Welcome to the Fear and Greed Daily interview. I'm Sean Aylmer. Australian winemakers have had a tough couple of years. China's decision to impose crippling tariffs on our wines, saw total exports fall almost 20% in value, to do just a bit over $ 2 billion. But considering exports to China fell from $ 1. 1 billion annually to just $ 25 million, it shows the industry has been very successful at replacing China with new markets. Bryan Fry is the chairman and CEO of Pernod Ricard Winemakers, the winemaking business that sits within the Pernod Ricard Group. The company owns famous Australian brands like Jacob's Creek and St. Hugo's. Bryan, welcome to Fear and Greed, or welcome back to Fear and Greed, I should say.

Welcome to the Fear and Greed Daily interview. I'm Sean Aylmer. Australian winemakers have had a tough couple of years. China's decision to impose crippling tariffs on our wines, saw total exports fall almost 20% in value, to do just a bit over $ 2 billion. But considering exports to China fell from $ 1. 1 billion annually to just $ 25 million, it shows the industry has been very successful at replacing China with new markets. Bryan Fry is the chairman and CEO of Pernod Ricard Winemakers, the winemaking business that sits within the Pernod Ricard Group. The company owns famous Australian brands like Jacob's Creek and St. Hugo's. Bryan, welcome to Fear and Greed, or welcome back to Fear and Greed, I should say.

Thank you, Sean.

Thank you, Sean.

St. Hugo's, why is it so good? I'm not a huge wine connoisseur, but I try really hard to remember great wines, and I've got to say St. Hugo's continually turns out good wines.

St. Hugo's, why is it so good? I'm not a huge wine connoisseur, but I try really hard to remember great wines, and I've got to say St. Hugo's continually turns out good wines.

Yeah, well I think our winemakers would be pretty happy to hear that because that's what they set out to do every day. So yeah, Peter Monroe, who is our chief winemaker for St Hugo, that's pretty much his briefs to get people like you saying things like that, so...

Yeah, well I think our winemakers would be pretty happy to hear that because that's what they set out to do every day. So yeah, Peter Monroe, who is our chief winemaker for St Hugo, that's pretty much his briefs to get people like you saying things like that, so...

Right. Oh, well, he's done his job.

Right. Oh, well, he's done his job.

Exactly. We believe that at the price point, it's one of the best value wines in the country, so thank you for saying that.

Exactly. We believe that at the price point, it's one of the best value wines in the country, so thank you for saying that.

Actually, I think that's it, it is one of the best value wines in the country, without a doubt. So let's get on to the industry itself. It's been an incredible couple of years for the industry, imposed a bit because of what China decided to do. How do you think the industry has responded and do you think it's done a good job in finding new places to sell wine, recovering from COVID, et cetera?

Actually, I think that's it, it is one of the best value wines in the country, without a doubt. So let's get on to the industry itself. It's been an incredible couple of years for the industry, imposed a bit because of what China decided to do. How do you think the industry has responded and do you think it's done a good job in finding new places to sell wine, recovering from COVID, et cetera?

It's a great question, because we've got to unpack it a fair bit in terms of what's been going on before and after the China tariffs. So China was definitely a great market for Australian wine, dominated by red wine of course, and now as you read out the numbers, that wine market pretty much doesn't exist for us now. So that's an enormous amount of wine that needs to be reallocated. It can't be reallocated overnight, it's going to take a lot of time. But also, before China, we did have a few other issues, in particularly the generally historic decline in our market share in the United States, which is quite a large and important wine market. It's actually, in terms of value, it's probably more important than the Chinese wine market globally. So it definitely has put some big headwinds for the Australian wine industry and also it's put a situation where we have a oversupply, particularly of red wine at the moment, in the country. So it requires us to be pretty resourceful. A lot of times go back to basics, in terms of getting out and establishing new markets, or reinvigorating existing markets.

It's a great question, because we've got to unpack it a fair bit in terms of what's been going on before and after the China tariffs. So China was definitely a great market for Australian wine, dominated by red wine of course, and now as you read out the numbers, that wine market pretty much doesn't exist for us now. So that's an enormous amount of wine that needs to be reallocated. It can't be reallocated overnight, it's going to take a lot of time. But also, before China, we did have a few other issues, in particularly the generally historic decline in our market share in the United States, which is quite a large and important wine market. It's actually, in terms of value, it's probably more important than the Chinese wine market globally. So it definitely has put some big headwinds for the Australian wine industry and also it's put a situation where we have a oversupply, particularly of red wine at the moment, in the country. So it requires us to be pretty resourceful. A lot of times go back to basics, in terms of getting out and establishing new markets, or reinvigorating existing markets.

Now, correct me if I'm wrong, but I think those latest figures showed that the US exports, the US were actually picking up. Is that right?

Now, correct me if I'm wrong, but I think those latest figures showed that the US exports, the US were actually picking up. Is that right?

They have. They have a bit, definitely. I'm more talking about if you look at the past 10 years.

They have. They have a bit, definitely. I'm more talking about if you look at the past 10 years.

Yeah. Okay. So what is it that we should be doing then to establish those or reestablish those markets?

Yeah. Okay. So what is it that we should be doing then to establish those or reestablish those markets?

Well, I think it's a couple things. Firstly, it's about being able to get back into the markets. So there's no doubt that during COVID when all the borders were shut, we couldn't fly anywhere, people couldn't come here. The ability to actually get out and put glasses in people's hands, particularly new buyers, particularly new wholesalers and customers, was quite constrained. So this last year it's now opened, so it's given us the opportunity to get back overseas. And I know myself, I think I've been overseas every eight weeks at the moment, to new markets. So I think that's the first thing is we got to get back out there and develop our relationships with our customers. We need to focus on building brands that consumers want, and then also opening up new markets. So there is opportunities in places like, of course, India. There's opportunities in Africa. There's opportunities even in places, believe it or not, like Kazakhstan, where we've started to see a bit of a pickup with the wine market there. So it's not sticking to the traditional markets, it's about trying to build your business in those markets, but also explore penetration into new markets.

Well, I think it's a couple things. Firstly, it's about being able to get back into the markets. So there's no doubt that during COVID when all the borders were shut, we couldn't fly anywhere, people couldn't come here. The ability to actually get out and put glasses in people's hands, particularly new buyers, particularly new wholesalers and customers, was quite constrained. So this last year it's now opened, so it's given us the opportunity to get back overseas. And I know myself, I think I've been overseas every eight weeks at the moment, to new markets. So I think that's the first thing is we got to get back out there and develop our relationships with our customers. We need to focus on building brands that consumers want, and then also opening up new markets. So there is opportunities in places like, of course, India. There's opportunities in Africa. There's opportunities even in places, believe it or not, like Kazakhstan, where we've started to see a bit of a pickup with the wine market there. So it's not sticking to the traditional markets, it's about trying to build your business in those markets, but also explore penetration into new markets.

It sounds like this is a lot of shoe leather involved, really, getting out there and meeting people. Where does the Australian wine industry sit on the spectrum relative to other wine countries? Obviously, you have some of those European countries are at the top of the pile, but I'm just interested where Australia sits in that.

It sounds like this is a lot of shoe leather involved, really, getting out there and meeting people. Where does the Australian wine industry sit on the spectrum relative to other wine countries? Obviously, you have some of those European countries are at the top of the pile, but I'm just interested where Australia sits in that.

Well, I think that we definitely are seen as... I mean we are part of the new World Wine producers is the word they use, and we're definitely seen as a very credible wine producer globally. There's no doubt that we don't need to establish our name as being a wine country. Probably our Achilles heel, I would say, is that we've often been most successful at probably lower price points, so under 10 US dollars or under sort of 6 pound 50 in the UK and that's probably somewhere where we need to actually move above those price points and probably establish ourselves in a more higher value context.

Well, I think that we definitely are seen as... I mean we are part of the new World Wine producers is the word they use, and we're definitely seen as a very credible wine producer globally. There's no doubt that we don't need to establish our name as being a wine country. Probably our Achilles heel, I would say, is that we've often been most successful at probably lower price points, so under 10 US dollars or under sort of 6 pound 50 in the UK and that's probably somewhere where we need to actually move above those price points and probably establish ourselves in a more higher value context.

Just before we leave the export discussion, where are Pernod Ricard's wines now sold overseas? I'd mentioned a couple of the brands there earlier on, St Hugo's and Jacob's Creek. Where do you sell overseas?

Just before we leave the export discussion, where are Pernod Ricard's wines now sold overseas? I'd mentioned a couple of the brands there earlier on, St Hugo's and Jacob's Creek. Where do you sell overseas?

Yeah, I'd be a while just going through it all. So we have 70 affiliates in Pernod Ricard Group, so that's basically markets where we control our own distribution. And of those, I would say that we have good wine penetration in about 48 of them.

Yeah, I'd be a while just going through it all. So we have 70 affiliates in Pernod Ricard Group, so that's basically markets where we control our own distribution. And of those, I would say that we have good wine penetration in about 48 of them.

Wow, okay. Diverse.

Wow, okay. Diverse.

Yes.

Yes.

Stay with me, Bryan, we'll be back in a minute. I'm speaking to Bryan Fry, chairman and CEO at Pernod Ricard Winemakers. Let's talk to the domestic market now. Pretty important time of the year because, of course, it's champagne season, being the racing season. And your brand Mumm, is a partner of the Melbourne Cup Carnival. Have you spent a lot of days at the track?

Stay with me, Bryan, we'll be back in a minute. I'm speaking to Bryan Fry, chairman and CEO at Pernod Ricard Winemakers. Let's talk to the domestic market now. Pretty important time of the year because, of course, it's champagne season, being the racing season. And your brand Mumm, is a partner of the Melbourne Cup Carnival. Have you spent a lot of days at the track?

Yes. It's a great sponsorship, which we started in 2013, and of course, this year is the first year we've been able to get back and activate the brand. So yes, I've been down for the Derby Day and I was down on the Cup Day as well, so unfortunately, the weather could have been more generous, but we did have a good turnout and some great support.

Yes. It's a great sponsorship, which we started in 2013, and of course, this year is the first year we've been able to get back and activate the brand. So yes, I've been down for the Derby Day and I was down on the Cup Day as well, so unfortunately, the weather could have been more generous, but we did have a good turnout and some great support.

Okay, so you have the Mumm brand, of course, which is the partner of the Melbourne Cup, we just mentioned that. You've recently launched Mumm Tasmania. What is it about Tasmania that makes it so good for sparkling wine?

Okay, so you have the Mumm brand, of course, which is the partner of the Melbourne Cup, we just mentioned that. You've recently launched Mumm Tasmania. What is it about Tasmania that makes it so good for sparkling wine?

Well, it's a great question and it's actually, there's a slightly bigger context because, of course, we have G. H. Mumm, the Champagne house, which is doing most of the activation around Melbourne Cup, and it's actually the second biggest market in the world outside of France, is Australia. But it's actually a house where the style of Champagne is very dominant in terms of Pinot Noir being the main varietal. So what happened a few years ago is the shift to Cab Mumm and our winemakers, at Pernod Ricard Winemakers, decided that we'd look at creating great sparkling wines from the great Pinot Noir regions of the world. So we released a Mumm Sparkling Marlborough two years ago. We already have a Mumm Napa in the US, and the newest edition is a Mumm Tasmania. And again, because we believe the quality of the product and the quality of the sparkling that we get out of Tasmania is at a very, very high standard. So we're super excited and the response rate has been excellent.

Well, it's a great question and it's actually, there's a slightly bigger context because, of course, we have G. H. Mumm, the Champagne house, which is doing most of the activation around Melbourne Cup, and it's actually the second biggest market in the world outside of France, is Australia. But it's actually a house where the style of Champagne is very dominant in terms of Pinot Noir being the main varietal. So what happened a few years ago is the shift to Cab Mumm and our winemakers, at Pernod Ricard Winemakers, decided that we'd look at creating great sparkling wines from the great Pinot Noir regions of the world. So we released a Mumm Sparkling Marlborough two years ago. We already have a Mumm Napa in the US, and the newest edition is a Mumm Tasmania. And again, because we believe the quality of the product and the quality of the sparkling that we get out of Tasmania is at a very, very high standard. So we're super excited and the response rate has been excellent.

Okay. Talking about is kind of new varieties, where are Australian consumers, what are they drinking more of now? So you're talking about a sparkling Pinot there, that's obviously something that you're confident Australian consumers want. What are they drinking?

Okay. Talking about is kind of new varieties, where are Australian consumers, what are they drinking more of now? So you're talking about a sparkling Pinot there, that's obviously something that you're confident Australian consumers want. What are they drinking?

Yeah, it's interesting. So of course, we've got the traditional Shiraz's and Chardonnays and things like that, but we've seen, in the last few years, there's probably been some interesting trends coming through. The first is definitely a move to, what I'd say, is a higher quality sparkling wine, very much in the vein of Mumm Tasmania, which is generally a method traditional. So it's a wine that is aged on lees for 18 months before release. Then we're also seeing a lot of interest in, I would say the lighter style reds that can be chilled. So we've seen a resurgence in Grenache, Pinots that can be chilled but also drunk normally. And we're seeing some interest, of course, in Italian varietals and also some other styles of white wine as well, rather than just Sauvignon Blanc and Chardonnay.

Yeah, it's interesting. So of course, we've got the traditional Shiraz's and Chardonnays and things like that, but we've seen, in the last few years, there's probably been some interesting trends coming through. The first is definitely a move to, what I'd say, is a higher quality sparkling wine, very much in the vein of Mumm Tasmania, which is generally a method traditional. So it's a wine that is aged on lees for 18 months before release. Then we're also seeing a lot of interest in, I would say the lighter style reds that can be chilled. So we've seen a resurgence in Grenache, Pinots that can be chilled but also drunk normally. And we're seeing some interest, of course, in Italian varietals and also some other styles of white wine as well, rather than just Sauvignon Blanc and Chardonnay.

Okay. What about in the low alcohol space, even the no alcohol space? Anecdotally, at least, it seems that demand is growing.

Okay. What about in the low alcohol space, even the no alcohol space? Anecdotally, at least, it seems that demand is growing.

It is. And I think low alc and no alc is a very interesting business to be in. The only issue we have is what people want to pay for it. And what I mean by that is it's actually quite expensive to make those wines, in terms of either you've got to remove the alcohol out, or you've got to plant them in a certain place where you can harvest early to keep the alcohol level down. And so it's about making sure that we can get the right value for those wines given the cost it takes to make them.

It is. And I think low alc and no alc is a very interesting business to be in. The only issue we have is what people want to pay for it. And what I mean by that is it's actually quite expensive to make those wines, in terms of either you've got to remove the alcohol out, or you've got to plant them in a certain place where you can harvest early to keep the alcohol level down. And so it's about making sure that we can get the right value for those wines given the cost it takes to make them.

I've never had one, I'm ashamed to say, and I will have to try, but they taste like wine?

I've never had one, I'm ashamed to say, and I will have to try, but they taste like wine?

Absolutely. That's the first criteria is that when the consumer buys a bottle of those wines, it still has to give them a wine experience.

Absolutely. That's the first criteria is that when the consumer buys a bottle of those wines, it still has to give them a wine experience.

Yeah. Okay. Tell me, how has consumption changed in recent years? And I suppose I'm thinking COVID and post- COVID.

Yeah. Okay. Tell me, how has consumption changed in recent years? And I suppose I'm thinking COVID and post- COVID.

It's interesting that you've got a longer term trend in terms of consumption of all alcohol, including wine in Australia has actually been declining since the 70s. But actually what's happening is the quality we're drinking is better. So I'd say people are drinking less but better. And we saw that during COVID where you saw actually the best growing sectors, in terms of sales, were wine above $ 20 and the Champagne sales were excellent. So I think it was, particularly during COVID, it was a nice way to, I suppose, have a little small luxury, particularly when we couldn't go out and enjoy ourselves in restaurants and bars.

It's interesting that you've got a longer term trend in terms of consumption of all alcohol, including wine in Australia has actually been declining since the 70s. But actually what's happening is the quality we're drinking is better. So I'd say people are drinking less but better. And we saw that during COVID where you saw actually the best growing sectors, in terms of sales, were wine above $ 20 and the Champagne sales were excellent. So I think it was, particularly during COVID, it was a nice way to, I suppose, have a little small luxury, particularly when we couldn't go out and enjoy ourselves in restaurants and bars.

Bryan, thank you for talking to Fear and Greed and good luck with Mumm Tasmania.

Bryan, thank you for talking to Fear and Greed and good luck with Mumm Tasmania.

Thank you very much. Appreciate the time.

Thank you very much. Appreciate the time.

That was Bryan Fry, chairman and CEO of Pernod Ricard Winemakers. This is the Fear and Greed daily interview. Join us every morning for the full episode of Fear and Greed, Australia's most popular business podcast. I'm Sean Aylmer. Enjoy your day.

That was Bryan Fry, chairman and CEO of Pernod Ricard Winemakers. This is the Fear and Greed daily interview. Join us every morning for the full episode of Fear and Greed, Australia's most popular business podcast. I'm Sean Aylmer. Enjoy your day.