By Adam Keath
Consultant, Wine Network Consulting, Victoria Email: email@example.com
As ageing winery equipment comes to the end of its life, there is an opportunity to not only just replace it with something new but take take advantage of all that has been learned over the last 30 years since the start of the last great expansion of the Australian wine industry to become more efficient, Adam writes.
It is now 30 years since the start of the last great expansion of the Australian wine industry. Driven by export markets, our industry grew at a great rate for 20 years from the mid ‘80s as exports went from 1 million litres in 1985-86 to nearly 800 million litres in 2006-07. This resulted in huge growth in the number of Australian wineries but also a massive increase in capacity at existing ones. The constant capital requirement to keep up with an ever-increasing demand meant that long-term plans were accelerated and/or rushed, and wineries grew beyond their intended sizes very quickly. With a current environment of relatively stagnant growth, it is time to reflect and look at what some of our businesses have become. We are now living in very different times compared to those when the decisions to design and equip our wineries were made.
In this article I talk about some of the factors that have changed in this time that have rendered some of our facilities no longer fit for purpose. As ageing equipment comes to the end of its life, there is an opportunity to not only just replace old equipment with something new but take a more holistic look at the whole process, taking advantage of all we have learned in the last 30 years to become more efficient.
THE BIG SQUEEZE
Before we talk of the rising costs associated with winemaking we need to touch on the lack of growth in return. Exports, whilst increasing our overall production, have not driven up prices, and domestic channel competition has limited any price increases for producers. If we look at the average sales price per litre of wine as published in ‘Winegrape and Wine Industry in Australia: a Report by the Committee of Inquiry into the Winegrape and Wine Industry’ in June 1995, winegrowers were receiving on average $5.45/litre in 1993. Compare this to the 2020 figures published by Wine Australia which show a combined domestic and export volume of 1.2 billion litres sold for $6.4 billion, an average price of $5.33/L. Had this 1993 price followed CPI, it would be $10.68, more than twice the current price. Essentially, as everything around us increases in value, power, labour, insurance, safety, inputs like glass, processing aides and transport to name a few, we have had to find efficiencies, or make less profit, or both to continue selling at a slightly lower price than 30 years ago.
‘Healey’s First Law Of Holes: When in one, stop digging’ — Denis Healey
Priorities in design have changed considerably since the mid ‘80s. During this time, electricity prices have increased by around 400%, the minimum wage has jumped by 360%, there have been limitations on the availability of water and a massive change in the attitudes towards health and safety, and a much greater focus on the environment. All this means is if you were to start again from scratch your winery would invariably be a very different place to what it is currently. It’s time to stop digging and change our thinking.
With refrigeration accounting for up to 70 per cent of a lot of wineries’ energy consumption, I spoke to Brian McLaughlin, from Serchill Pty Ltd, about the opportunities he sees when visiting wineries that are in the 25 plus years age bracket. Brian’s observations are that when energy was cheap and growth in volumes was high, the approach was to throw capacity at the chilling problem and not be concerned by the energy use. It was easier and cheaper to put a bigger chiller in than look at the design of a system. “We’ve had 20 years where many wineries have not often engaged refrigeration engineers. It’s been a combination of ringing a salesman for a new chiller, the same size or larger than the old one, and then use the local plumber to hook up the glycol systems to the tanks,” McLaughlin said.
As he explained, the poor sizing and design of reticulation pipework and equipment, such as heat exchangers, around wineries leads to chilling problems that are solved by lowering the glycol temperature. A better understanding of fluid dynamics and improving flow at a higher temperature can give the same result with considerable energy savings. “An increase in the glycol temperature set point can improve refrigeration performance by up to 3% for every degree,” McLaughlin explained. Another mistake businesses make is replacing chillers like for like without considering changes in their processes or considering what their actual need is. “Sure, the EER [energy efficiency ratio] or COP [coefficient of performance] of chillers has improved through new technologies in manufacturing and system control over the last 25 years, but you need to understand that these numbers are calculated at the conditions required and with much more accurate control of the refrigeration system. Part load and full load values with the right plant management can return improvements to energy useage not possible with older style equipment,” McLaughlin said. His point is that practices such as flotation and picking fruit at night can dramatically reduce the need to chill fruit to the same degree it was needed when using traditional cold settling techniques. He also suggested that the traditional spreadsheets used by salespeople to sell a unit when filled in by the winemaker need to be fully understood and considered with an engineering viewpoint to ensure that calculated values are not overstating the need for chilling, resulting in a larger unit than necessary.
When asked how quickly a tank should be chilled for cold stabilisation, us winemakers won’t generally consider the cost of power when answering “as quick as possible”. The difference in cooling product in one hour instead of two is using twice the energy. As McLaughlin said, “I can give a winemaker a 100kW cooling plant and they can make some great wine. If I give them a 250kW unit, they will make exactly the same wine. At some stage they will use all those 250kWs but not very often. It is difficult to see operationally what that additional cost is, not just in capital, but in ongoing reduced efficiencies”. The other opportunities with new generation chillers when looking at refrigeration holistically is that heat recovery systems are pretty much standard these days. The opportunity to get free heat whilst chilling can save considerable costs. For example, there is an opportunity to use the heat generated whilst controlling ferments to heat grape bins to 45°C where their sterilisation is required due to phylloxera, essentially for free. Compared to dipping the bins in 80°C water heated by gas the savings can be considerable. This recovered heat can also be used to pre-heat feedwater for gas-fired systems offering reductions in gas usage as well.
With an ambition for zero emissions, the support available to businesses through grants for energy audits and energy saving improvements is always worth considering. But, as McLaughlin mentioned, the generic audits he has seen conducted for wineries generally result in recommendations to install solar and a few variable speed drives. The understanding of the wine industry, how it works and the other opportunities through management of cooling doesn’t seem to be considered.
“A suite of generic solutions that doesn’t address the real issues doesn’t help anyone,” McLaughlin said. “Yes, solar is great but if you’ve still got your chiller set at -6°C for 12 months of the year, you’re essentially just burning $100 notes. Find a good company with proven winery engineering experience to run the audit and get real solutions that will actually make a difference to your bottom line.”
“The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong, it usually turns out to be impossible to get at and repair.” — Douglas Adams
Like energy and wages, the price of grapes has also steadily increased in the last 10 years. The averaged weighbridge value per tonne of grapes has risen from $463 to $701 since 2015. While this is great for growers who have also seen rises in costs, it again squeezes the profitability of wineries. One way to countenance this is to work on optimising extraction rates. I am not necessarily talking about pressing harder, although this can at times be a good solution. I am talking about reducing losses through the process, maximising the cases per tonne that make it through once grapes are pressed. I spoke to Jim Guszlovan, founder and director of Rapidfil. We spoke about the changes he has seen and where introducing technology has made a big difference to final yield. Guszlovan’s background was as a service engineer for Westfalia Separator (now GEA). He talked about spending countless hours on different sites servicing and trialling centrifuges and witnessing the waste that was considered normal. The idea for the Rapidfil barrel filler came from these visits, watching cellarhands struggle to empty and fill barrels and seeing giant pools of red wine on the ground from what was left behind post racking or from the inevitable overflow when people get distracted filling.
“The idea came from seeing all this waste. The barrel spear hadn’t changed since the invention of the pump. It just made sense to put the valve at the bottom of the spear and use the technology of sensors to automatically switch off the pump when the barrel is empty or full,” Guszlovan recalled.
He has gone on to refine the product so that it not only saves wine — Guszlovan says “our conservative estimate is that you save a litre of wine per barrel when emptying” with some trials showing this to be “as high as five litres” — but the improvement in quality through the reduction in dissolved oxygen in the wines can’t be underestimated, he adds.
With wines sometimes being racked and returned two or three times in their life, this technology can result in 2-5% more wine at bottling without factoring in the spillage from overfilling barrels. The ability to have one person managing multiple fillers without risk of overfilling can also dramatically reduce a winery’s labour component. Rapidfil’s tank control systems utilise portable radar sensors on the top of tanks to automatically stop a pump when full or at a desired level, again reducing the chance of human error overfilling a tank. Not only does this eliminate the chance of large losses but also allows wineries to run with less staff in the cellar without the need for someone to sit on the top of a tank watching the level. The confidence in a system stopping on its own also means people can perform multiple jobs at the same time, removing the risk of expensive errors and losses.
Coming from a separation background, Guszlovan’s observations on the improvement in filtration technology is also interesting.
“Some of the new lees filtration technology has meant that instead of tipping that last five litres of lees down the drain, a winery can now filter that and recover up to 80% as comparable quality wine to the rest of the barrel,” he said. “The Andritz separator we helped install at one site was one of the most impressive pieces of technology I’ve seen — seeing the two streams coming out of that thing, one perfectly filtered wine and the other a thick sludge exceeded any expectations I had.”
When you combine new technologies as those just mentioned with techniques such as flotation, you can considerably increase the cases per tonne produced, helping to negate the higher cost of fruit, but also reduce the pressure and power needed to run your effluent systems.
“If you do not change direction, you may end up where you are heading” — Lao Tzu
I also spoke to Stuart Cameron, from Grapeworks/Tanium, about his observations. His comments about wineries from the era that had huge growth in the ‘80s and ‘90s was that there was “not much thought to design, usability, cleaning nor safety”.
“One thing really common in a winery in the ‘80s and ‘90s was the 3-4m deep hole in the ground to house the destemmer and crusher, only to then have a massive open throat auger and pump to get the fruit back out of the hole, then elevators and conveyor belts to remove the stalks. It’s all one serious hazard — a nightmare for cleaning and maintenance and the only real purpose is to house a machine that wineries are now using less as technology improves with in-field destemming on harvesters and other sorting practices back in the winery,” Cameron said. This is an interesting point when you consider that confined spaces in wineries were rarely considered a risk 30 years ago. With workplace manslaughter laws around the country now in place, not understanding these risks and the possible impact on your business, staff and you could be devastating.
Cameron’s other observations were around the increased interest in the energy efficiency of new equipment as well as their compliant safety certification. There is also greater focus on quality over the speed of processing in a market where average prices are not moving. The imperative to add value and attract a higher price point to ensure you are at the right end of the bell curve is imperative to stay afloat.
Another trend that has emerged is the reintroduction of controlling your own bottling.
“The last seven years has seen a huge level of interest and investment in new bottling lines,” Cameron reflected. “Up until the early ‘90s the percentage of wineries that had their own bottling line equipment was high. During the ‘90s and first part of the 2000s a huge number were decommissioned or scrapped. The vast majority of wineries — small, medium and large — moved to contract bottling facilities: mobile trucks or large static lines.” He said the reasons cited by his company’s clients for purchasing bottling lines included, “quality concerns when control is lost by sending wine offsite, cash flow, being able to spread bottling costs such as glass purchases and dry goods across the year, being able to bottle exactly when they want or when the wine is ready rather than when they can get fitted into the schedule”. “Current cheap finance costs are also making it a pretty short ROI compared to the costs of contract bottling,” Cameron added.
So, despite the erosion in equivalent return-per-litre over the last 30 years there are many opportunities to increase winery efficiency and, as such, margins. But to take advantage of this may involve investment. At Wine Network we are increasingly getting inquiries from wineries on how to approach this process of ‘retooling’ as we like to call it. It can be quite daunting and overwhelming when looking around at all the issues, leaving people wondering where and how to start the process. We work with several clients who have identified the need for change and are helping them navigate their way forward.
As John C. Maxwell said, “My advice is to surround yourself with talented people who will challenge you, help you grow and inspire you to maximise your potential.” It is not a time to be complacent and continue doing blindly what you have done for the past 30 years. Look around, get some sound advice, take advantage of funding opportunities and cheap finance to set your business up for the next 30 years, safely, efficiently, and profitably.
Adam Keath is a consultant at Wine Network Consulting, www.winenet.com.au