STATE LIBRARY OF SOUTH AUSTRALIA

J. D. SOMERVILLE ORAL HISTORY COLLECTION

OH 692/172

Full transcript of an interview with

JAMES WARK

on 15 August 2002

by Rob Linn

Recording available on CD

Access for research: Unrestricted

Right to photocopy: Copies may be made for research and study

Right to quote or publish: Publication only with written permission from the State Library

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OH 692/172 JAMES WARK

NOTES TO THE TRANSCRIPT

This transcript was donated to the State Library. It was not created by the J.D. Somerville Oral History Collection and does not necessarily conform to the Somerville Collection's policies for transcription.

Readers of this oral history transcript should bear in mind that it is a record of the spoken word and reflects the informal, conversational style that is inherent in such historical sources. The State Library is not responsible for the factual accuracy of the interview, nor for the views expressed therein. As with any historical source, these are for the reader to judge.

This transcript had not been proofread prior to donation to the State Library and has not yet been proofread since. Researchers are cautioned not to accept the spelling of proper names and unusual words and can expect to find typographical errors as well.

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TAPE 1 - SIDE A

NATIONAL WINE CENTRE, WOLF BLASS FOUNDATION ORAL

HISTORY PROJECT.

Interview with James Wark on 15th August, 2002. Interviewer: Rob Linn.

James, where and when were you born?

JW: I was born in Angaston Hospital in the Barossa Valley in 1947.

And who were your parents, James?

JW: My late father was Alfred Wark, and my mother, who is still alive, is

Viola Wark, and today she is eighty-seven.

Today?

JW: No. She is eighty-seven.

In fact, I think the last time I interviewed you it was your birthday.

JW: Yes, that’s correct.

James, your father, Alf, and your mother were very much an

instrumental part of the Barossa wine fraternity. Can you tell me a

bit about your father and his coming into it?

JW: Yes, well, my father worked with Robert Hill Smith’s father, Wyndham

Hill Smith, and he spent twenty-five years here working for Yalumba. He

joined here as the company secretary in 1947, and he was employed by

Wyndham when they met perchance in Western Australia. It was through

an association of my mother’s—her father, who was Alec Bathgate, who

was then the State Manager of Penfolds in Western Australia. The wine

fraternity, being what it was, Wyndham and Alec Bathgate had met when

Wyndham was over in Western Australia as the State Manager for Yalumba

in Western Australia.

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My father joined Yalumba in 1947. We moved to the Barossa Valley here

at Angaston. I was born in July 1947. I think they moved up here about

February ‘47. My parents lived in the local pub, what is now the Brauhaus,

for about a year I think until they found a house, and my mother has been

living here ever since, very happily, and was very obviously very involved

with all the Hill Smith families.

Now your father, too, James, he had a large part to play in the

wider industry as well in the Barossa.

JW: Yes. He was an intriguing man. When I look back and see old

records that he’s been involved in—his official title was Company Secretary.

The thing he did least of was company secretarial work in the winery. As a

kid I always remembered, even then, with some surprise about how he was

always going to race meetings, and other events. He would often give

cooking demos, where he was cooking for large groups of people; he and

Wyndham would socialise enormously whether it would be with press, with

customers, at coursing events….whatever. In those days it was a highly

social industry. There must have been some very good people in the

background here, as they were doing a lot of the routine functional work.

But, of course, in those days Yalumba in fact was an entirely different

company in terms of size, in terms of business direction, and it was a far

less complicated business and industry.

James, as you were growing up did you know a lot of people in the

broader wine industry in the Barossa?

JW: Yes, I did. It was a very close community, and socially they all mixed

a large amount, and as kids we were on the fringe of all of that.

So there was no, if you like, holding to one company. It was very

much mixing.

JW: Yes, there was much mixing! I remember that my father gave Peter

Lehmann his first job in the wine industry when Peter I think was fifteen,

shortly after Peter’s father had died. Peter was supposedly proving to be

5

something of a handful for his mother! His father, who was a pastor, had

died and left this rather high-spirited young man with nowhere to place his

energy. And so there were many people like that who worked within the

industry, worked within Yalumba, and of course became, and still are

today, very close friends.

Were your father and mother involved in things like the Vintage

Festivals up here?

JW: Yes, very much so. With Colin Gramp and with Bill Seppelt, Dad was

involved very much actually. I think he was on the second committee for

the second Vintage Festival. It was run in the Barossa and he was a very

active participant in that. And through all those associations—through the

Gramps from Orlando, and through the Seppelts family, and through the

Yalumba family—extended family—there were some great friendships of all

the people involved within those companies.

James, how did you first get involved in the wine industry?

JW: My first job was when I was sixteen, and it was a school holiday job.

It was just after leaving school. And my first job, as I recall very clearly,

was cutting up mallee to feed the fire burners that were creating steam

down in the brandy still-house. This was during summer time. I was given

an axe and a chopping block and a shed full of mallee to be trimmed and

be cut, and I think I lost half my body weight during that summer holiday.

This is at Yalumba, is it?

JW: Yes, at Yalumba. And then subsequently came back here in the

following year and worked for a wonderful bloke called Peter Kellett, who

ran our engineering shop, and I worked in there as a gopher and worked

on all the pre-vintage maintenance within the winery.

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Had you gone to school up here in the Barossa?

JW: Yes, I went to Angaston Primary School for the duration of the seven

years, and then I went to Nuri High School for one year. Then went down

to Rostrevor College, where I was a boarder there for four years. And then

went to Adelaide Uni to do an Economics/Commerce degree.

During the time that I was at Uni I came back here and played football for

Angaston. Won a grand final with them—a drawn grand final—and so I had

quite a lot of regular contact through coming back from University, holiday

jobs where I worked here each year doing vintage work, and playing

football.

I have a memory of the last time that we spoke, James, that you

had some time over at Vintners as a young man, too.

JW: Yes, exactly. Working at Vintners with this wonderful character,

Raymond Henry Ward, who was the Cellar Manager. “Raymond Henry” had

this wonderful dream about building wine tanks cheaply. He and a

Professor Bull from Adelaide Uni got their heads together over several

flagons of wine, I imagine, and they devised a way of actually making

cheap wine storage tanks by getting concrete squatters tanks, (as opposed

to the traditional way where you’d make a metal forming in the tank) and

poured concrete over the top of it. To avoid doing that rather laborious

work associated with the traditional method, Ray Ward and Professor Bull

had their wonderful idea of filling the tank with sand, making a mound of

sand in the shape of the roof and then pouring the concrete over that

mound. Then getting a pump and pumping the sand out of the inside of

the tank. The only problem was that in about the first two hours of doing

this they burnt out about four mono pumps and removed hardly any sand.

I spent the best part of two months bucketing sand out of these tanks. But

it was all good fun!

Ray Ward was a pretty memorable sort of character.

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JW: He was, and is! He never forgot any person’s name because he’d call

nearly everyone the same nickname. It was ‘Knackers’. (Laughter) So

this wonderful greeting that you’d hear, ‘G’day, Knackers’. And that

applied to whether it was myself as a kid on the place or the boss.

With your commerce degree, James, you don’t come back into the

industry immediately after you finish, do you?

JW: No. After doing the commerce degree I then went on and worked for

a chartered accountancy firm in Adelaide called Irish, Young & Outhwaite.

Ron Irish, wasn’t it?

JW: Yes, that’s correct. He was quite a well regarded auditor.

I never wanted to be a practising chartered accountant, but I realised that

it was a very good avenue to get good broad business training. And after

spending two and a half years there we had to do some preliminary exams

with the Institute of Chartered Accountants to be qualified as a chartered

accountant. I did that, and as soon as I finished that my wife, Di, and I

decided that we wanted to go to England. And so I was making some

discussions about the possibility of resigning and going to England. Irish,

Young & Outhwaite had just made, in Australia, an international association

with an English firm called Turquands, Barton Mayhew, and they kindly

agreed to send me to England for two years, with Di, on the understanding

that I went back and worked for them in Melbourne. So Di and I left to go

to England for what was going to be two years but ended up being a little

over a year and a half. My father became quite ill and so we decided to

come back a little bit earlier to see him and to make sure everything on

8

that front was okay. And then we moved to Melbourne, honouring my

obligation with them, because they wanted me to go back and work in

Melbourne and not Adelaide, where what I had learnt could be better

applied. And I worked there for a little over five years. After working as a

chartered accountant in Melbourne for the same firm for five years, I then

became disenchanted with accountancy and wanted to get out into the real

world, and so I came here.

What year would that have been? Do you remember?

JW: I joined here in April ‘79. I started communicating with Mark Hill

Smith, who was then our Managing Director, in about October ‘78, and I

was putting out several feelers as to different directions in which I could

go. One was to go back to work in England with a company I worked with

there that I enjoyed. It was never my intention to come back to my old

roots and my old haunts, but I’m thrilled that I did. And I’m delighted that

they saw fit to use my services.

Just coming back to your mother and father, James. When you

grew up there would have to have been wine on the table in your house.

JW: Every day. Yes, wine was a very important part of our lives. My

father was a wonderful cook. In fact, he wrote many articles. There was a

little book called Rigby Instant Books, and he wrote a Rigby Instant Book

on wine cookery. These instant books were on all sorts of topics, and his

was always the one that was regarded as being the highest seller of any of

the books that they produced. And so because of his love of cooking, and

because of his love of the area, and because of his love of life, there were

always people in our home. He was often seen to be cooking at either

9

home or out at Bacchus Club functions, and so the whole food/wine thing

became a very important part of our existence.

I’ve been thinking a lot about your father’s contribution, James,

and in many ways he was two or three decades ahead of his time. He was in what’s going on now.

JW: Yes, he was. We, for example, would go and scour local creeks

looking for wild asparagus, and we’d spend a whole afternoon getting a

small bunch of asparagus. Or we’d go looking for quail out at Ebenezer.

And he’d say to me, ‘I only need six quail’, and so six quail would be all

that we’d get. If he saw thirty quail, we would never shoot them. He’d

say, ‘I only need six’. He was a ‘greenie’ in the nicest possible way, and a

very balanced way, in terms of releasing birds, in terms of being the

president of the Upland Game Association, which in fact would incubate

eggs of pheasant and a whole lot of other wild birds and then release them

into the wild. We did an enormous lot of that. He was the foundation

member of the South Australian Fly Fishers’ Association, and through his

love of fly fishing he then became involved in setting up a hatchery in the

Adelaide Hills. And with many other people was involved in large numbers

of releases of trout into local streams over many years. So the whole chain

of the food/life/wine cycle was very much hard-wired into all of us.

The other thing that occurred to me was at the time when your

father was very much into fine table wine, other people would only drink fortifieds, and he was way ahead in that regard.

JW: Yes. And the other interesting thing, Rob, is that he never went

overseas. He used to read enormously. He wasn’t married until he was

thirty-nine, and the early part of his life he spent an enormous amount of

recreational time in Victoria on cattle musterings—he had a chartered

accountancy business himself in Melbourne, but every holiday he got away.

10

He’d go fishing, go cattle mustering, acting as a cook for mates up in

Gippsland high plains.

Did you find that some of the people who worked here at Yalumba

and had worked with your dad, like Rudi Kronberger, had influence on you, James?

JW: Oh, enormous, yes. Rudi was a wonderful person. He was a person

who, as a young kid, you’d be in awe of. He had an absolute mystery

about him. People talk about the X-factor that some people had. Well, he

had absolute lashings of the X-factor. There was always something hidden,

always something there, that we knew in fact was just an enormous

strength and quality. He was a highly intelligent person and he’s regarded

as being a huge contributor to the white winemaking in the early days in

the Australian wine industry. He was an extremely gracious person. Being

Austrian and coming to Australia, he brought a whole lot of cultural

differences to what, until then, was a reasonably remote area in the

Barossa Valley.

James, before we go on to more about your life here at Yalumba, I wonder if you could talk about your relationships with the Hill

Smith family because, as your father had been Windy’s right-hand

man, you turned out to be Robert’s in a very real way.

JW: Yes.

You have grown up with both the Mark Hill Smith side and Windy’s

family. Could you talk a bit about the families please?

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JW: Yes, I can. Well, as a kid, I think I probably regarded the families as

all being one, and they were the Hill Smiths. And our family was very close

to all of them. My sister, in fact, had her wedding reception in Mark’s

house, which we now affectionately call Percy’s, which is here. Our family

had been very close to Christobel, who was Mark and John Hill Smith’s

mother. There was never any ill feeling. There was always a great deal of

harmony between all of the different family interests. And I guess the

person who had the greatest impact on me, without any question, was

Wyndham. He was an extraordinary man in terms of his love of life, his

intelligence, his capacity to relate to people. He had an enormous capacity

to draw things from people and to be close to people, and be able to relate

to people of all walks of life in a consistent and very refreshing manner.

Norman Hanckel said to me that Windy was probably the best

teacher that he’s ever had. In terms of concentration and getting

down to the tintacks of business there was no other person like

Windy as a tutor.

JW: Yes. Certainly, I could well imagine that. Obviously I saw him in a

different light. When I came to Yalumba here in 1979, my first job in fact

was that I was the Assistant Company Secretary, but I had no-where to sit!

Fortunately for me Wyndham said, ‘Put him behind the door in my room’.

So I sat behind the door in Wyndham’s office. Wyndham would come in at

about ten o’clock in the morning and leave at lunchtime and come back for

a couple of hours in the afternoon. And some days he’d just want to talk.

And so I got “zip” done quite often during those early days, but learnt a lot!

This is James’ task.

JW: Yes, that’s right. But, no, we were very close to them all.

Many of the family associations in fact were stressed and strained during,

of course, the buy-out by Wyndham’s family. And I guess in all these

things when you’re involved in a business as close as this and you have

different shareholder blocks, that people like myself, who are non family

members, eventually have to make a choice as to where they think, in our

12

own view, the best interests of the company lie, and I guess it’s no secret

that my judgement was certainly well behind Robert.

In a wonderful way your family had been shareholders themselves,

hadn’t they, James, over the years?

JW: Well, we haven’t been shareholders, no.

I thought I saw your father in the photographs of shareholders.

JW: Oh, yes. I think that was rather a generous interpretation of the facts

—for legal reasons my father held one share in the different group

companies.

But nonetheless you were in there.

JW: Yes, exactly. It’s been a very close association. And like many

people, you feel as though you’re very much part of the place and the place

is part of you.

James, since you came here full time in ‘79 and back into this role

in the company, what have been some of the events that have really shaped the face of Yalumba for you?

JW: Well, without any question, the family buy-out has been—even

today—by far the most defining event in the history of the company.

The families of Yalumba never argued, and so you’d never have a situation

where if Mark disagreed with Wyndham, or vice versa, about an issue,

there would never be a stand-out ‘blue’. What would happen is that if one

member of the family thought aggrieved about something that’s happening

with the other, they would in fact ask a third party to try and resolve the

issue. And the third parties that were frequently used in this case were

Dennis Reimann, prior to myself, and I suppose my father to some extent

before Dennis. My father, Dennis Reimann and myself. And I became

involved in this process. In a business sense, it became particularly

difficult when dealing with the promotion of family members when business

opportunities came up, for some of the sons, and when choices had to be

made that were made on business judgement, not actually on a person’s

13

bloodline, as to the position that they held. And of course, as a parent, I

can understand that could be quite hurtful. The line that I would always

take is that if promotion depends on family name, it is somewhat self-

destructing because all the other people of that peer group who were

actually applying for those jobs, who were non family, who were sitting

around observing this, would in fact be turned away from working here as

a viable place to work because promotion won’t be based on skills, it will be

based on a whole lot of other factors that they can’t compete with. Also

the other thing that happened—in any private company, or family company

such as this, different shareholders have different aspirations for the

business. You have some that are highly commercial, and focus on the

business. Some have a whole lot of different interests that may not be in

the best interests of all the shareholders financially. It could be for a

lifestyle, it could be for a whole range of other things that are quite

justifiable if they owned the company singly, but not when it’s owned by a

whole group of shareholders. In my position, I had a moral and legal

responsibility to act in the best interests of all shareholders. And so I think

that the buy-out in fact was a very painful process. It’s one that tested our

relationships in a way that was quite hurtful in some instances, but at the

end of the day it was in the interest of the business going forward as a

successful entity that was the basis on which I made my judgement.

This is 1989 that we’re talking about?

JW: That’s correct.

And then from there, as a result of that, the company took on an enormous

amount of debt. And we took on an enormous amount of debt at a time

when interest rates were very high —I think I mentioned to you before that

I remember rolling one five million dollar Bank-bill for 24-1/2% interest.

They were nervous days. But the other thing is that had not the company

been acquired in the time of very high interest rates, I think the price of

the company would have been much higher and probably unaffordable.

There was a lot of nervousness in the economy generally at that time—in

14

‘89—that Robert and his family were able to buy the company at a price

that was then just affordable.

As I’ve been thinking about it, James, it just happens—to be

purchased in ‘89 is really the beginnings of the export boom in Australia.

JW: Yes.

The very early days.

JW: Yes.

And in one sense you and Robert and others had read that time

coming through. Or if you hadn’t read it, it was wonderful timing. (Laughs)

JW: Well, it was, except there was a history at Yalumba—we’d been an

exporter for many years of fortified wines, and some of my early

recollections of this business in fact were in front of the building, where the

lawn is now, there used to be a very large platform out there, which was

often filled with barrels of fortified wine that were going to England and to

other countries in Europe. And so we’d been in the export market for many

years but we’d been at the wrong end of it. And I think it was certainly

Robert’s foresight—that time in the late 80’s/early 90’s—that actually

certainly promoted and encouraged and pushed us into becoming a serious

exporter. We had to become an exporter of premium table wine.

Was that a gradual thing or did it just move very quickly?

JW: I remember at one Board meeting in the mid 80’s it was agreed that

we should never allow the company to be exposed to export more than

about 15% because of currency fluctuations that we have to deal with. We

should always try to abide by domestic sales of about 85% of our business.

15

I can assure you that’s certainly changed. Now we mirror very much

what’s happening in the Australian industry, where we’re virtually 50/50

domestic/export within our business, and over this time, as our whole

business has grown, we’ve been able to maintain that relationship.

And James, have there ever been political impacts on the wine

industry from your perspective that have really begun to -

JW: There’ve been some, Rob. I guess the things that have been the

political issues have been—in our early days we saw what happened with

brandy. We had a still-house here. We made brandy and, of course, the

excise and the taxing on brandy forced us to abandon that part of our

business. As a private company we grizzle, like every other private

company, about the changes in the stock valuation, where in about 1978, I

think it was, the basis on which the Australian Tax Office wanted to value

our stocks, changed. And what they did, they changed it from being quite

a notional value—a low value—up to being a more market value. And by

doing that of course you had to, during a short period of time, increase

your taxable profit by increasing the value of your stock. It automatically

meant that you increase your taxable profit and taxes paid. This had a

severe impact on many private companies that didn’t have the resources to

go to outside shareholders. So that certainly brought us some financial

stress.

There was, of course, the vine-pull, which I guess is another political

decision that in fact changed the face of the Barossa Valley for some time,

and for some time it was quite irreparable.

We’re also a company, Rob, that have never relied enormously on

government issues. Peter Wall’s been a great industry representative for

us and a good political contact for us in terms of many technical issues

within the industry; but as a company we haven’t been a great lobbyist.

We’d rather put our energies and use our key people to be involved in

driving the business here rather than lobbying people in Canberra.

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TAPE 1 - SIDE B

James, you were saying that as a company Yalumba’s tended to go with the flow for the industry and let the political things happen

alongside, in effect.

What about some of the other individuals in the Barossa that you’ve come across, James, that we haven’t mentioned. People like

Wolf Blass. Do you have memories of these type of folk at all?

JW: Yes, I do. I certainly do. Many memories of Wolf and his antics that I

think we all remember very well. The memories go well before Wolf, to

Peter Lehmann, to some of those wonderful characters that in fact were

larger than life individuals who were uniquely carved. Wolf I regard almost

as being a latter day person. Going back well before that in terms of

people—venerable old lads of the industry. Colin Gramp or Bill Seppelt—

friends of my father of that era. Max Hackett from Tarac. Some of the

dinner parties that these blokes would have were serious!! - if we ever

think that we drink today, we’re in mini league. No, there’s some

wonderful characters. The industry, and the way of life, and being a little

removed from city pressures all went towards being wonderful ingredients

for crafting some wonderful personalities, and it certainly did that up here.

From the late 80’s onwards, James, what was your role in the company that’s continued to evolve?

JW: Well, my responsibility has been for looking after the financial

administrative affairs of the business. It’s a strange title, but my title is

Commercial Director. I’m responsible for finance and administration, which

includes our computing facilities, and also the last few years all our staff

relations—that awful term, human resources. So that’s the range of

responsibilities that I have, which I find very complementary and I enjoy

thoroughly.

17

Did you ever expect to be doing all this?

JW: I guess when I first came here I hoped that I would. I was very lucky

because in June 1982, after I’d been here for two years, Wyndham asked

me to go across to the house and have a Scotch with him one night and

laid out what he said he thought would be my future. He said, ‘I want to

make you a director in six months’. So I was very fortunate. I came at a

time when in fact there was a paucity of the training that I’d received. And

so I was quite lucky in that respect.

As a family company, James, it appears to me that Yalumba have

been one who’ve never been afraid to bring in outside directors to assist in the Board thinking. Would that be right?

JW: Yes, it is. That is correct, as evidenced by a wonderful mate, John

Heine, who we were talking about before. Very wisely, it’s been a push of

Robert’s, that he realises that there’s a real danger in internalising our

thinking too much, and how we desperately need to have a couple of really

competent complementary individuals who in fact will challenge our

thinking. And particularly in the role of the chairman. I think Robert also

realises though that we all work together. At the end of the day we don’t

always agree with each other. It’s quite common that we take quite

different views about issues, but what happens over time of course is that

you can almost pick the lines that each one of us will take. We know each

other so well that we understand each other’s thinking pretty well. And so

it’s very important to have external Directors who are respected,

particularly by Robert.

The other ingredient that is so essential, in terms of determining the

success of an external chairman, is that Robert must feel as though he

needs a chairman more than the chairman needs Robert. If you had a

situation where our chairman felt as though he was a little overawed by the

whole process here, it wouldn’t be as successful as a situation with a

person like John Heine, who was highly respected by Robert, who was a

18

very strong willed individual, and he couldn’t give a toss whether Robert

agreed with him or not.

Yes, I think we’d both agree with that. (Laughter) That was John’s

character alright.

JW: Yes.

James, there have been so many critical changes in the recent past,

but what about with Yalumba for instance of moving from being

predominantly a fortified winemaker

JW: You’re right, Rob. When I first came here we were very reliant on

fortified wines, Ports, and Brandivino, and Autumn Brown Sherry. They

were a critical part of our business. Another very important telling time

was when we sold our fortified wine brands to Mildara Blass. It gave us an

opportunity in fact to get rid of some of the burden of the debt. And what

happened was that we focused our energies and our resources into table

wines, and particularly table wines that were in fact not at the fighting end

of the market.

And the other very, very important contributor to this process was the two

litre wine casks. We were the first on the market with the two litre casks.

There were similar products in the market being five litre casks or ten litre

casks, which in fact were low priced. We brought on a two litre cask that

was a bottled wine quality. And so that had an enormous shift. In the mid

80’s I remember being horrified when I looked at some of the profits out of

the wines that we were selling, and one in particular was that we were

selling semi-trailer loads of Angaston flagons to Queensland and we lost

money on every bottle that we sold. The more we sold, the more we’d

lose.

Today it’s a very different business. We have our own brands, which are

firmly entrenched. We have the Yalumba branded brands, and obviously

we also have other brands that we own that are well known—Pewsey Vale,

Heggies, Jansz —and a whole range of third party wines that are sold

within Australia and Internationally. In New Zealand our large brand is

Nautilus. In America we have Voss. Apart from our own brands, an

19

important part of our business is not just our export business but it’s also

the distribution business that we have, where we act as a distributor, both

domestically for a whole range of third party principals, as we do in our off-

shore satellites. And so in Australia we have about fifteen different

companies where we act as a distributor. And similarly we act as a

distributor for a large range of companies off shore. In New Zealand we

act as a distributor for a large range of New Zealand winemakers, and also

a large range of Australian winemakers, also companies like Bollinger and

European winemakers. And similarly we do the same thing in America and

the U.K.

Beverage distribution became an important part of our business. So we

wear several hats. We are principally a winemaker. That’s where our

heart and soul lies. But as we have this infrastructure which includes

distribution for our own products—we have tacked on to that this other

distribution business that in fact has served us very well.

And that would be in contra-distinction to how it was thirty or forty

years ago.

JW: Oh, very much so. Thirty or forty years ago, very often what most

companies did was that they’d appoint a different agent in each capital city

of Australia. The danger and the problem with that was that you would—

for example, we had XXXX in Queensland, so we had a large brewery in

Queensland distributing our wines in Queensland, and that was a totally

different image that was being created to our brands that we had in Perth.

We did our own distribution in Adelaide and Perth and in Darwin but not,

interestingly enough, in the largest markets of Sydney and Melbourne. So

in terms of being able to control our own destiny we decided to set our own

distribution network in each of the capital cities of Australia to distribute

our own products.

And James, you were saying that initially in the business it was

very much a fortified with semi-trailer loads going out.

JW: Yes.

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Today, what’s the story with Yalumba?

JW: Today the only fortified wine that we make, in very small quantities,

are Museum fortified wines. One of the reasons that we got out of the

fortified wine business was the fact that financially it was a road to hell. It

was a road to hell because Galway Pipe, for example, was a wine we kept

for fifteen years—an average age of fifteen years—so the holding costs

were just crippling. And so we realised that it was fine through times of

very low interest rates but in the early 90’s when we had this massive

debt, and we had these huge stocks of fortified wine that we were keeping

for these long periods of time, commercially it was just completely in

conflict. So that was the reason why we decided to get out of our fortified

wines, to re-focus on table wines where we had greater turnover and

margin, and also where Robert, quite correctly, picked where the market

was going.

And just looking back—I know we’ve mentioned the buy-out of the

family as being such a significant thing in the Yalumba story, but as

you look over the whole industry what have been some of the significant changes that you’ve seen, James?

JW: Well, of the changes that I’ve seen, probably the most important

relate to the complete restructure within the industry. We are quite unique

in terms of being a family company and still being of the size and the

independence that we are. In the public arena, there have been many

mergers of companies, brands and in the winemaking facilities

themselves—in the wineries—but it also has occurred where there’s been

huge syndications of vineyards where there have been mergers and large

corporate vineyards have been established. Sometimes they’ve been

stand-alone, sometimes have been associated with a wine company.

At the other end of the food chain, the same thing is occurring in

distribution and sales where large retail chains now account for a large

increase in market share.

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And the other change is in the export side of our business, which is growing

ahead of domestic sales. New types of international associations are being

made : they can be joint ventures, they can be formal business

associations or informal business associations, where they are between

Australian wine companies and international distribution companies. So

that’s something that is happening all around us, and challenging our

thinking as we in the past have dealt with this by being independent and by

establishing our own distribution companies off-shore.

James, do you have a view of where Yalumba and the industry is

headed today in Australia?

JW: At Yalumba, we have a view where that’s going. I think that Yalumba

is going to continue to head on a path of profitable growth. We don’t chase

growth for growth’s sake. We’ve been extremely fortunate that our two

principal shareholders are two brothers who, in fact, have a very sound

relationship. Sam Hill Smith is not interested in being involved directly in

the business. He has an Art business and has his other interests outside of

Yalumba, which leaves Robert to run the business. Sam is the ideal

partner for Robert. He’s highly supportive of Rob. And there is no need for

us as a business, in terms of satisfying shareholder demand, to chase

growth for growth’s sake.

The other thing we do is set our objectives which are the acid test of our

thinking — “is the decision that we’re taking today, in the best medium to

long term interest of this business?” So we don’t have to take short term

disjointed decisions in the interest of the company. We take decisions that

are properly founded and will further the interests of the employees and

the business and the shareholders in the longer term.

And so I see ourselves growing steadily. I can see export becoming a

greater part of our business. I can see our distribution business becoming

an important mainstay of our business, where we act as a distributor for a

range of complementary high quality companies, both around Australia and

in our international satellites. I think that we may well, in the not too

distant future, look at another winery facility. The property at Yalumba is

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becoming choked by growth. It’s a sad fact. It was built 150-odd years

ago to service the needs then on this site, and I think we will have to look

at something that is probably an efficient site for some of our high volume

products. But all those things will evolve as we are financially able to

handle them without a great deal of risk to the business.

Well, thank you so much, James, for talking to me today. It’s been a real pleasure.

JW: Thank you. My pleasure.