Ep 33: Treasury Wine Estates' Great Brand Purge: Genius or Disaster?

[00:00:04] Speaker A: Why do we drink what we do? Why do some drinks become classics while others languish at the back of the drinks cabinet? [00:00:11] Speaker B: Is it just because we prefer those drinks? Or are there underlying economic, social or technological trends that shape our choices? [00:00:19] Speaker A: And that's what we're going to explore on A Question of Drinks. [00:00:22] Speaker B: Join us as we explore the hidden side of the drinks cabinet. The decisions, reversals, and underlying forces that shape the beverage market. I'm Luli Halstead. [00:00:32] Speaker A: And I'm Felicity Carter. And together we host A Question of Drinks. Nice to see you again and catch you between travels. Luli, do you want to tell everybody where you've just been? [00:00:46] Speaker B: I will. I have been in California, so primarily in Sonoma and Napa. But Felicity, talking of travels, share with us where you've been. [00:00:56] Speaker A: You will be amazed at the coincidence. I've also been in California, primarily in Healdsburg and Napa. [00:01:03] Speaker B: So basically what we're saying is that essentially we were in the same state at the same time and managed not to see each other once. [00:01:10] Speaker A: Yeah, we did try, but our schedules were packed. So what were you doing there, Luli? [00:01:15] Speaker B: I was over there seeing clients, going to dinners, but obviously clearly the wrong ones because apparently I didn't see you at all. And what about you? What were you up to? [00:01:24] Speaker A: So I was at this very interesting week long event called New Wave, organized by California wines. So they brought together wine professionals from all over the world to talk about where wine goes next. [00:01:34] Speaker B: Okay, so where does wine go next? [00:01:37] Speaker A: New styles of wine lists, new grapes, maybe hybrids, lots of things. [00:01:41] Speaker B: Okay. Okay. So back to today's episode. Actually, can I do a really quick tangent time before we get into the episode? [00:01:50] Speaker A: You're on a tangent already. We've started. [00:01:52] Speaker B: Okay, I know, I know, I know. Did you remember in our last episode when I confessed to asking for water with ice alongside my white wine on a plane, which I know is a very first world problem, so that I could add the ice to my white wine because I was too embarrassed to ask for ice in wine in front of other people. Do you remember that? [00:02:12] Speaker A: Yeah, I remember that for the life of me couldn't understand why you were so nervous about it. [00:02:18] Speaker B: Anyway, guess what? So two of the most respected wine writers in the UK, so Jane McQuitty of the Times and Jancis Robinson, well, needs no introduction. Have both published articles in the last week saying, guess what? It's okay to add ice to your wine. Even they say, to red wine. So Jancis said it can even have the bonus of reducing the alcohol levels with the ice melt. So get that. [00:02:44] Speaker A: So now you too can ask for white wine on a plane with added ice without any feelings of embarrassment. [00:02:50] Speaker B: Indeed I can. So I feel appropriate vindication on this one now. So, anyway, tangent time over. So back to the episode. So, as we've said, we were both in California, and it was not long after Treasury Wine Estates was holding its investor day, which included a pretty strong focus on their US business and on Dow in particular. [00:03:10] Speaker A: Yes. And what happens says a lot about the future of wine, and not just in California. [00:03:15] Speaker B: It does. Which also makes talking about Treasury Wine Estates and in particular their newly announced brand strategy worth this episode all on its own. [00:03:26] Speaker A: All right, let's get into it. But first of all, do you want to explain who it is that we're talking about? [00:03:30] Speaker B: Okay. Yeah. Yeah. So, good idea. So top Line Treasury Wine Estates is Australia's largest wine company. It's listed on the Australian Stock Exchange and is the owner of some of the world's biggest and most famous wine brands. So at its investor day, which was earlier on in June this year, 2026, they announced one of the most significant strategic shifts that we've probably seen in the wine industry for many years. [00:03:56] Speaker A: They did indeed. And it sent shockwaves through Australia in particular, but through the wine world in general because treasury announced it was going to kill more than 40 brands from its current portfolio of 76. Now, that would leave them with around, or will leave them with around 30. But they're planning to focus on just 10 key brands. [00:04:15] Speaker B: Yeah. And the really sort of big news that they announced is that they think those 10 brands, their 10 focus brands, will account for about 90% of future sales. And the investors seem to think this was a good strategy because on that very day, their company value rose about 13% in terms of their share price. [00:04:36] Speaker A: Yes. And their three power brands are Penfolds, Dow and Mature. [00:04:40] Speaker B: Yeah. So a quick one on one on the brands in case people aren't familiar with them. So Penfolds is probably the brand with the biggest global exposure. It's basically Australia's global icon brand. You've got Grange, which sits at several hundred a bottle. While much of the portfolio within Penfolds is sort of the 30 to $100 price range, it's all built around kind of status, collectibility and prestige. Yeah. [00:05:07] Speaker A: And Dow is also a luxury brand. It's one of America's fastest growing luxury wine brands. And its core Cabernet wines typically retail from 25 to $50, while their Reserve and Estate wines move well beyond $100. Yeah. [00:05:21] Speaker B: And it's their third declared power brand that I find really super interesting, Felicity, because it's mature. So it is kind of the opposite of the two that we've just been describing. So it's a mainstream New Zealand, primarily Sauvignon Blanc brand, typically around kind of 10 to $15 in the US so it's not luxury, like we were just saying all about refreshment, reliability and everyday drinking. [00:05:45] Speaker A: Yes. So as well as those three, there are another seven that they're calling regional heroes. They are Frank Family, Viney, Bailu. I can never pronounce that. Bailu Vineyards, Stagsley, Wind Squealing Pig, Pepperjack and Coldstream Hills from the Yarra Valley. [00:05:59] Speaker B: I'm glad you tripped up on pronunciation. That's normally my job. Anyway, I've got to say that the choices, well, I guess from the 76 brands, what's interesting is what didn't make the top 10, and there's two in particular that they're focusing on that I think are really interesting, that I've got lots to say about, we can come on and talk about. But those two are Squealing Pig and Pepper Jack. [00:06:25] Speaker A: Yeah. It's a somewhat odd collection of wines because you've got these very historic storied brands like Stagsley, Coldstream Hills that are very much rooted in a particular place. And then you've got these very commercial brands. [00:06:37] Speaker B: Yeah. So just in case, again, listeners are not familiar with the two brands I was just referring to. So Squealing Pig, again, a New Zealand brand, Sauvignon Blanc dominant, but they also have and lighter styles and they now source globally. So, for example, they've got an Argentinian Malbec, although I wouldn't having just. They're lighter in style. That doesn't quite fit anyway. I know. I'm just kind of questioning myself on that one. So typically around $10 to $15, so sort of think sociable, approachable, built around the modern drinking occasions. [00:07:08] Speaker A: Yes. And Pepper Jack is an Australian shiraz. It's about 15 to $25. So this is big and bold territory. [00:07:14] Speaker B: Yeah. Now, Felicity, if I were just asking for a friend, how do you feel as an Australian, that Australia's biggest wine company is focusing on 10 brands? Australia, four of which are Australian, but four are American and two are from New Zealand. [00:07:32] Speaker A: Well, I guess my reaction is treasury has really been a multinational for a long time, so it's a global company that just happens to be headquartered in Melbourne. What bothers me a lot more is their shuttering of very significant historic labels. So from a very cold business standpoint, they might be making the right decision. But I think what this all proves is that shareholder driven corporations are the wrong people. Absolutely the wrong people to be in the wine business. [00:07:57] Speaker B: Okay, strong statement. So only a few minutes into the episode and it sounds like you're on a rant, Felicity. Keep going. [00:08:04] Speaker A: Well, yes, since I'm not pulling any punches here, I think it's worth remembering that treasury itself came out of a strategic mistake. [00:08:11] Speaker B: Okay, so you're definitely not holding back. So I'm just going to repeat that statement because I'd like to ask you to build on that. So treasury itself came out of a strategic mistake. Explain to us. [00:08:24] Speaker A: Okay, so during the 1990s and early 2000s, there was a giant Australian beer company called Fosters Group, and they went on a buying spree. So they snapped up major wine companies and they were working on the theory that alcohol is just alcohol. And if their salespeople had a portfolio that had lots of wine, beer and spirits in it, they would capture all the shelves and all the alcohol space because retailers and sommeliers wouldn't go anywhere else. [00:08:49] Speaker B: Yes. Though we should point out that they weren't the only beer company doing this at the time. So didn't we have Lion, Nathan and potentially others? I think. [00:08:58] Speaker A: Yeah, I think there were others as well. But anyway, so in the late 90s, I worked briefly at a company called Cellar Masters in Sydney and I was there when it got bought by Fosters. Cellar Masters was a direct to consumer wine company and it took wine very, very seriously. So every single staff member, whether you were an IT or the receptionist or on the phone, you had to do wine training. And at the end of every day you'd go and open a bottle because they wanted you to understand the portfolio. [00:09:23] Speaker B: Well, that sounds like a very nice place to work. Yes, I'd quite like to work there. So did Fosters add beer effectively to your lineup at Cellar Masters? [00:09:34] Speaker A: That would have been okay if they had, but what they did was they introduced this sort of dead cold hand of corporate culture, you know, told us lots of KPIs and unrealistic sales targets. You know, they used to have these posters of thermometers on the walls telling us how much we'd sold. [00:09:50] Speaker B: Okay. So, Felicity, could I say that what you're describing sounds like a very clear business strategy and focus to me? [00:09:58] Speaker A: The problem is that wine is different. So if you try and manage it like beer or detergent, you're going to lose the things that make the brand valuable in the first place. [00:10:08] Speaker B: Okay, so first major disagreement of the episode. Incoming. Felicity, as you know, I tend to think wine people go way too far on the focus on kind of terroir and history and the fact that wine is different and not enough focus on kind of basic core business practices. [00:10:26] Speaker A: Look, I absolutely agree with you about that. There's no disagreement. But in the case of Fosters, they made a much more fundamental mistake, which was thinking they could, you know, treat wine like beer, but unfortunately you can scale beer up or down depending on what the market's doing, whereas you get one vintage a year with wine and that's it. And that makes forecasting a lot more difficult. [00:10:45] Speaker B: Yeah, okay, I 100% agree with you on that bit. But what in particular did they do that makes you say it was a mistake? Because you were quite vocal about that. [00:10:56] Speaker A: So many. So their goal was to be the world's biggest drinks company. And I'm not making it up. That's actually what they said. So what they were after was volume. Right. So they snapped up lots of brands and vineyards, some of which were very historic and important, but they ended up with this huge multi country portfolio that was full of brands that needed individual attention, which they just couldn't supply. Now, unlike beer, wine ties up lots of capital in stock and vineyards. And so when demand FEL after the 2008 recession, Fosters was stuck with lots of excess wine and non performing assets. [00:11:28] Speaker B: Yeah, which is I guess why they spun off the wine division effectively at that time, didn't they? Into kind of a whole new company in 2011. Which is how we get treasury wine estates that we're talking about today. [00:11:40] Speaker A: That's right. To be fair, you know, treasury understood wine a lot better than Fosters did, there's no doubt about that. And they inherited a lot of famous brands like Wolf Blass and Yellow Glen, but those were brands that had been really damaged by Foster's volume play and treasury never really resuscitated them. So I also think treasury was still hamstrung by this need to please shareholders, which is a very tough place to be for a wine company. [00:12:03] Speaker B: Yeah. So we could enter at this point into a sort of whole discussion, couldn't we, about, you know, the point of family, or at least kind of privately owned businesses versus listed and shareholder businesses owned businesses and the demands of the business outcomes required. But I guess I don't want to kind of derail us, unlike me, at this point. [00:12:26] Speaker A: So. [00:12:26] Speaker B: So let's go back to the recent treasury announcement and about reducing their brand portfolio, as you were saying, from 76 to 30 brands with these 10 focus brands that we've already mentioned. [00:12:37] Speaker A: Yeah. And so let's be transparent. We are recording this episode in the third week of June, and the announcement at the investors meeting was three weeks ago. [00:12:45] Speaker B: Yeah. So some of the very significant names that haven't made their top 10 include brands like Wolf Blast, Lindemann's Yellow Glen, 19 Crimes Even, which was one of their fastest growing brands not long ago. And these are wines in some cases that have been on the shelves and around in the world for decades, if not generations. So the best we know that some of these brands, their futures are uncertain, I guess. [00:13:10] Speaker A: Yeah. [00:13:10] Speaker B: And then. [00:13:11] Speaker A: Yeah, that's right. And then on the other side of the ledger, we've got Dow. Now, Dow is a California winery that was founded in 2007. So it's less than 20 years old. So this is a really important part of the story. It was acquired by treasury late 2023 for nearly a billion US dollars, and they've now named it as one of these three power brands. So it sits alongside Penfolds. [00:13:31] Speaker B: Yeah, And I want to flag up one thing here before we get into it, because I think. I don't know, I think the framing of the question really matters enormously here because I think treasury isn't really making a wine decision here in this strategic choice. [00:13:47] Speaker A: All right, so what's the decision they're making? [00:13:50] Speaker B: I'm interpreting it as they're making a consumer decision. So they're asking not which wines are best, but which brands will consumers still care about or be relevant to consumers in 2035. So, you know, in 10 years time. So with. I think those are two completely different questions and the ones that the wine industry doesn't usually ask itself or should be asking itself more, at least. [00:14:16] Speaker A: Yeah, no, I agree with that. But it does bring back to the question of whether corporations should be involved in the wine business at all. So retiring brands, slimming down your portfolio, that is a very rational business decision, but it is a horrible cultural decision when some of these wines have very deep historic roots. [00:14:33] Speaker B: Yeah, but things don't have to exist, do they? Because they've just been around for a long time. So again, I could go off on another tangent here about Joseph Schumpter, the economist, and his theory of what he called creative destruction. So it's basically that capitalist capitalism has this clever habit of renewing itself by consigning outdated things to the dustbin of history. And embracing disruptive innovation. So wine persistently talks to consumers about vineyards and grape varieties and fermentation, oak, da da da, da, da. And yes, history, all of which matter. But in the end, it comes down to, as I was just saying, what consumers actually want and what they choose. You know, just because it's historic, it doesn't mean it's right for consumers. [00:15:19] Speaker A: Yeah, but there's lots of cultural goods that aren't necessarily, you know, popular with consumers that we still choose to value. But anyway, we have a problem when we talk about wine because, you know, wine is a word that's stretched across too many things. So vineyards, history absolutely matter to buyers of Bordeaux first growth, but they're, of course, irrelevant to consumers buying in supermarkets. [00:15:39] Speaker B: Yeah, fair. Yeah. Which is where most sales happen, though, isn't it? In the supermarket, or equivalent, depending on which part of the world you're in. But that's where people are looking for. I don't know, they're buying wine because it's playing a role in their lives. They're looking for celebration or reward or belonging or hospitality or whatever it is. The wine is simply the vehicle that delivers that in their lives. [00:16:04] Speaker A: Yeah. I will say that's treating relevance like it's a force of nature. That's just an inevitability, whereas it can absolutely be affected by specific business decisions. But anyway, let's. Let's have a look at Treasury's decision, specifically their purchase Dow, which, like I said, cost them about 900 million back in 2023. Yeah. [00:16:23] Speaker B: And I think that was a choice, if you look at what they were reporting at the time and why they made that decision, because it was about connecting with younger consumers, which is where Dao was positioned. So it was also a luxury wine, and they could also distribute it in China, which was very important at the time to replace Penfolds, after the Chinese government kind of slapped all of the tariffs it did on Australian wine. [00:16:49] Speaker A: Yeah. I mean, I will say there were lots of good reasons they bought it, but unfortunately the timing was terrible. Almost immediately they bought it, the market went into a slump. [00:16:58] Speaker B: Yeah. Which is not what investors expected to hear after a near. What? Well, after the bonus around a billion dollar acquisition. [00:17:07] Speaker A: Yeah. My colleague Jeff Siegel wrote for my Drinks Insider newsletter about Down Rose being sold in Texas for under $10 a bottle. [00:17:15] Speaker B: Well, at the moment, that's being sold now. [00:17:18] Speaker A: Oh, no, this was. He wrote this a few months ago, but he snapped a picture in his local. His local store. [00:17:23] Speaker B: So recently that. Yeah, so since post acquisition, anyway. [00:17:26] Speaker A: Yeah, that's fine. Yeah. [00:17:28] Speaker B: And that's, I guess, the key point. Treasury may have bought a strong brand, most definitely did, but bought the brand probably in one of the worst oversupply environments that California has experienced. Well, in decades, if not ever. [00:17:42] Speaker A: Yeah. So they made a billion dollar bet that just didn't pay off. And really it's the economic fallout from that that partly explains why they're restructuring their portfolio now. [00:17:51] Speaker B: Indeed. And I'm interested in what, know what, what did it offer Dow to them that they thought was worth betting on at that time? Because that was a bold move, wasn't it? [00:18:03] Speaker A: Yeah. Okay. So it's a luxury brand and it was created by two tech entrepreneurs, the brother George and Daniel Dow, from, from Lebanon originally, I think. So they built and sold a healthcare technology business and they took that money and they bought land in Paso Robles on top of a mountain. So it was 2,200ft above sea level. And they did this in 2007. [00:18:21] Speaker B: Yeah. And that location is really interesting, isn't it? Because it's not one of the sort of traditional BL blue chip areas of California. [00:18:30] Speaker A: That's right. Which makes this really interesting. And, and yet their flagship wine, which is called Soul of a Lion, became a collectible. So their claim is, and I, I don't know if this is true, but they, they use science and data to create a proprietary system to sort of optimize all the right elements. Wine. And what's interesting about this is that many, many, many wealthy people have attempted to create icon wines without success. But they actually did it. [00:18:54] Speaker B: Yeah, absolutely. And treasury saw that effectively and then paid accordingly. [00:18:59] Speaker A: Yeah, they paid a lot. $900 million upfront, with an additional 100 million earnouts. So this is for a winery that's under 16 years old. [00:19:08] Speaker B: Yeah. So what treasury was effectively paying for here when they acquired Dow was a brand as a future asset, so not a past achievement. But treasury wasn't paying for what Dow had done. It was paying for what it believed it could become. So Penfolds, for example, generates over a billion Australian dollars in revenue annually. And if Dow could get to even a fraction of that internationally, the kind of the math starts to stack up, doesn't it? So what we're seeing here is basically investors buying future cash flows, not nostalgia. [00:19:42] Speaker A: Yeah. I will say at the time it was really big news that they did this and they were criticized a lot for this deal with people saying that one of the problems with the company is they keep buying these expensive assets instead of fixing underlying problems. Distribution and the portfolio. [00:19:57] Speaker B: Yeah. And volumes have been under pressure and parts of the portfolio have been struggling to maintain their relevance. And they've done significant write downs, haven't they? And they have even attempted to sell some of the brands which they were doing, what, two years ago, 18 months ago. And they were on record as saying that the offers were not what they had hoped for. So with the result, all of that, treasury have revised, or they did in December last year, their financial forecast downwards and announced a major cost cutting program. [00:20:35] Speaker A: Yes. And at this particular point, a guy called Robert Foy waded in. Now, he's an ex CoH dude, Becky, who joined treasury and ran major parts of the business before becoming Chief Operating Officer. Now, he was dismissed in 2019 for undisclosed reasons. And he went on to run Accolade Wines. Yes. [00:20:52] Speaker B: And he has criticized treasury publicly as a shareholder, which he is activist shareholder, arguing that while treasury owns some exceptional assets, it's failed to manage them effectively. [00:21:05] Speaker A: Is his. [00:21:05] Speaker B: His was what he's saying. Effectively. [00:21:07] Speaker A: That's right. He says they've been too focused on volume and not enough on brand building. [00:21:11] Speaker B: Yeah. And what I find fascinating here is that you kind of, if you strip away the sort of personalities that's going on here and Foyer's criticism, actually, and Treasury's new strategy aren't actually that far apart from each other. So the company has effectively stood up and said, look, we've got too many brands, too much complexity, and we need more focus. [00:21:31] Speaker A: Which, ironically enough, is exactly what happened with Fosters. [00:21:35] Speaker B: Okay, so that leaves me with two questions then. Felicity, we've got two questions here. So the first is, have they chosen the right 10 brands? Discuss. Which we'll come on to do. And the second is whether the organization that created many of these problems. Here's a tricky one. Is capable of delivering solutions. [00:21:54] Speaker A: Good question. All right, let's do the brand portfolio question first. [00:21:58] Speaker B: Okay, you're ducking the other one then first. Okay, let's go into that one. [00:22:02] Speaker A: Oh, no, I have thoughts. I have thoughts, believe me. [00:22:04] Speaker B: Oh, good. I'm looking forward to you sharing those with us. So let's jump into question one. Have they chosen the right 10 brands? So I think the direction is right. I think there's sort of the courage to focus is actually quite real and rare in the wine industry. So if I were in charge of treasury, however, I would ban the development or launch of any new brands for at least five years. So I would have an absolute moratorium on any new brands. [00:22:36] Speaker A: By the sound of it, that is the direction they're now heading in. Yeah. [00:22:40] Speaker B: And I think it's the right approach. So if you need to develop a new brand to meet a market need, so a new style or a new occasion, a new segment, you should be doing that under one of your key 10 brands. That's what a focused portfolio is for. So the brand should be elastic enough for you to be able to grow into adjacent spaces. Otherwise you're just diluting everything. [00:23:05] Speaker A: So what do you think? Do you think the 10 brands that they're keeping, you know, serve the market needs. [00:23:10] Speaker B: Good question, Felicity. I think that. Yeah, actually, that. Really good question. I think there are a few that deserve scrutiny so far. I suppose one of the things that occurs to me is, does. Does the portfolio cover sparkling wine, and particularly premium correctly? [00:23:27] Speaker A: Yeah, I mean, that's a really interesting question, because sparkling is one wine category that's in really good health. And yet they've cut Yellow Glen and Sepals, which were two sparkling brands, and so they've got a hole in the, you know, where they could have had a sparkling wine. Yeah. [00:23:41] Speaker B: So it does seem a strange decision, doesn't it, to move that focus away from sparkling. So why don't you talk about those brands and maybe we can kind of try and work out why. [00:23:51] Speaker A: Yeah. Okay. So Yellow Glen is really interesting. Interesting. It's the brand that really launched the sparkling category in Australia. So it was created in 1975 by a businessman called Ian Holm, and he brought in a French winemaker because he specifically wanted an elegant Australian sparkling wine. So back in the day, it was really huge. I remember one of my dad's friends going to a hotel and ordering it off the menu, and I just thought it was really sophisticated. But then it got caught up in corporate buyouts, and so by the 1990s, it was owned by Foster. [00:24:22] Speaker B: Okay, well, I love the fact that he. They bought in a French winemaker to bring elegance to Australia first up. But what happened to it then? [00:24:32] Speaker A: Okay, so this is. This is one brand, one that, to their credit, Fosters brought back from the dead. So in 2000. That's right. They launched a major advertising campaign which was called Bubbly Girl. And it featured a girl who looked very girl next door. Ish, who was. Was dressed in a shift dress made of bubbles, and that was the whole poster. She was just standing there looking happy with this bubbly dress. So they tweaked the winemaking, they made it a bit more sophisticated, and this lifted the entire category of sparkling. And by the way, the Bubbly Girl ads is some of the Most iconic ever produced in Australia. [00:25:03] Speaker B: Yeah. And I think it's a really good example, isn't it, of consistency and distinctive brand assets. If I'm allowed to bring those in, could have an episode without talking about them, because that was. They kept that sort of imagery that communications, those distinctive brand assets really consistent over a number of years, didn't they? Which really kind of helped that. So you think they are not focusing on it and therefore potentially leaving themselves without a core focus on a sparkling brand? [00:25:32] Speaker A: Well, because Yellow Glenn went the same way as many of the other brands being retired. It was just sort of used for volume, you know, and unfortunately, that left Yellow Glen sitting at the commercial end, which is the segment of the market that's in decline. [00:25:46] Speaker B: Yeah. And is it the same story with Sepulce, do you reckon? [00:25:49] Speaker A: Now, Sepulce is my argument for why shareholder driven corporations are the absolute worst people people. For the wine trade, Sepals is a completely different story, and I'm quite wound up about it because this is about the destruction of history. [00:26:02] Speaker B: Oh, my God. Okay. Have you. I'm just checking for a friend again. Have you been deprived of caffeine this morning, Felicity? Because we're. You're definitely on a roll. [00:26:11] Speaker A: I don't need caffeine. I'm fired up about this. [00:26:13] Speaker B: Okay, okay. I will listen with interest. I think I need to sit back because I think I need to let you carry on. Tell us about Sepulch. Why. Why are you going off on one, two or on them? [00:26:24] Speaker A: Okay, so segment was historically Australia's most important sparkling wine producer, as well as being a pioneer of some unique styles. [00:26:31] Speaker B: Yeah. So it was basically sparkling shiraz, if I'm correct. Is that. Am I right that it was primarily shiraz? [00:26:40] Speaker A: Yeah, that's right. [00:26:41] Speaker B: Yeah. Yeah. Okay, so what's. Okay, interesting. What's your view on sparkling red then? Because we haven't really talked about it. [00:26:47] Speaker A: Oh, look, it's been a long time. It's been a long, long time since I drank it. I used to love it. Right. People inside the wine trade used to go call it Spergle, and it was really popular, though. This is really awful. But Australian male wine writers used to call it a chick's wine. They were very disparaging. Bad. [00:27:02] Speaker B: Okay, go back. But what did you call it? Spurgel? [00:27:07] Speaker A: Sparkling Burgundy. I think it was a. It was a portmanteau. [00:27:11] Speaker B: A portmanteau. Oh, I heard that expression before. Well, I think sparkling red is fab and completely underrated in terms of its market opportunity. [00:27:21] Speaker A: Oh, really? Why is that? [00:27:23] Speaker B: Okay. So way back when, so May, many, many, many years ago, when I was running a wine importing business, we imported a sparkling red from Burgundy into the UK market. And we used to do these. You know, you have to do this when you're an importer. Go round to your kind of key retail customers and do in store tastings around Christmas time. And what was really interesting was pretty much everyone who tasted the wine, the sparkling red, bought at least one bottles, if not more, there and then. And it was basically because it was different, it was fun, it was, it was literally bubbly. Yeah. [00:27:55] Speaker A: And it's definitely a Christmas wine. Even in the hot Australian summer. Christmas. It's definitely that. Anyway, so going back to Sepals. So Sepals was founded in the Barossa in 1851. Right. So this is right at the beginning of the Australian wine story. But it expanded into the state of Victoria in the 1860s. So the family commissioned gold mine. So this is Victoria in the 1860s is the gold rush. Right. So the family commissioned gold miners to carve out this massive network of underground cellars. And then in 1890 they commissioned a French winemaker again. They'd bring in the fren, make the first traditional methods wines. So they finally got around to buying the Great Western Winery in 1918. [00:28:31] Speaker B: Okay, so plenty of heritage there. So what went wrong? [00:28:35] Speaker A: Well, it was the involvement of corporates, basically. So it was just corporates that made it just one more brand inside the portfolio. None of the companies that owned it developed it. And you know, Australians stopped drinking mid market sparkling and either they moved to champagne and premium or they went to the cheap end. Right. So sparkling wine was sparkling charade was always too niche. But this was a, this was a wonderful asset that, you know, if they'd been taken care of, could have, could have been turned with its history and location into an absolute top premium Australian sparkling. [00:29:06] Speaker B: Okay, so you're basically saying wrong wines, wrong price point at the time. [00:29:11] Speaker A: Yeah, I mean, I think it's just a national tragedy. So in 2015, treasury closed the Great Western Winery. And so, you know, it turned Sepult into just another label, more or less. [00:29:21] Speaker B: Okay, so what do you think they should have done? What should have happened? [00:29:25] Speaker A: Like I said, a company that values the history and the asset would have developed the wines into a premium offering. So, you know, as you know, if you. Everything that you've said about terroir in history is true, except at the premium end. This is really important that history and heritage and Sebbles had more of it than any other sparkling winery. In Australia instead, it was just allowed to become irrelevant, another volume brand. [00:29:47] Speaker B: But isn't that the whole point, Felicity? It's a reminder that heritage isn't a strategy. Heritage can be a huge asset. Yeah, yeah, yeah. But only if somebody actively turns it in, into consumer value. Otherwise it's just a very old story that has become dated and irrelevant. And I think you've kind of inadvertently made my case there about [00:30:12] Speaker A: if something's just old. Sure, I completely agree with you. But the thing is in wine is if you've got that combination of old and story and all of that history, you can turn it into. It does become a huge asset. Right. And I think out of all wineries in Australia, apart from maybe the ones in Tasmania, Sepulch could have been a premium story. Anyway, Sepulch is not the only historic asset to suffer from this. So another brand that's being shuttered is Wolf Blast. Now, Wolf Blast, still alive. The Guy's in his 90s, I think. Founded his winery in the Barossa Valley in 1966. Now what he did was, was incredibly groundbreaking. He created a visually recognizable quality hierarchy. So he had these yellow, black, red labels. So it instantly demonstrated to consumers what it was they were buying. Now he, he created what was really the first national brand in Australia. And he show that you could supply both the premium and the commercial ends of the market. [00:31:07] Speaker B: Yeah, absolutely. And I'm old enough to remember Wolf Blass as a brand in its absolute heyday. So I, you know, you can picture the bottles, the bold labels, the confidence really of it on the shelf and it was a serious brand that stood for something very specific. So it had kind of clear positioning and relative, relative, always differentiation, if we're thinking about that from a brand point of view. So rich, full flavored Australian cabernet, primarily kind of made with craft and intention and it won loads of prizes and it did it quite loudly, didn't it? So the Australian wine boom of the 80s and 90s and Wolf Blast as a brand was right in the forefront of that. [00:31:48] Speaker A: Well, yes, and a lot of, you know, from a historic point of view, he actually sort of kick started a lot of, you know, what became Australia's export boom. Now he himself was also known for his incredible showmanship. [00:32:00] Speaker B: Yeah, and I had the pleasure of meeting him, I'm sure you've met him as well. An indus. Yeah, an industry dinner a few years ago in Australia. And he's such a charming and generous man, isn't he? And I, Okay, I have to admit, I was a bit of A fangirl when I met him, because I'd kind of grown up admiring this brand and then to actually meet them, the man behind it, it was. It was, you know, it was really special, actually. [00:32:24] Speaker A: I know. Which is the whole story, isn't it? [00:32:27] Speaker B: Yeah. So, so here it is. The founder and the brand were completely aligned here. So Wolf Blast, the man we've just been talking about him, he bold and uncompromising and proud of it and very generous as a person as well, isn't he? So the wine was bold and uncompromising and generous, just like him. So there's this real kind of coherence which is quite rare and very valuable between both him as a person and what the brand that manifested what it stood for. So what do you think then went wrong with this incredible brand? [00:33:00] Speaker A: Mismanagement. So Wolf Blast. No, absolute mismanagement. So Wolf Blast Black Label was a famous, you know, premium collect wine, but basically under, you know, the dead cold hand of the corporates, Wolf Blast just became this supermarket brand that people learned to buy on promotion. You know, just a dreadful downgrading of a really important piece of Australian wine history. Now, treasury did try to sell it, but they couldn't get the price that they wanted. And that was the end of Wolf Blass, you know, at least for the moment. So this is a long way from the original cross question about sparkling wine, but you understand, Wolf Bless. So what would you have done with the brand? [00:33:37] Speaker B: Okay, so I don't claim to have inside and knowledge, but that, and, well, that's never stopped me having an opinion. [00:33:44] Speaker A: So we would expect nothing less from the never under opinionated Luly House. [00:33:49] Speaker B: Yes. Okay, yeah, I've got some opinions. Actually, I have been thinking, genuinely, I have actually been thinking about this question since I first heard the new news. [00:33:58] Speaker A: All right, so for the sake of the exercise, Luli, you now own Wolf Bl. You bought it when it went on the market a couple of years ago. Though in actuality it failed to sell. How are you going to bring it back to life? [00:34:08] Speaker B: Okay, well, first up, thank you for gifting me Wolf Blouse. Do you know, actually flisty, if I'd have had the money, which clearly I didn't, a couple of years ago when it was put on the market, I would have bought it at the right price, of course, I might add. First thing I do. Okay, so before any tactical decisions are made about labels or campaigns, distribution, anything, we need to answer two questions. And by the way, Felicity, these are the two questions every brand needs to answer. And most Brands in wine cannot answer clearly. [00:34:39] Speaker A: The floor is yours, Luly. Give us the questions. [00:34:41] Speaker B: Okay, thank you. So, one question one, who is our primary target audience? And question two, what is our brand positioning? [00:34:51] Speaker A: Actually, that sounds quite straightforward. [00:34:53] Speaker B: It is. It does sound straightforward, but actually it can be quite difficult. Difficult. So most brands either have vague answers for question one, which is wine lovers age 25 to 55. That is not a target audience, Felicity. [00:35:06] Speaker A: All right, so. So now you're presenting your plans, your investors, who happens to be me because I've made so much money from the podcast. How are you going to justify your purchase of this now tired brand? [00:35:17] Speaker B: Okay, so you continue to be a tough crowd today, Felicity. So target audiences, what type of wine drinker am I targeting? Marketing. The really important bit to understand is why, when, and how do they drink wine? Those being the key questions I need to know the answers to. [00:35:33] Speaker A: All right, your second question was about brand positioning. [00:35:36] Speaker B: Yep. So start with brand personality. Get the personality right and the positioning follows. And then the DBAs, the distinctive brand assets, the visual expression of the brand, follow on from that. So that's what I would do. Now you're turn. Tell us more about Wolf Blass for context, setting. [00:35:54] Speaker A: I think you're outsourcing your. Your responsibilities as the new owner of. Well, Wolf Blast me. [00:35:59] Speaker B: We're a team. We've bought it together. [00:36:02] Speaker A: Okay, so, okay, so Wolfgang Blass was born in Germany where he trained as a winemaker, and then he came to Australia in 1961 when he was 27. So at the time, most of the wine produced in Australia was just for the domestic market, was very unknown internationally, and probably wasn't very good. I mean, I think they drank a lot of to find back in the day. So he took a job at a winery called Kaiserstuhl in the Barossa Valley, and then in 1966, he started a small winemaking business in a garage in Adelaide. So the thing is, those wines went on to win Australia's most prestigious wine prize, known as the Jimmy Watson Trophy. And he did it in three consecutive years, which I think has never been done before or since. [00:36:41] Speaker B: Is it remarkable? Isn't it? Yeah. So here it is. The founder and the brand were completely aligned. So Wolf Blast the man, as I said earlier, bold, uncompromising, generous, as proud the wine, exactly the same thing. So this coherence is incredibly rare and as I said earlier, really valuable. [00:36:59] Speaker A: Do you want to talk about what brand personality actually is? [00:37:03] Speaker B: Okay, yeah. So brand literally think about it as well, personality as in human characteristics. It's the characteristics, the personality that the brand embodies and the way it basically should show up. If a person were walking into a room, kind of what characteristic, what personality would that be? Brand B. Right. [00:37:24] Speaker A: So Wolf Blass's actual personality and his brand personalities were congruent with one another. [00:37:29] Speaker B: Yeah, yeah, exactly. And Wolf Blass has always made wines that kind of don't apologize for themselves. So big and confident, no hand wringing. And whether the oak, you know, even if the oak is showing up a lot, you know, still confident, proud of that. So the winemaking style was always. And here it is, the kind of glory, take it or leave it bit that I guess the word is bold. And that's what we're talking about in terms of, of brand. So we kind of break down Wolf Blast. We've got as a brand personality, uncompromising, so it has a point of view and holds it generous. So the flavors are generous. He is generous. It's all about sharing and bringing a good bottle. And proud, I would say, is the other brand personality for Wolf Blast. So proud, kind of without being arrogant. So if we did sum up the brand personality here, we could say unapologetic. [00:38:23] Speaker A: All right, so there's one issue that I can think of which, of course, the dominant trend in wine right now is towards lighter, fresher, lower alcohol by volume. And if Wool Bless chased that, it would undercut its own personality and branding. So what are you going to do about that? Who's the target? [00:38:39] Speaker B: Okay, so the target is the engaged explorer wine drinker. So typically somebody in their 40s and 50s, but someone for whom wine is a genuine part of meal and occasions at home. They kind of want flavour, they want proper flavour, a wine with a big presence, with depth, with something to say. They're not intimidated by Big Red. They celebrate it with it, in fact, and it plays the role of sort of reward in their lives. [00:39:07] Speaker A: Are there many of those wine drinkers left? And doesn't, you know, chasing that group, doesn't it just buy time rather than solve the underlying problem, which is that big reds are on their way out? [00:39:16] Speaker B: Okay, back into combative mood. I'll take that one on. So, yes, my, my suggestion does go against a market trend, but it's only just one market direction. So in a market where the majority of brands are racing towards lighter and fresher, the consumer who loves bold, full flavored wine is kind of increasingly being underserved. And there are still plenty of them out there, Felicity, millions of them all over the world. And fewer brands are speaking to them with conviction. So owning a clearly defined underserved space with complete conviction beats fighting for incremental share in what's coming. You know, increasingly overcrowded space. [00:39:58] Speaker A: All right, so you've identified the positioning and now how are you going to express it? [00:40:02] Speaker B: Distinctive brand assets, the visual cues. All right, you walked into that one. [00:40:08] Speaker A: You're going to just say to myself. [00:40:10] Speaker B: Yeah, exactly. The, the visual cues that mean Wolf blasts before anybody even needs to read the name on the label. And here I feel. So I'm on a rant now. I feel really strongly about this one. Felicity would go straight back to the archive. [00:40:28] Speaker A: All right, so that's an interesting choice because, you know, part of the problem is that Wolfplace has become very old fashioned. So why the archive? [00:40:38] Speaker B: Okay, so absolutely. Archive, super important. So going back to your roots can remind you of what the brand DNA is. And most brands decline not because they've kind of forgot who they were or they're keeping a role that is no longer needed. They just kind of get replaced by something better. When this explains almost sort of every major brand failure in wine and spirits. But, but, but if you look at what happened to Wolf Blouse and you were just talking about this, the DBAs, the distinctive brand assets, were progressively eroded by successive marketing and brand teams until it lost exactly one of its most valuable assets. These distinctive brand assets that we've been talking about. [00:41:21] Speaker A: Actually, now that you're talking. Maggie Enriquez was brought in by Mart Hennessy to turn around Krug Champagne. [00:41:26] Speaker B: Yeah. [00:41:27] Speaker A: And one of the first things she did called in a historian to go back to the archives and find out why those decisions had been made as they were at the very beginning. And she actually turned around the company. So, so, yes, I can see that. I can see the value of that. But, but Luli, now you're doing the ranting. [00:41:42] Speaker B: I am. I've got one more. Okay, I've got another one. I've got another one. So they then introduced. Do you remember this? Do they introduced a kind of lower tier Eagle Hawk, which was a sort of a cheaper, lower price point tier. And it was developed, I'm assum. An attempt to preserve the Wolf Brass, Wolf Blast brand equity. Gosh, that's quite hard to say. And it was. I think that was a really poor decision. [00:42:09] Speaker A: God, I mean, there were just so many poor decisions. And, and anyway, you've heard me rant about this. Should we, should we add some case studies that come from outside Treasury? [00:42:18] Speaker B: Yes. Okay, I think that's a good idea. Otherwise we could Keep going on this one. So I know you love a good case study, so why do. I'll gift you the case study of Blue Nun. Felicity. [00:42:30] Speaker A: Oh, Blue Nun. I love Blue Nun. I' have you been to the Mosel, to the company that makes Blue Nun? [00:42:35] Speaker B: Of course you have. No, I have. [00:42:37] Speaker A: Okay, so Blue Nun, at its peak in the 1970s and early 1980s, was one of the most commercially successful wine brands in the world. It's a style of wine known as a German Liebframich. It's so sweet and easy to drink. And it had, you know, and at the time, having a bottle on the table signaled that you had a lot of European sophistication. [00:42:54] Speaker B: It did indeed. I remember it well. So what happened? [00:42:58] Speaker A: Well, basically, people started traveling more, so they started to experience actual European wines first hand. And so. And then when they went back home, this was the period when varietal labeling was in full swing. So they could pick up a Chardonnay or a Samuel Blanc and they could know what was in the bottle. And also, Blue Nun was kitsch. [00:43:16] Speaker B: It was, it was. So I've got one. I've got case. Good case study to follow that Baby Sham. [00:43:22] Speaker A: Do you know, I don't actually know what Baby Sham is, even though I've heard of it. [00:43:26] Speaker B: Don't you? Okay. Okay. Well, Baby Sham was a. [00:43:30] Speaker A: Is. [00:43:30] Speaker B: Was still. Is, I think, yes, effectively a. A sparkling Perry. So made with pear. So it's kind of like a hard cider, but made with pear rather than apples. And it's. So it's lightly sparkling around 6% ABV. And it was invented in Somerset in England and launched nationally in 1953. [00:43:52] Speaker A: Okay, so what made it a big success? [00:43:55] Speaker B: Okay, so the key is that it came in single serve box bottles. It's kind of really ahead of its time, wasn't it? And was also advertised typically alongside a glass, you know, the kind of like champagne saucer style glasses. So basically it was positioning itself as performing the role of celebration and luxury that champagne had performed, but all coming in a convenient single serve and not surprisingly, at a much more accessible price point. [00:44:22] Speaker A: That sounds really clever. So who was the target? [00:44:26] Speaker B: Okay, so it basically women. So it gave women at the time, so in the 50s and 60s, the opportunity to confidently order drinks in pubs at a time when most drinking occasions certainly out of home and in pubs, were heavily male dominated. So it was light, glamorous, and as I just said, came in these kind of little champagne style, you know, single serve bottles. And it allowed women to participate in a social Occasion in a way that felt actually quite aspirational. Yeah. [00:44:56] Speaker A: And I gu. In that post war period, it must have been, you know, right price, right style. So it was really about having a, you know, confident good night out. [00:45:03] Speaker B: Yeah, correct. But what happened was that, that kind of role. Well, the role stayed there, but then moved to disappearing because women gained access to other drinks categories. So cocktails became more mainstream. You know, we saw kind of gin and tonic being more accessible. Those types of mixed drinks, as you well know, one of your favorites. So wine became a bit more mainstream. Then gradually Prosecco started to arrive. So consumers still wanted that celebration and social connection, but they kind of hired different drinks to do the job. [00:45:41] Speaker A: So, Luly, how do you determine which brands can come back and which ones are just better left to history? [00:45:46] Speaker B: So brands often come back when they work out again. I sound like a broken record on this one, but I'll keep going. What role they're playing in people's lives. So take Guinness. You know, we've talked about Guinness before on the podcast. Consumer started value things that Guinness was already offering. So authenticity, heritage and ritual, the famous two part pour, the sense that you're participating is something, I guess, which is a bit more. Has a bit more history behind it. So maybe I'm sounding a bit more like you now. [00:46:14] Speaker A: Yeah. So I'm not gonna, I'm not gonna torment you over that. But yes, I know talking about history and heritage all of a sudden, Lulu, but carry on. [00:46:21] Speaker B: Okay, okay. So for years, moving on quite swiftly, those things felt slightly old fashioned, but felt distinctive and desirable again. [00:46:31] Speaker A: Well, hang on a second. They, you know, people didn't just suddenly discover Guinness. Right. So Diageo decided to invest heavily in marketing experiences. [00:46:39] Speaker B: Right. [00:46:39] Speaker A: So they put a lot of effort into the brand, you know, particularly their Guinness storehouse in Dublin. And one of the reasons they did this is that they recognize that consumers right now absolutely value authenticity and heritage and all those good things. [00:46:52] Speaker B: Okay, before you kind of dig into me again, let's move on. [00:46:55] Speaker A: I've seen the point I'm making here. [00:46:57] Speaker B: Yeah, I'm moving, moving on. So let's do a quick tangent as we talk. As we're talking about old fashioned, not about us, but the notion of brands being old fashioned. What do you think? And so I've got a question for you, genuine question. What do you think is the difference between old fashioned, so out of date versus kitsch, which is a word you used earlier. What's the difference between the two of them, Felicity? [00:47:22] Speaker A: Oh, that's a good Question. Okay, so I'll buy it. So old fashioned means dated. Like it's stuck in the. In the past. [00:47:29] Speaker B: So. And retro, how does that question. [00:47:34] Speaker A: That's a hard question. I have to think about it. I guess retro is. I guess retro is making a conscious choice to use something from a past cultural era, but making it, refreshing it for the modern world because maybe what it expressed then is genuinely useful and resonant now. [00:47:51] Speaker B: Okay, so would Company Campari, for example, be a good. Would that be a good example here? [00:47:58] Speaker A: Yes, yes, absolutely. So it's just archive posters and historic colors. You know, this is something reassuring about it in a. In a world that many people feel is changing too fast. [00:48:08] Speaker B: Okay, and back to kitsch. What, what, what does that mean? How does that manifest? [00:48:14] Speaker A: Oh, you're forcing my brain. Okay, Kitsch, I guess it's about irony, right? So it's, it's ironically embracing something that is screamingly unfashionable. So, but, but, but kitsch only works if people are in on the joke. Right? So I would say that something like 19 crimes has genuine kitsch energy. You know, the mugshot labels, the Snoop Dogg, the sort of. The provocation. Maybe, maybe that's a bit kitschy, that. [00:48:38] Speaker B: Yeah, so that's really interesting. So, so you basically what you're saying there is then the best kitsch says, I know this is a lot, but I don't care. And the worst kitsch is sort of trying too hard. [00:48:52] Speaker A: Oh, there's gradations of kitsch I hadn't thought about. Oh my God, I have to update my view of the world. Okay, so how does all of this apply to Wolf Bless? [00:49:02] Speaker B: Okay, okay, yeah, I took us off on a tangent there. We were talking about going back into the archive and Retro and Wolf Blass and is it old fashioned? Weren't we? So the opportunity for Wolf Blash. Wolf Blass, I think is retro. Rather than Kick by your definitions then, which were really helpful and absolutely not old fashioned. And this is why I suggested going back into the archives. They were. What they were expressing, we can express again, but kind of take a contemporary take on it. [00:49:32] Speaker A: Right, so getting back to the roots of the brand, basically. [00:49:34] Speaker B: Yeah, yeah. And going back into the archive isn't about, I should say very clearly recreating 1974 or whenever it was. It's about reclaiming the conviction that existed in 1974. So when in a market where everything is kind of going minimal and pale and sans serif and quiet, I guess I'm saying bold visual confidence is the differentiation so you can be chosen and can be noticed if you go down that route. Yeah. [00:50:03] Speaker A: And I guess you might want to perk up what's inside the bottle as well, [00:50:08] Speaker B: potentially. I think brands most often don't decline primarily because the product quality deterioration deteriorates. They decline because the world around them is changing. So the role they played stops being needed or most typically gets replaced by something that's doing the job better. And this explains, as I've said before, almost like kind of every major brand failure in wine and spirits. Yeah. [00:50:32] Speaker A: Or because they get seen primarily as cash cows and nothing is put into them, but a lot is taken out of them. So to me, the biggest problem in this discussion is the word brand, which just reduces everything to being a marketing asset. So if you go back to sepals, it wasn't just a brand. Real place with real history. And so once you reduce it to being a brand, it becomes much easier to justify stripping it for parts or letting it fall apart. [00:50:57] Speaker B: Oh, Felicity, I've got so much to say on that. So that's the whole point of brand though. It's the all encompassing personality, the passion, the reason for being of a product. It's not just a label. So if a brand is treated with the respect it deserves, it should, should be central to an organization. Kind of the heartbeat of what drives every decision in the organization. And that's what true and good brand management looks like. It's not simply a label refresh or a design that somebody puts out there. It's the heartbeat, the energy, the personality of the organization. So I want to come back to something you said earlier. If sepult was so valuable, why do consumers stop buying it? [00:51:46] Speaker A: I think it's because the people who were in charge of it themselves didn't value it and they just allowed it to stagnate. I think that's as simple as that. [00:51:55] Speaker B: Yeah, yeah. So what? Basically weren't doing brand management in the way that I was just ranting, talking, however you want to define it about. Which brings us back to Treasury. So they're making a bet on what they think consumers will still care about. And, and apparently not a lot of that is to do with history. [00:52:16] Speaker A: Look, I've never claimed that people care about history. In fact, one of the things that I hear people talk about at conferences is always, you know, history, and we should talk about history. And I always say if people cared about history, thrift shops wouldn't be full of antiques [00:52:31] Speaker B: or just because they're ugly and heavy and don't fit in modern houses anyway. I'm confused then. Does history matter or not? [00:52:38] Speaker A: Felicity, look, it might not matter to consumers, but it matters enormously to a culture and a country. So Semple's has deep roots in Australian history. You know, from everything from pioneers in South Australia to the gold rush in Victoria to the very first attempts at professional winemaking. It is profoundly important. [00:52:57] Speaker B: Okay, you're sounding rather romantic in your, in your views there, Felicity. I didn't have you pinned down as that. [00:53:04] Speaker A: Well, I, you know, I believe that some things are important, and I think that culture. I think that culture and history are really important. Are they important as consumer values? No, probably not. But are they important? You know, do they have other values and. Yes, absolutely they do. It's. I think it's a national treasure and should be treated as. [00:53:21] Speaker B: Okay. [00:53:22] Speaker A: And while I'm ranting, I cannot think, I cannot think another country in the world that would have allowed something as, as important as that just to be shuttered. I really can't. I think it's a, It's a very Australian thing just to sort of close the doors on something important. It falls me. [00:53:39] Speaker B: Can we, can we just make a, A wine museum for you, Felicity, where we can have lots of lovely history and put these brands and bottles in there? [00:53:48] Speaker A: No, but it doesn't have to be, it doesn't have to be museum culture. If you treat things well, you can keep them alive. I, I, you know, samples should never have been allowed to die, and I think it was neglect. [00:54:00] Speaker B: Okay, okay, I'll move us on. This gets us to the question, Felicity, of ownership structure, which you've just been talking about there. So if a corporation is listed on the stock exchange, it has a duty to its shareholders, so not to. Australian national pride, cultural history. It can't keep wineries afloat just out of obligation to the past. [00:54:26] Speaker A: No, I understand that. And, you know, they do have well defined fiduciary responsibilities. I get that. But this is why, in general, I think corporations being involved in wine has been a disaster for wine itself. And all due respect to the people at treasury, many of whom I know personally and I know they care a lot about, about what they do. [00:54:43] Speaker B: Okay, but what's the alternative? That effectively. Are you saying somebody should keep a winery on life support? [00:54:50] Speaker A: No. So, first of all, I think if you're going to buy these assets, you should take care of them. Right? That's number one. But also, yeah, you and me on Wood Flex. You know, it's absurd to have bought something like this and just let it. Language over decades, right? But. But also a privately owned company with a longer time horizon can see the long term value of an asset and they can wait for. For returns. So a good example of this would be the California wine company Gallo. Right. Which is both family owned, and it's also one of the biggest and most innovative wine companies in the world. So over the years, it's bought historic wineries like Louis Martini, and it's invested heavily in restoring and developing them. [00:55:29] Speaker B: Yeah, and that's not philanthropy or for history's sake. They are determined and focused on making a return on investment. [00:55:37] Speaker A: Oh, yeah, absolutely. I mean, these are smart people, but the thing is, they're prepared to wait, and they can wait. And that's the difference. And by the way, just to be clear, I'm not trying to make treasury into the villain. Right. It is operating within very tight parameters. It must deliver returns to shareholders, and it has a legal duty to do so. Or heads. All right, so it is doing what financial logic demands that it does. [00:56:00] Speaker B: Yeah, exactly. So let's try and be a little bit more optimistic. [00:56:05] Speaker A: No, I'm in a grumpy mood now. You can't decide. Grump me. [00:56:10] Speaker B: Okay, I'm gonna try. We should add that treasury was responsible for one of the most interesting and successful brands we've seen in recent times. 19 crimes. [00:56:20] Speaker A: Oh, yes. All right, you've cheered me up. I have a story to tell about 19 crimes. Would you. But. But introduce the wine. [00:56:26] Speaker B: Okay, okay. And then we'll get to your story. I'm glad I've managed to cheer you up. So treasury came up with the idea around sort of 2012, 13, and it launched in 2014. So the concept basically was based on the idea that there were 19 crimes that you get transported from Britain to Australia in the 18th and 19th century. So it was brilliant. Is brilliant branding. Most wines want to talk about vineyards and heritage, as we've been saying, and they talked about crime, punishment and survival. So clearly aimed at younger, off legal drinking age consumers. And it was a massive hit. [00:57:01] Speaker A: And they also pioneered talking labels. And for a couple of years afterwards, you know, there were talking labels everywhere. [00:57:06] Speaker B: They did. Yeah, they did. And it kind of seemed gimmicky potentially, but, you know, as you said, people copied it. But it was groundbreaking at the time. And you kind of effectively pointed your phone at the label and the convict started talking to you, which is quite creepy in some ways. But it was a period when wineries were mostly kind of ignoring social media or particularly that kind of interactive way. And treasury created something that everyone was Filming and posting online. It was brilliant. [00:57:35] Speaker A: Yeah. Right. So here's my story. So around about 2011, so this is this period, I started to get annoyed at how many wineries I walked into everywhere in the world where they, you know, they proudly show me their wine for women, Right? So they were treating women like this strange zoo animal that they were stalking. And I got so cranky about it that when they showed me their wine for women, I would immediately say to the winemakers, tell me about your wine for men. [00:57:58] Speaker B: Okay. I've got so many things I could say here. So first up. Up, I think, comes to mind. Felicity, did the wine producers you were talking to not understand that you or the job you do, which journalists you are, when they put that in front of you and said that? I pity the fool that said that to you. But anyway, so what was her reaction? [00:58:21] Speaker A: Well, they were all flummoxed. They just stood there. Absolutely flummox. Except with one exception. I was in this cooperative in northern Greece, and I said, which are your wines for men? And the guy, without stopping a beat, turned around to the huge wall of wine with about 100 different labels. He went all of these. But me asking this question didn't stop this title of bad bulk wine that was being aimed at women. So I got so annoyed about it that I decided to write an article about how to create wines that would appeal to. [00:58:56] Speaker B: To men. Okay, I'm gonna bite. I might regret this. Tell us what you did. How did you do that? [00:59:01] Speaker A: Well, so. So I went and I talked to experts on flavor from outside wine. And what they told me was that if you wanted to attract young men, you had to make the product sweeter than for young women, which. [00:59:11] Speaker B: Wow. [00:59:12] Speaker A: We got surprised because the received wisdom was that it was women that drank sweeter wines. [00:59:17] Speaker B: Okay, okay. I'm allowing this tangent to continue. I'm not sure why. [00:59:21] Speaker A: Go. [00:59:21] Speaker B: Carry on. [00:59:22] Speaker A: Oh, well, there was a lot about, you know, the way that men want to be cheeky and funny and the way that they. They want. You never want to show men being solitary and stuff. And. But what was interesting is that the more I learned about what you do to appeal to men, and I remember I talked to people from other industries. The more I realized that both 19 crimes and gallows Apothec must have been created to appeal to young men because they both hit all of those cues. It turned out that both companies were the only companies to realize that young men had dropped out of the wine category and were creating these products specifically to appeal to them. [00:59:55] Speaker B: Wow. So that doesn't surprise me. So one thing big companies like treasury and Gallo do, do, do extremely well is market research to understand their target audience. [01:00:06] Speaker A: Yeah. So when I talk to people in the wine industry, they would tell me that there were young men everywhere because they were going to wine fairs. And when young men are engaged in wine, they're extremely geeky. And so it was this sort of bi. I don't know, what's the bias called when you see what's in front of you and you assume that's everything. So they were seeing the full universe of young men and assuming that was the wine market. But in the wine market, young men had disappeared Anyway, so I approached treasury and they let me visit the advertising agency J. Walsh Thomas in London. And they had helped to develop 19 crimes. So their key insight was they realized that young men love the idea of rebellion, which is why the convicts are struggling. And they also made the wine itself with very high residual sugar to hit that young male taste. It's a very sweet wine. [01:00:50] Speaker B: Yeah. And most importantly, they weren't trying to teach their target audience about wine. They were giving them something worth shar. And that's kind of the real difference here, isn't it? So their marketing was flawless, including the partnership with Snoop Dogg. And though I'm not sure about the partnership with Martha Stewart. [01:01:07] Speaker A: Well, okay, so I'm speculating, I want to be really clear about this, but it might be because 19 Crimes turned out to have a second audience. So middle aged women, it turned out so many women were buying this for their sons that Treasure realized they had a second audience. Expect it. Right. Okay, so this leaves a big question that maybe you can answer, Lily. Why didn't treasury make 19 crimes one of their power brands? [01:01:32] Speaker B: Ah, such a good question, Felicity. And I don't know for sure, but again, never knowing the under opinionated, I'll have a guess. So I reckon there could be a few reasons. Maybe the brand has run its course. That's one possibility. After all, it was created for younger millennial males who are now growing up in terms of terms of age. So that's possibly one reason. [01:01:56] Speaker A: Do you think? I'm sure you're going to say no to this, but ask question anyway. Is the brand so strong that it can just run itself? [01:02:04] Speaker B: Maybe there are other possibilities that they think it needs reinvention to stay relevant, potentially. Or. Or maybe they think the brand is worth selling. Maybe they think it's got lots of value. So maybe that's why they're kind of keeping it from a Asset and resale point of view, I don't know. Until they come out and say something, I guess we won't know. But what we do know is that it's still a very strong brand. [01:02:33] Speaker A: You know, we've just spent more than 40 minutes talking about treasury and we've ended up exactly where we started. He says it's focusing on 10 brands because one, simplicity, focus, growth, blah, blah, blah. And as soon as they said that, the share price jumped. So I guess from a business perspective, they might have done exactly the right thing. [01:02:51] Speaker B: Yeah, yeah, exactly. And I do agree with the strategy. However, I'm intrigued that they have haven't prioritized sparkling or as much as we were just talking about that. But yes, they've done something and I. They've done something I wish other companies would have the courage to do, which is kind of strip back to the basics and focus. [01:03:10] Speaker A: Yeah, look, I, I understand all of this, but I don't like what it says about, about, you know, you know, when you look at the brands that they've left behind. So Yellow Glenn, maybe there's an argument to leave that one behind, but Sepult Wolf, Blast. You know, what you see right there is the big tension at the heart of wine. So, you know, yes, you've got to be profitable and yes, you've got to do all of those things and make the business case, but you're also dealing with intangible cultural assets. [01:03:35] Speaker B: Yeah. Or you could say, Felicity, that what you're seeing is a company deciding what consumers will still care about in 10 years for nine from now, and prioritizing that for profit. [01:03:47] Speaker A: Yeah, I. Look, I'm sure, I'm sure. And they have to do that and can do nothing else. I mean, this isn't. But what I'm trying to say is this isn't just a debate about brands. It's also a debate about stewardship, you know, and who should be looking after wine's history. [01:04:02] Speaker B: Yeah. And I think the answer is that consumers decide. So, you know, as people are super. Our hands in our pockets and wallets and purses to kind of actually spend the money. They always do. So companies can only keep things alive if people are willing to buy them. [01:04:16] Speaker A: Yeah. But that lets companies off the hook for really bad decisions. All right, so ever since corporations moved into Australian wine back in the 1990s, there's just been nothing but a string of bad decisions. Now, you know, and I think the, the sort of. The start of this was companies like Fosters, which fundamentally misunderstood the category. [01:04:34] Speaker B: So I think what we can safely say, Felicity, is that we've really struck a chord with you on this one. I think we're safe there. But. But what? Might that might all be true, but in the end it comes, as I've said, has to deal with what's in front of them and not what's been done in the past. Or they have to think to the future. And right now, treasury is making a huge bet, not just on 10 brands, but, as I've said, what consumers are going to want in the future. [01:05:02] Speaker A: Yeah, we won't know whether they'll write or not for another decade. [01:05:05] Speaker B: No, no, absolutely. Which means we'll have to come back and revisit this in an episode in 2036. [01:05:11] Speaker A: Yes, but we know by then we'll be bigger than the rest of history. You will have bought an revitalized Wolfglass and people will be awaiting our verdict with bated breath. [01:05:19] Speaker B: And with a glass of sparkling red wine in hand, of course. [01:05:23] Speaker A: Or a wine made of hybrids, who knows? [01:05:26] Speaker B: So if you have an opinion about all of this, drop us a line at a question of drinksmail.com or send us questions for the next episode. You've been listening to A Question of Drinks, the podcast that explores why we drink, what we do, and we're here [01:05:47] Speaker A: to answer your questions. If you want to know more about anything drinks, from the marketing history to the economic underpinnings to why this drink is popular and not that one, send [01:05:57] Speaker B: us an email, send us any questions you'd like us to discuss, and quite frankly, the more random and niche, the better, and we'll have a go at answering them. We can be reached on A Question of Drink drinks@gmail com. That's a question of drinks all one word at gmail com, and we would [01:06:15] Speaker A: hugely appreciate you reviewing and rating this podcast before you go. Five stars are much appreciated.