Proof Version Only s1

C O R R E C T E D V E R S I O N

OUTER SUBURBAN/INTERFACE SERVICES AND DEVELOPMENT COMMITTEE

Inquiry into sustainable development of agribusiness in outer suburban Melbourne

Mornington — 10 February 2009

Members

Mr N. Elasmar Mr D. Hodgett Ms D. Green Mr D. Nardella Mr M. Guy Mr G. Seitz Ms C. Hartland Mr K. Smith

Chair: Mr G. Seitz Deputy Chair: Mr K. Smith

Executive Officer: Mr S. Coley Research Officer: Mr K. Delaney

Witness

Mr Martin Spedding, Vice-President Mornington Peninsula Vignerons Association (affirmed).

27 The CHAIR — All the evidence we take is under the privilege of the Parliamentary Committees Act. The evidence that you give here is all protected under that privilege. If you say it outside or have a go at someone or whatever else, you have not got that protection, but in here, while you are talking to us, you are under privilege. Can we have you name, and mailing address for Hansard?

Mr SPEDDING — Martin Spedding, 1333 Mornington-Flinders Road, Mornington Peninsula.

The CHAIR — You have 10 minutes for a presentation and that gives us 5 for questions, a bit of dialogue. So it is up to you; if you talk for longer you will get less questions.

Mr SPEDDING — I thought that it might be helpful, seeing you are down here, for me to give you a very brief overview of the wine industry on the peninsula.

Overheads shown.

Mr SPEDDING — To start off with, the Mornington Peninsula Vignerons Association, MPVA, was incorporated in 1982 and is the peak industry body on the peninsula. The current era of wine development on the peninsula has been going for 36 years, with Bails Myer planting the first vineyard here in 1972 and establishing the first winery in 1975. There are 130 members of the association today and we have the highest level of participation in the local association out of any region in Australia, which means that we — hopefully — provide a very clear voice as to the issues of the industry and the needs and desires of members.

We have over 900 hectares on the peninsula planted under vine, with over 80 wineries and 60 cellar doors. We have not this year, but we should have had about 6000 tonnes of fruit, which is about a fivefold increase since 1996. Of what is planted, 50 per cent is pinot noir, 25 per cent is chardonnay, a little bit of pinot gris and then there are some other varieties. Pinot noir and chardonnay are the flagship varieties of the Mornington Peninsula.

Total wine sales are in excess of $110 million and the investment in wineries on the peninsula is in excess of $100 million. We have over 1000 employees in the industry and we spend on average $200 000 on local suppliers each year.

In terms of wholesale sales, which are to restaurants and bottle shops around Australia, Mornington sells about $65 million in wines effectively off the peninsula. Over the last four years our wholesale prices have increased by 24 per cent, which reflects the growing reputation and quality of the wines that are produced here. Exports have increased by 300 per cent since 2004–05 and 200 per cent since 2005–06. They have been driven primarily by pinot noir, which has been growing in most markets in the western world. Exports are primarily to the UK, the US, China and Hong Kong. Cellar door sales, which represent about 30 per cent of sales, have also been growing, which reflects the growing wine tourism to the region. They are very important to local growers because of the obviously higher margins that they deliver but also the other things that people who come here to buy our wines do while they are here.

Pinot noir is one of the fastest growing varieties both domestically and internationally. It is also one of the highest average price points — it is also very expensive to grow. A film called Sideways that was released a few years ago is commonly referred to in the industry as the ‘Sideways Effect’, because since that film was produced there has been significant impact on pinot sales in Australia, the US and Europe. Mornington is leading the charge in growing Victoria’s reputation as the leading state in terms of pinot noir production. You have Mornington Peninsula, the Yarra Valley, Geelong and Mount Macedon as the leading regions in the production of pinot noir in Victoria.

Very quickly, I will just give you an idea of how we rate, I suppose, Mornington and other Victorian regions. This is looking at an average of the last three years from James Halliday’s

28 companion, which is the most comprehensive wine rating book and regime that is available to us to look at. It is produced every year. It is an incredible undertaking, with over, I think, 20 000-odd wines that he looks at and over 2500 wineries. What you are looking at here is a collation of the data. You would probably be familiar with the 100-points system for rating wines. You will see all the regions there. Over the three years there were nearly 1200 pinots rated by James Halliday, with 237 from the peninsula, and you can see Tasmania and the other states there. You can see what the mean score is and the percentage of wines that rate over 94 points. Over the last three years, and probably the last five years, Mornington has continued to do extremely well as the leading pinot producing region in Australia.

It is a fact that anywhere you grow good pinot you grow good chardonnay, so I thought I would show you very quickly the next slide, which shows you the same for chardonnay. You can see there that again Mornington Peninsula rates very high. It is either the top or second-top rated region in Australia, between Margaret River in Western Australia and ourselves.

On the sorts of things that we do, probably the most important thing was what we did just this last weekend. Every two years we have a pinot celebration. It is one of only three celebrations held in the world. We had here as our guest note speaker Jancis Robinson, who is the most important writer and wine critic in the world. We also had international media from Japan, the US, the UK, Asia et cetera. We had all of Australia’s leading wine writers and of course wine industry leaders, such as the chairman of the Australian Wine and Brandy Corporation, the CEO of the Winemakers Federation of Australia, Mr Holding and others. The presence of Jancis Robinson at an event like this is obviously very significant for any wine region, certainly for ours.

On the last slide there is a little quote I thought I would give you that she wrote in the Financial Times. She is the wine writer for the Financial Times, and you can see there a lovely quote about how our region is doing, and she suggests it may be sending shivers down the spine of a Frenchman. We have been getting fantastic coverage in newspapers and journals like the Financial Times over the last few years. Hopefully she will write some nice things after this weekend — other than about the bushfires.

What is our strategic plan? Our strategic plan is on building the Mornington Peninsula wine brand in our export markets — and I include in that our markets such as Sydney, Brisbane and other domestic markets, but also the UK, US et cetera — and continuing to promote wine tourism and our leadership role in the area of pinot noir, which is, as was mentioned before, a high value-added wine production niche. Our key focus from a local point of view in doing what we do is to continue to grow not only environmental sustainability but also the economic sustainability of what we do. That is just to tell you where we are trying to lift the profile of our brand.

We might move on from that, given the time. In terms of working with government, we have been doing diagnostic reviews of the industry for the last 10 years or so. You can see there we did our first one in 1996. We completed our last one just a few months ago, and that has been very valuable to the industry. We have had some assistance from RDV in that.

Research funding is obviously an ongoing area which is very, very important for us because we are growing grapes in a cool climate with lots of disease pressure, and lots of the research that has been done and is being done relates to warm climates, which does not really apply to us. We have got water quality projects which we have been running here for a number of years. We have got pinot benchmarking, where we are looking at wine quality between ourselves and the Yarra Valley.

We have got significant biosecurity issues here in relation to the wine industry, such as phylloxera. You might be aware that in the Yarra Valley there were outbreaks of phylloxera in the last six months, which is a considerable threat to our industry. About 90 per cent of all vines planted on the peninsula and in the Yarra Valley — and I have got to say outside of the phylloxera regions of Victoria — are on their own roots, which means that they will have to be replanted in a

29 relatively short period of time if phylloxera were to come here. So we need funding around biosecurity. We have applied to the Department of Primary Industries for rezoning, and that is pending, to become what is called a PEZ — a phylloxera exclusion zone. Ongoing marketing assistance and coordinating wine and food tourism events are also other areas of need. They are just areas of need that I thought would be useful to identify.

Current issues, of course, relate to the extreme weather conditions we have had, really starting in November-December when we had very cool and unusually cold weather during flowering, which means that we have lost up to 40 per cent of our potential crop through poor fruit set. That was followed four weeks later by the extreme heat we had, as you would be aware, which has resulted in further losses. I am going to quote percentages here. How much this has affected us depends on whether you are up at the top of the hill or down in the lower parts of the peninsula, but the overall effect of the extreme heat would probably be over 50 per cent crop loss.

We obviously have not had any direct issues with fires here, but we are concerned about potential smoke, maybe later in the week, which can impact on grape quality. Of course we all are affected by the last of those points. That gives you a little bit of background.

The CHAIR — That was very short and neat; very concise.

Mr SPEDDING — I hope that is helpful in giving you a bit of an overview of the industry. A summary of all that is that the wine industry on the peninsula has moved into a very exciting phase. We are now getting international recognition for what we do, and we are starting to export and to sell our wines outside of our home market of Melbourne, which of course has always been critical to us.

We also had new producers coming into the region who have brought great expertise and a tremendous amount of professionalism, which is really having a great impact on consistency and quality in the region. But as with all wine regions, there are different areas of need and, as per what I put up in front of you today, our areas of need really are around biosecurity, ongoing research and promotion, and marketing what we do. There are other local issues which are around planning and things like that, but they are similar issues which I think face most regions.

The CHAIR — Of those 60 cellar doors, how many actually have restaurants or meals to go with them?

Mr SPEDDING — I am sorry I cannot give you an exact number. If I had to guess, I would say it would be something of the order of 20 or 25. I said that there were 60 cellar doors; not all of those are open every day or even every week or every weekend. Some of them only open once a month. But, yes, in terms of serving food I would say it would be something between 15 and 20, and of those you are probably looking at about 8 to 10 which are considered to be serious restaurant operations. They are obviously bringing to the peninsula an extra dimension to the wine tourism experience, which is very positive. Anywhere where people want to enjoy good wine, they are usually looking to enjoy that with good food, and that is how we want people to enjoy their good wine. And it gives us an opportunity to utilise local produce and to promote the gourmet side of the peninsula as well as obviously the wine side.

Ms HARTLAND — Obviously climate change is becoming an issue, so has there been any research done into how you are going to cope with that in the future? And I suppose water is the other major issue; how are you coping with that?

Mr SPEDDING — Climate change is something which we are all obviously very mindful of. Maybe there is a bit of guilt attached to this, but we are probably beneficiaries of climate change. The inland continental climates are likely to fare much worse than we will in the coastal area. We have the maritime climate, which has a significant influence on our grape growing. I mentioned the benchmarking project which we have in progress. It has been running for four years. We had some initial funding around that, and even though that dried up, the local growers decided to

30 continue that on. We have data loggers in a number of vineyards spread over the peninsula, so we are actually collecting good data here in terms of season-to-season data, how the climate is potentially changing, what that means from a viticultural point of view, how we should be managing canopies and how we should be managing our vines.

We had Professor Greg Jones here from the Southern Oregon University last year, who gave a talk to local vignerons. He has done extensive research into the effects of climate change on wine regions around the world, in particular pinot-producing and cool-climate producing regions, and his view is that our region will benefit, really. It almost creates this air conditioning effect, if you like; as the inland areas heat up, it creates these sort of air flows off the ocean. We obviously are experiencing hotter weather. Our seasons in recent years have been earlier than they have ever been, and what that has meant for Mornington is we have moved from being a marginal wine-growing region, in the sense of being a very cool-climate region, to being maybe more reliable and more consistent with our growing.

But in areas like the Yarra Valley, which are a little bit more inland, where once the pinot would do very well, maybe the cabernet is doing better. But I do not see an impact of climate change in terms of the varieties we grow, as it is I think for a lot of people a great concern. With these events we have had in the last few weeks, any weather in excess of 40 degrees Celsius is going to do major damage to vines. That is something which we obviously hope does not become a regular occurrence, but this is the second year where we are seeing some form of damage as a result of that.

As to water, because of the cool climate we tend to get winter and spring rains. We have the clay soils so the water sticks around for a while and is available to the vines during the growing season. We all have dams, of course, and during these heat events we definitely need to call on the water supplies we have. To date we have been fortunate; the drought did not really have a significant impact on us, but if we were to have consecutive years like this with these sorts of events, water would become a much bigger issue than what it is today.

Mr K. SMITH — The peninsula used to be just a lot of boutique wineries, good boutique wineries.

Mr SPEDDING — Yes.

Mr K. SMITH — How many big companies are getting into the wineries now?

Mr SPEDDING — The type of wine and the varieties we grow tend to lend themselves to smaller, more boutique-type operations. Things like pinot noir do not grow well in warm climates and are usually very difficult to mass produce, if you like. But, yes, there are some big bigger operators coming down here. We have Lion Nathan, of course, which owns Stonier; we have Fosters, which owns T’Gallant; we have bigger, privately owned operations like Kooyong and Port Phillip, which are building a new cellar door and restaurant complex up on Red Hill; and then we have people like Yabby Lake. Kooyong, Port Phillip and Yabby Lake have very well-funded backers who are able to afford to do things that those of us at the smaller end of the scale can only be envious of. They bring to the peninsula some infrastructure and expertise and professionalism that is very beneficial to the region as a whole. I think we are seeing more vigour.

The other thing that is happening that is interesting is that in the Yarra Valley, which is more dominated by what I would call corporations or large commercial organisations, they are sourcing more and more of their fruit from the Mornington Peninsula. I am sure more of them will be looking at their own vineyards down here and maybe operations as well.

Mr K. SMITH — Which winery is yours?

Mr SPEDDING — Ten Minutes by Tractor it is called.

31 Mr K. SMITH — You have had a bit of good publicity.

Mr SPEDDING — It is up on Main Ridge at Red Hill.

The CHAIR — Thank you very much for your presentation. In due course you will get a copy of the Hansard transcript.

Mr SPEDDING — I hope it was helpful to you.

Mr K. SMITH — It was, thank you. You had better go and talk to the gourmet group over there. They want to have some heavy discussions with you wine people.

Mr SPEDDING — Okay.

Witness withdrew.