1 00:00:04,170 --> 00:00:06,600 Sean Aylmer: Welcome to the Fear and Greed Daily interview. I'm Sean 2 00:00:06,690 --> 00:00:10,799 Sean Aylmer: Aylmer. Australian winemakers have had a tough couple of years. 3 00:00:10,800 --> 00:00:14,580 Sean Aylmer: China's decision to impose crippling tariffs on our wines, saw 4 00:00:14,580 --> 00:00:18,689 Sean Aylmer: total exports fall almost 20% in value, to do just 5 00:00:18,690 --> 00:00:22,170 Sean Aylmer: a bit over $ 2 billion. But considering exports to China 6 00:00:22,170 --> 00:00:25,710 Sean Aylmer: fell from $ 1. 1 billion annually to just $ 25 million, 7 00:00:26,430 --> 00:00:29,400 Sean Aylmer: it shows the industry has been very successful at replacing 8 00:00:29,400 --> 00:00:33,330 Sean Aylmer: China with new markets. Bryan Fry is the chairman and 9 00:00:33,330 --> 00:00:37,290 Sean Aylmer: CEO of Pernod Ricard Winemakers, the winemaking business that sits 10 00:00:37,350 --> 00:00:40,740 Sean Aylmer: within the Pernod Ricard Group. The company owns famous Australian 11 00:00:40,740 --> 00:00:45,059 Sean Aylmer: brands like Jacob's Creek and St. Hugo's. Bryan, welcome to 12 00:00:45,060 --> 00:00:46,680 Sean Aylmer: Fear and Greed, or welcome back to Fear and Greed, 13 00:00:46,680 --> 00:00:47,220 Sean Aylmer: I should say. 14 00:00:47,640 --> 00:00:48,330 Bryan Fry: Thank you, Sean. 15 00:00:49,140 --> 00:00:53,580 Sean Aylmer: St. Hugo's, why is it so good? I'm not a 16 00:00:53,580 --> 00:00:57,270 Sean Aylmer: huge wine connoisseur, but I try really hard to remember 17 00:00:57,720 --> 00:01:00,570 Sean Aylmer: great wines, and I've got to say St. Hugo's continually 18 00:01:00,570 --> 00:01:01,680 Sean Aylmer: turns out good wines. 19 00:01:02,190 --> 00:01:04,440 Bryan Fry: Yeah, well I think our winemakers would be pretty happy 20 00:01:04,440 --> 00:01:07,590 Bryan Fry: to hear that because that's what they set out to 21 00:01:07,590 --> 00:01:11,520 Bryan Fry: do every day. So yeah, Peter Monroe, who is our 22 00:01:11,520 --> 00:01:15,119 Bryan Fry: chief winemaker for St Hugo, that's pretty much his briefs 23 00:01:15,300 --> 00:01:16,831 Bryan Fry: to get people like you saying things like that, so... 24 00:01:16,830 --> 00:01:19,950 Sean Aylmer: Right. Oh, well, he's done his job. 25 00:01:20,130 --> 00:01:23,340 Bryan Fry: Exactly. We believe that at the price point, it's one 26 00:01:23,340 --> 00:01:26,100 Bryan Fry: of the best value wines in the country, so thank you for 27 00:01:26,100 --> 00:01:26,550 Bryan Fry: saying that. 28 00:01:26,700 --> 00:01:28,110 Sean Aylmer: Actually, I think that's it, it is one of the 29 00:01:28,110 --> 00:01:31,020 Sean Aylmer: best value wines in the country, without a doubt. So 30 00:01:31,440 --> 00:01:34,590 Sean Aylmer: let's get on to the industry itself. It's been an incredible 31 00:01:34,590 --> 00:01:38,069 Sean Aylmer: couple of years for the industry, imposed a bit because 32 00:01:38,069 --> 00:01:41,970 Sean Aylmer: of what China decided to do. How do you think 33 00:01:42,090 --> 00:01:44,880 Sean Aylmer: the industry has responded and do you think it's done 34 00:01:44,880 --> 00:01:48,600 Sean Aylmer: a good job in finding new places to sell wine, 35 00:01:49,170 --> 00:01:51,240 Sean Aylmer: recovering from COVID, et cetera? 36 00:01:51,600 --> 00:01:54,030 Bryan Fry: It's a great question, because we've got to unpack it 37 00:01:54,180 --> 00:01:56,820 Bryan Fry: a fair bit in terms of what's been going on 38 00:01:56,820 --> 00:02:00,780 Bryan Fry: before and after the China tariffs. So China was definitely 39 00:02:00,780 --> 00:02:03,780 Bryan Fry: a great market for Australian wine, dominated by red wine 40 00:02:03,780 --> 00:02:06,870 Bryan Fry: of course, and now as you read out the numbers, 41 00:02:06,870 --> 00:02:10,200 Bryan Fry: that wine market pretty much doesn't exist for us now. 42 00:02:10,620 --> 00:02:13,139 Bryan Fry: So that's an enormous amount of wine that needs to 43 00:02:13,139 --> 00:02:16,350 Bryan Fry: be reallocated. It can't be reallocated overnight, it's going to 44 00:02:16,350 --> 00:02:20,429 Bryan Fry: take a lot of time. But also, before China, we 45 00:02:20,430 --> 00:02:23,760 Bryan Fry: did have a few other issues, in particularly the generally 46 00:02:23,760 --> 00:02:27,119 Bryan Fry: historic decline in our market share in the United States, 47 00:02:27,120 --> 00:02:29,520 Bryan Fry: which is quite a large and important wine market. It's 48 00:02:29,520 --> 00:02:33,450 Bryan Fry: actually, in terms of value, it's probably more important than 49 00:02:33,450 --> 00:02:37,380 Bryan Fry: the Chinese wine market globally. So it definitely has put 50 00:02:37,380 --> 00:02:41,010 Bryan Fry: some big headwinds for the Australian wine industry and also 51 00:02:41,010 --> 00:02:44,489 Bryan Fry: it's put a situation where we have a oversupply, particularly 52 00:02:44,490 --> 00:02:47,519 Bryan Fry: of red wine at the moment, in the country. So 53 00:02:48,030 --> 00:02:50,940 Bryan Fry: it requires us to be pretty resourceful. A lot of 54 00:02:50,940 --> 00:02:53,400 Bryan Fry: times go back to basics, in terms of getting out 55 00:02:53,400 --> 00:02:58,139 Bryan Fry: and establishing new markets, or reinvigorating existing markets. 56 00:02:58,740 --> 00:03:00,930 Sean Aylmer: Now, correct me if I'm wrong, but I think those 57 00:03:00,930 --> 00:03:04,020 Sean Aylmer: latest figures showed that the US exports, the US were 58 00:03:04,020 --> 00:03:05,430 Sean Aylmer: actually picking up. Is that right? 59 00:03:05,790 --> 00:03:08,040 Bryan Fry: They have. They have a bit, definitely. I'm more talking 60 00:03:08,040 --> 00:03:10,019 Bryan Fry: about if you look at the past 10 years. 61 00:03:10,410 --> 00:03:12,720 Sean Aylmer: Yeah. Okay. So what is it that we should be 62 00:03:12,720 --> 00:03:17,669 Sean Aylmer: doing then to establish those or reestablish those markets? 63 00:03:18,330 --> 00:03:21,090 Bryan Fry: Well, I think it's a couple things. Firstly, it's about 64 00:03:21,360 --> 00:03:24,450 Bryan Fry: being able to get back into the markets. So there's 65 00:03:24,450 --> 00:03:27,419 Bryan Fry: no doubt that during COVID when all the borders were 66 00:03:27,419 --> 00:03:30,870 Bryan Fry: shut, we couldn't fly anywhere, people couldn't come here. The 67 00:03:30,870 --> 00:03:33,750 Bryan Fry: ability to actually get out and put glasses in people's 68 00:03:33,750 --> 00:03:38,250 Bryan Fry: hands, particularly new buyers, particularly new wholesalers and customers, was 69 00:03:38,760 --> 00:03:41,820 Bryan Fry: quite constrained. So this last year it's now opened, so 70 00:03:41,820 --> 00:03:44,190 Bryan Fry: it's given us the opportunity to get back overseas. And 71 00:03:44,340 --> 00:03:47,340 Bryan Fry: I know myself, I think I've been overseas every eight 72 00:03:47,340 --> 00:03:50,430 Bryan Fry: weeks at the moment, to new markets. So I think 73 00:03:50,430 --> 00:03:51,960 Bryan Fry: that's the first thing is we got to get back 74 00:03:51,960 --> 00:03:55,110 Bryan Fry: out there and develop our relationships with our customers. We 75 00:03:55,110 --> 00:03:58,620 Bryan Fry: need to focus on building brands that consumers want, and 76 00:03:58,620 --> 00:04:01,890 Bryan Fry: then also opening up new markets. So there is opportunities 77 00:04:01,890 --> 00:04:05,910 Bryan Fry: in places like, of course, India. There's opportunities in Africa. 78 00:04:06,330 --> 00:04:10,380 Bryan Fry: There's opportunities even in places, believe it or not, like Kazakhstan, where we've started 79 00:04:10,380 --> 00:04:14,250 Bryan Fry: to see a bit of a pickup with the wine market there. So 80 00:04:14,400 --> 00:04:17,400 Bryan Fry: it's not sticking to the traditional markets, it's about trying 81 00:04:17,400 --> 00:04:20,550 Bryan Fry: to build your business in those markets, but also explore 82 00:04:21,060 --> 00:04:22,500 Bryan Fry: penetration into new markets. 83 00:04:22,890 --> 00:04:24,779 Sean Aylmer: It sounds like this is a lot of shoe leather 84 00:04:24,779 --> 00:04:28,380 Sean Aylmer: involved, really, getting out there and meeting people. Where does 85 00:04:28,380 --> 00:04:34,110 Sean Aylmer: the Australian wine industry sit on the spectrum relative to 86 00:04:34,380 --> 00:04:37,230 Sean Aylmer: other wine countries? Obviously, you have some of those European 87 00:04:37,230 --> 00:04:39,720 Sean Aylmer: countries are at the top of the pile, but I'm 88 00:04:39,720 --> 00:04:41,490 Sean Aylmer: just interested where Australia sits in that. 89 00:04:42,270 --> 00:04:44,190 Bryan Fry: Well, I think that we definitely are seen as... I mean 90 00:04:44,279 --> 00:04:46,589 Bryan Fry: we are part of the new World Wine producers is 91 00:04:46,589 --> 00:04:49,290 Bryan Fry: the word they use, and we're definitely seen as a 92 00:04:49,290 --> 00:04:52,680 Bryan Fry: very credible wine producer globally. There's no doubt that we 93 00:04:52,680 --> 00:04:55,169 Bryan Fry: don't need to establish our name as being a wine 94 00:04:55,170 --> 00:04:58,859 Bryan Fry: country. Probably our Achilles heel, I would say, is that 95 00:04:58,860 --> 00:05:02,820 Bryan Fry: we've often been most successful at probably lower price points, 96 00:05:03,089 --> 00:05:07,440 Bryan Fry: so under 10 US dollars or under sort of 6 97 00:05:07,440 --> 00:05:11,339 Bryan Fry: pound 50 in the UK and that's probably somewhere where we 98 00:05:11,339 --> 00:05:14,880 Bryan Fry: need to actually move above those price points and probably 99 00:05:14,970 --> 00:05:17,460 Bryan Fry: establish ourselves in a more higher value context. 100 00:05:18,600 --> 00:05:22,470 Sean Aylmer: Just before we leave the export discussion, where are Pernod 101 00:05:22,470 --> 00:05:25,710 Sean Aylmer: Ricard's wines now sold overseas? I'd mentioned a couple of 102 00:05:25,710 --> 00:05:29,789 Sean Aylmer: the brands there earlier on, St Hugo's and Jacob's Creek. Where 103 00:05:29,790 --> 00:05:30,630 Sean Aylmer: do you sell overseas? 104 00:05:30,630 --> 00:05:33,810 Bryan Fry: Yeah, I'd be a while just going through it all. 105 00:05:33,810 --> 00:05:38,460 Bryan Fry: So we have 70 affiliates in Pernod Ricard Group, so 106 00:05:38,460 --> 00:05:42,779 Bryan Fry: that's basically markets where we control our own distribution. And 107 00:05:42,870 --> 00:05:47,490 Bryan Fry: of those, I would say that we have good wine penetration 108 00:05:47,490 --> 00:05:48,719 Bryan Fry: in about 48 of them. 109 00:05:48,960 --> 00:05:51,240 Sean Aylmer: Wow, okay. Diverse. 110 00:05:51,570 --> 00:05:52,050 Bryan Fry: Yes. 111 00:05:52,230 --> 00:05:54,240 Sean Aylmer: Stay with me, Bryan, we'll be back in a minute. 112 00:06:00,839 --> 00:06:04,110 Sean Aylmer: I'm speaking to Bryan Fry, chairman and CEO at Pernod 113 00:06:04,110 --> 00:06:09,270 Sean Aylmer: Ricard Winemakers. Let's talk to the domestic market now. Pretty 114 00:06:09,270 --> 00:06:12,000 Sean Aylmer: important time of the year because, of course, it's champagne 115 00:06:12,000 --> 00:06:15,029 Sean Aylmer: season, being the racing season. And your brand Mumm, is 116 00:06:15,029 --> 00:06:17,549 Sean Aylmer: a partner of the Melbourne Cup Carnival. Have you spent 117 00:06:17,550 --> 00:06:18,779 Sean Aylmer: a lot of days at the track? 118 00:06:19,320 --> 00:06:24,210 Bryan Fry: Yes. It's a great sponsorship, which we started in 2013, 119 00:06:24,210 --> 00:06:26,190 Bryan Fry: and of course, this year is the first year we've 120 00:06:26,190 --> 00:06:28,500 Bryan Fry: been able to get back and activate the brand. So 121 00:06:28,500 --> 00:06:30,720 Bryan Fry: yes, I've been down for the Derby Day and I 122 00:06:30,720 --> 00:06:33,810 Bryan Fry: was down on the Cup Day as well, so unfortunately, 123 00:06:33,810 --> 00:06:36,270 Bryan Fry: the weather could have been more generous, but we did 124 00:06:36,270 --> 00:06:38,190 Bryan Fry: have a good turnout and some great support. 125 00:06:38,640 --> 00:06:41,339 Sean Aylmer: Okay, so you have the Mumm brand, of course, which 126 00:06:41,339 --> 00:06:43,110 Sean Aylmer: is the partner of the Melbourne Cup, we just mentioned 127 00:06:43,110 --> 00:06:46,799 Sean Aylmer: that. You've recently launched Mumm Tasmania. What is it about 128 00:06:46,800 --> 00:06:50,220 Sean Aylmer: Tasmania that makes it so good for sparkling wine? 129 00:06:51,000 --> 00:06:54,000 Bryan Fry: Well, it's a great question and it's actually, there's a 130 00:06:54,000 --> 00:06:57,810 Bryan Fry: slightly bigger context because, of course, we have G. H. Mumm, the 131 00:06:57,810 --> 00:07:01,229 Bryan Fry: Champagne house, which is doing most of the activation around 132 00:07:01,230 --> 00:07:04,980 Bryan Fry: Melbourne Cup, and it's actually the second biggest market in 133 00:07:04,980 --> 00:07:08,640 Bryan Fry: the world outside of France, is Australia. But it's actually 134 00:07:08,640 --> 00:07:11,670 Bryan Fry: a house where the style of Champagne is very dominant 135 00:07:11,730 --> 00:07:15,000 Bryan Fry: in terms of Pinot Noir being the main varietal. So 136 00:07:15,510 --> 00:07:18,179 Bryan Fry: what happened a few years ago is the shift to 137 00:07:18,180 --> 00:07:22,470 Bryan Fry: Cab Mumm and our winemakers, at Pernod Ricard Winemakers, decided 138 00:07:22,470 --> 00:07:26,310 Bryan Fry: that we'd look at creating great sparkling wines from the 139 00:07:26,310 --> 00:07:30,300 Bryan Fry: great Pinot Noir regions of the world. So we released 140 00:07:30,360 --> 00:07:34,590 Bryan Fry: a Mumm Sparkling Marlborough two years ago. We already have 141 00:07:34,590 --> 00:07:38,310 Bryan Fry: a Mumm Napa in the US, and the newest edition 142 00:07:38,310 --> 00:07:41,340 Bryan Fry: is a Mumm Tasmania. And again, because we believe the 143 00:07:41,340 --> 00:07:44,370 Bryan Fry: quality of the product and the quality of the sparkling 144 00:07:44,370 --> 00:07:47,310 Bryan Fry: that we get out of Tasmania is at a very, 145 00:07:47,310 --> 00:07:52,170 Bryan Fry: very high standard. So we're super excited and the response rate has been excellent. 146 00:07:52,680 --> 00:07:55,380 Sean Aylmer: Okay. Talking about is kind of new varieties, where are 147 00:07:55,380 --> 00:07:59,489 Sean Aylmer: Australian consumers, what are they drinking more of now? So 148 00:07:59,490 --> 00:08:03,180 Sean Aylmer: you're talking about a sparkling Pinot there, that's obviously something 149 00:08:03,180 --> 00:08:06,360 Sean Aylmer: that you're confident Australian consumers want. What are they drinking? 150 00:08:07,110 --> 00:08:10,260 Bryan Fry: Yeah, it's interesting. So of course, we've got the traditional 151 00:08:10,290 --> 00:08:13,080 Bryan Fry: Shiraz's and Chardonnays and things like that, but we've seen, 152 00:08:13,530 --> 00:08:15,480 Bryan Fry: in the last few years, there's probably been some interesting 153 00:08:15,480 --> 00:08:19,860 Bryan Fry: trends coming through. The first is definitely a move to, 154 00:08:19,890 --> 00:08:23,489 Bryan Fry: what I'd say, is a higher quality sparkling wine, very 155 00:08:23,490 --> 00:08:27,330 Bryan Fry: much in the vein of Mumm Tasmania, which is generally 156 00:08:27,330 --> 00:08:30,750 Bryan Fry: a method traditional. So it's a wine that is aged 157 00:08:30,780 --> 00:08:34,050 Bryan Fry: on lees for 18 months before release. Then we're also 158 00:08:34,050 --> 00:08:36,030 Bryan Fry: seeing a lot of interest in, I would say the lighter 159 00:08:36,030 --> 00:08:39,089 Bryan Fry: style reds that can be chilled. So we've seen a 160 00:08:39,090 --> 00:08:43,290 Bryan Fry: resurgence in Grenache, Pinots that can be chilled but also 161 00:08:43,290 --> 00:08:46,349 Bryan Fry: drunk normally. And we're seeing some interest, of course, in 162 00:08:46,620 --> 00:08:50,340 Bryan Fry: Italian varietals and also some other styles of white wine 163 00:08:50,340 --> 00:08:53,010 Bryan Fry: as well, rather than just Sauvignon Blanc and Chardonnay. 164 00:08:53,580 --> 00:08:55,679 Sean Aylmer: Okay. What about in the low alcohol space, even the 165 00:08:55,679 --> 00:08:59,730 Sean Aylmer: no alcohol space? Anecdotally, at least, it seems that demand 166 00:08:59,730 --> 00:09:00,270 Sean Aylmer: is growing. 167 00:09:00,660 --> 00:09:05,580 Bryan Fry: It is. And I think low alc and no alc is a very interesting business 168 00:09:05,580 --> 00:09:09,000 Bryan Fry: to be in. The only issue we have is what 169 00:09:09,000 --> 00:09:10,439 Bryan Fry: people want to pay for it. And what I mean 170 00:09:10,440 --> 00:09:13,470 Bryan Fry: by that is it's actually quite expensive to make those 171 00:09:13,470 --> 00:09:16,380 Bryan Fry: wines, in terms of either you've got to remove the 172 00:09:16,380 --> 00:09:18,479 Bryan Fry: alcohol out, or you've got to plant them in a 173 00:09:18,480 --> 00:09:20,670 Bryan Fry: certain place where you can harvest early to keep the 174 00:09:20,670 --> 00:09:24,000 Bryan Fry: alcohol level down. And so it's about making sure that 175 00:09:24,090 --> 00:09:27,270 Bryan Fry: we can get the right value for those wines given 176 00:09:27,270 --> 00:09:28,350 Bryan Fry: the cost it takes to make them. 177 00:09:28,679 --> 00:09:30,840 Sean Aylmer: I've never had one, I'm ashamed to say, and I will have 178 00:09:30,840 --> 00:09:33,150 Sean Aylmer: to try, but they taste like wine? 179 00:09:33,840 --> 00:09:37,380 Bryan Fry: Absolutely. That's the first criteria is that when the consumer 180 00:09:37,380 --> 00:09:39,809 Bryan Fry: buys a bottle of those wines, it still has to 181 00:09:39,809 --> 00:09:41,100 Bryan Fry: give them a wine experience. 182 00:09:41,670 --> 00:09:45,480 Sean Aylmer: Yeah. Okay. Tell me, how has consumption changed in recent 183 00:09:45,480 --> 00:09:49,679 Sean Aylmer: years? And I suppose I'm thinking COVID and post- COVID. 184 00:09:49,679 --> 00:09:52,200 Bryan Fry: It's interesting that you've got a longer term trend in 185 00:09:52,200 --> 00:09:56,970 Bryan Fry: terms of consumption of all alcohol, including wine in Australia has actually 186 00:09:56,970 --> 00:10:01,829 Bryan Fry: been declining since the 70s. But actually what's happening is 187 00:10:01,830 --> 00:10:04,109 Bryan Fry: the quality we're drinking is better. So I'd say people 188 00:10:04,110 --> 00:10:06,630 Bryan Fry: are drinking less but better. And we saw that during 189 00:10:06,630 --> 00:10:11,220 Bryan Fry: COVID where you saw actually the best growing sectors, in 190 00:10:11,220 --> 00:10:14,550 Bryan Fry: terms of sales, were wine above $ 20 and the Champagne 191 00:10:14,550 --> 00:10:18,449 Bryan Fry: sales were excellent. So I think it was, particularly during 192 00:10:18,450 --> 00:10:20,400 Bryan Fry: COVID, it was a nice way to, I suppose, have 193 00:10:20,400 --> 00:10:23,309 Bryan Fry: a little small luxury, particularly when we couldn't go out 194 00:10:23,309 --> 00:10:25,110 Bryan Fry: and enjoy ourselves in restaurants and bars. 195 00:10:26,309 --> 00:10:28,350 Sean Aylmer: Bryan, thank you for talking to Fear and Greed and 196 00:10:28,350 --> 00:10:29,820 Sean Aylmer: good luck with Mumm Tasmania. 197 00:10:30,150 --> 00:10:31,321 Bryan Fry: Thank you very much. Appreciate the time. 198 00:10:31,321 --> 00:10:35,520 Sean Aylmer: That was Bryan Fry, chairman and CEO of Pernod Ricard 199 00:10:35,520 --> 00:10:38,640 Sean Aylmer: Winemakers. This is the Fear and Greed daily interview. Join 200 00:10:38,640 --> 00:10:40,770 Sean Aylmer: us every morning for the full episode of Fear and 201 00:10:40,770 --> 00:10:44,610 Sean Aylmer: Greed, Australia's most popular business podcast. I'm Sean Aylmer. Enjoy 202 00:10:44,610 --> 00:10:44,790 Sean Aylmer: your day.