Interview – McWilliams’ CEO, Kevin McLintock

Kevin McLintock is perhaps, along with chief winemaker Jim Brayne, one of the two main reasons for the resurgent position McWilliams now occupies in Australian wine. He’s taken a family wine business which ran itself in the cautious, conservative style so familiar to the traditional rural community and is turning it into a focused, quality-driven business able to exploit the diversity of its new acquisitions and alliances. He’s a graduate of Harvard Business School in Boston and has held his current post since May 1993.

How difficult is it being a large medium-sized player in Australian wine?

I don’t think medium is the optional word – although we are medium in terms of tonnage – for we have to develop a series of brands focusing on our regional strengths in different niche markets. The market is so polarised and the big boys will get more ruthlessly efficient in terms of packaging and grape tonnages so we don’t want to compete on that level.
Our competitors are not the larger companies – for the difference in size is enormous – but the domestic family orientated companies. Southcorp is ten times our size. We’re competing against wineries of 25,000 tonnes down, the bigger boys against others 100,000 tonnes and up. You can’t afford to be medium-sized because you’ll get sandwiched in between, where it will be hard to survive in an over-supply environment.

How likely is an oversupply?

It won’t happen with premium reds until 2003. There’s presently a shortage and the 2000 vintage was a non-starter for red and white. Given that the new premium reds won’t hit the market till 2003, there’s some breathing space to manage it. As far as chardonnay goes, we can keep managing and changing wine styles, so there’ll be no problem there.
One thing we do know is that we can manage the industry very well, and we’ll manage equally well in an oversupply. If our crops presently average 10-12 tonnes per hectare and the larger companies tell growers that quality is the way to go, we’ll reduce crop loads to 9 tonnes and the oversupply just evaporates. We will however need to educate growers to get their returns based on dollars per hectare against dollars per tonne.

What is changing most about the business side of wine?

In the markets in which we compete the main issue with wine is quality. It’s peculiar to wine that we’re not concerned with market share ratings, there’s nobody looking at AC Nielsens and saying that someone should drop their prices to retain their market share. That’s a significant difference between wine and other businesses. Strong brands have evolved and they build markets, creating opportunities for everybody.

Some of the other New World markets will take a long time to catch up, for we have a competitive advantage in our global brands. Brands like Blue Nun and Mouton-Cadet etc take years to build on an international scale, yet the Australian brands we talk about have only been around for ten years and are now outselling them.

Rationalisation has occurred in the Australian wine industry but is only beginning on the global market, where only 3-4 of all wine is controlled by the top four companies. By comparison the top four global soft drink makers control around 75 of their market. So we have a competitive advantage here.

What is different about the way McWilliams is now doing business?

This company has come a hell of a way in the last six years. We’ve tried to become a multiple brand company. The key to our strategy is to recognise every aspect of the marketplace in its segments and demographics and not just rely on 122 years of tradition. Our five major brands Mount Pleasant, Brand’s, Lillydale Vineyards, Barwang and Hanwood have achieved good results and have grown by 500,000 cases in the last three to four years. That’s big for a small company. We’re also looking at new varieties and look forward to increasing our make of Tyrian from 500 cases to 20,000.

We commenced our major fortifieds programme in 1993, mainly to sell our stocks of old vintage ports. Regrettably they’re almost depleted and we’re only making half our sales volume to drill down further on stocks. Those old wines are a treasure chest with respect to money, but things have changed. Five to eight years ago all our shiraz went into port, but it now goes into premium table wine

Today we’re grading our fruit very carefully. In Coonawarra for example we have a huge variance in soil types and vine age, but our price point reflects the age of the vines. Only the grapes that come off the old vines vineyard planted over a century ago are eligible for the Stentiford’s Reserve Shiraz; so the wine isn’t stretched. The main vineyard there is for the other Brand’s wines, but the new plantings in Coonawarra remain as blending material for the cheaper Hanwood range – they’re not designated for the Brand’s Coonawarra wines unless they’re exceptionally good.
What is your view of the short and medium-term future for Australian wine?
I’m very optimistic. The industry talks together all the time and at every opportunity about issues like the management of oversupply. I’m incredibly bullish.

To what extent do you believe E-commerce will infiltrate the way Australians buy and do business in wine?

The Internet will help to provide education for the industry, allow consumers to explore interesting sites, do their homework and provide information for fanatics, but as far as being a major influence in business to consumer B2C sales, I doubt it. B2B business to business is another matter. We are involved in a major wine industry B2B site which respects the traditional approach to wine sales and everyone who has seen it shares great enthusiasm for its benefits.

What constitute the major threats facing Australian wine?

Water has to be a major consideration. No matter where you are it costs more money and is a big component of this industry and most agribusiness. We’ve also got to pay attention to the emergency in California with the sharpshooter pest. We’re looking at Californian grapes and that would be suicidal at the moment. We must be careful about protecting the agricultural side of the industry.

From a tax perspective there’s been no growth in the domestic market and indeed the June figures show a 10 decline. There is a big risk of losing our domestic market base, in which instance oversupply becomes a real problem. Please login to post comment