Speaker 3: and also some other styles of white wine as well,

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Speaker 3: rather than just savignon blanc and.

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Speaker 2: Chard me Okay, what about in the low alcohol space,

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Speaker 2: even the no alcohol space. Anecdotically at least it seems

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Speaker 2: that demand is growing.

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Speaker 3: It is, it is, and I think lower OLC and

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Speaker 3: no ELK is a very interesting business to be in.

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Speaker 3: The only issue we have is what people want to

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Speaker 3: pay for it. And what I mean by that is

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Speaker 3: it's actually it's actually quite expensive to make those wines

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Speaker 3: in terms of either you've got to remove the alcohol

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Speaker 3: out or you've got to plant them in a certain

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Speaker 3: place where you can harvest early to keep the alcohol

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Speaker 3: level down. And so it's about making sure that we

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Speaker 3: can get the right value for those wines given the

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Speaker 3: cost it takes to make them.

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Speaker 2: I've never had one, I'm ashamed to say, and I

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Speaker 2: will have to try. But they taste like wine absolutely.

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Speaker 3: That's the first criteria is that when the consumer buys

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Speaker 3: a bottle of those wines, it still has to give

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Speaker 3: them a wine experience.

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Speaker 2: Yeah, okay. To me, how has consumption changed in recent years?

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Speaker 2: And I suppose I'm thinking COVID and post COVID.

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Speaker 3: You know, it's interesting that you've got a longer term

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Speaker 3: trend in terms of consumption of all alcohol including wine

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Speaker 3: in Australia has actually been declining for since the seventies.

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Speaker 3: But actually what's happening is the quality we're drinking is better,

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Speaker 3: so I'd say people are drinking less but better. And

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Speaker 3: we saw that during COVID where you saw actually the

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Speaker 3: best growing sectors in terms of sales were wine above

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Speaker 3: twenty dollars and the champagne sales were excellent. So I

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Speaker 3: think you know it was a particularly during COVID. It

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Speaker 3: was a nice way to I suppose, have a little

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Speaker 3: small luxury, particularly when we couldn't go out and enjoy

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Speaker 3: ourselves and restaurants and bars.

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Speaker 2: Brian, thank you for talking to Fear and Greed and

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Speaker 2: good luck with Mum Tasmania.

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Speaker 3: Thank you very much, appreciate the time that was.

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Speaker 2: Brian Fry, Chairman and CEO of Pano Ricard Wine Makers.

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Speaker 2: This is the Fear and Greed Daily Interview. Join us

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Speaker 2: every morning for the full episode of Fear and Greed,

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Speaker 2: Australia's most popular business podcast. I'm Sean Aelma Enjoy your day.