JACK HILL

Jack Hill came to the BCW in 1977 with a strong background in the management of Rural Cooperatives and in the senior management of manufacturing and marketing operations in the Dairying Industry.

His father was a WW1 Soldier Settler at Barmera and was manager of the BCPC from 1925 -50. He was an original shareholder of both BCW and BCPC.
Jack graduated from RAC in 1954 with RDA and RDD and was appointed to his first management role in February 1955 as Branch Manager of the new R.J.Finlayson Ltd Cheese Factory at Meningie SA. He also managed the Tantanoola Coop Cheese Co in the early 1960’s before being appointed Production Manager of the Canberra Branch of Bega Dairying Coop in 1963. He became General Manager of the Company in 1970 in which role he initiated the marketing activities of the Coop for the now well known Bega Cheese.

In 1975 he was appointed GM of Norco Coop, the largest Dairy Products manufacturer in NSW. In that period the Company took a lead role in a substantial program to achieve changes to Industry legislation to allow their shareholders access to the Sydney milk market - which was essential to their survival in the Industry.
Jack’s experience covered not only the normal Chief Executive responsibilities for Company financial management, policy development and implementation etc. but also included significant experience in the preparation and presentation of evidence to Parliamentary inquires into various significant issues affecting the Industry. He also had experience as a member of several peak State and National Industry bodies including the Dairying Industry Council, Dairy Industry Equalisation Committee and Australian Dairy Corporation.

This broad based experience equipped him well for the requirements of the role of General Manager of BCW.

A PERSPECTIVE ON BERRI WINERY & DIST LTD. 1977-1981

By Jack Hill, General Manager Sept 1977 - July 1981

When I was appointed General Manager of B.C.W. in 1977 the Company typically crushed 25000 tonnes of grapes per annum of which approx 5000 tonnes was to brandy/distillation products. The market positioning was as supplier of convenience of bulk wine products to Brand Marketers (Gramps, Lindemans, Stanley, Woodleys etc).

The Industry had recently experienced a red grape shortage and the changes to the plantings mix to remedy this were coming into bearing at a time when consumer preference moved substantially to white table wine, creating a red grape surplus! The change to white wine demand (and increasing total wine consumption) was in major part the result of the wine cask changing consumption habits from special occasions use to more regular consumption. The new wine consumers were generally introduced to wine consumption from the sweeter end of the spectrum of white wine styles. There was, of necessity, substantial usage of sultana and doradillo varieties into white table wine blends to meet this demand while bona fide white wine varieties’ plantings came into production.

The grape growing industry was in a period of change with the progressive implementation of mechanical harvesting, mechanical pruning and spray and/or drip irrigation. This facilitated an opportunity for broad acres production, as opposed to the labour intensive 10-15 hectare owner-operator approach which had been the traditional production system.

The increasing production from proprietary winemaking company plantings which this evolution facilitated was progressively displacing grapes traditionally supplied by owner operator grape growers.

The Cooperative had three types of supplier shareholders designated A, B and C class where
-A class share holders had always supplied all of their wine grape production to the Coop

-B class shareholders had shared their crop between the Coop and other winemakers but met their annual supply obligations to the Coop.

-C class shareholders, mainly more recent entrants to the Industry who, partly through pressure to maximize income to service debt, chased the best return market each year.

For the Coop to meet its obligations to A class shareholders and to take up B class shareholders’ production displaced by propriety winemakers increasing grape production (both to keep them solvent and to enable the Coop to access adequate future supplies) it was essential that the Coop substantially increase its capacity to utilize grapes into stable market opportunities.

The 80% Brandy excise rise in the 1978 Federal Budget (from $10.75 to $18.20 per litre alcohol) was a substantial set back to the Coop in this regard. The sales reduction resulting from the price increase of brandy converted what had been a normal three years sales equivalent brandy stock level ( to account for the mandatory two years wood maturation requirement) to five years stock. This required that there be no brandy production for two years to bring stocks back into balance, and lower future demand. Not only did this reduce grape demand but the under utilization of the Coops substantial investment in distillation facilities led to the under recovery of those overheads having to be applied to the ex factory cost of marketable wine products. This added 10% to bulk wine production costs and in the over supplied market inevitable impacted on return to producers, when they could least afford it.

The Company had negligible brand sales (mainly cellar door ) and at that time the Brewing Industry was busy lobbying Government to introduce a wine tax, as increasing wine sales through casks etc. was affecting beer consumption. With the threat of such a tax being levied at a punitive rate, which could significantly affect total industry sales, it was clear that the Coop could not afford the risk of its market opportunity for bulk wine to other winemakers being substantially eroded. The decision was taken to embark on an aggressive marketing effort to establish, through cask sales initially, a brand presence in the market.

The strategy carried with it the risk that our traditional customers for bulk products may be alienated by us competing with them for retail shelf space, and transfer some of their custom to our competitors in that market segment, Renmano and Loxton Coop.

To limit this risk we adopted an approach aimed at being the best quality/price option for that market segment by introducing every relevant technical innovation we identified as advantageous to reliable product quality and optimal production costs. To this effect we installed 2 x 1 metre Coq presses to maximize juice extraction, installed centrifuges, substantially upgraded refrigeration capacity to allow good control of ferment temperatures and installed a tank farm in an insulated, refrigerated room to allow us to store juice cold rather than use the Brimstone SO2 dosing option. Our proximity to Tarac’s spirit recovery plant allowed us to maximize product recovery and optimize extraction per tonne crushed.

An important decision in relation to the cask marketing initiative was the decision to convert to five litre casks at the change from imperial to metric measure when the rest of the Industry converted to four litres to reduce (or stabilize) unit costs/prices.

Our Brand name was unknown to wine consumers and casks were the growth market which met our need to increase grape utilization quickly. Being in the "value for money) market segment the five litre cask gave us something to talk about to consumers and the TV campaign based on the theme "have four glasses on us"(referring to the difference between four litre and five litre casks) was a huge success. Brand sales (predominantly casks) were developed to approximate 15,000 tonnes grape equivalent in four years. Such was the impact of this program that in the Nov/Dec’80 Christmas cask promotion our Melbourne distributor ordered 27 semi-trailer loads of casks. Whilst this seriously tested our packaging capacity the stock clearance from cellar storage prior to vintage was a significant benefit at that time. That level of demand was also evidence that we had got the attention of consumers thereby shifting the leverage in the market place from the retailers to the Company.

Grape utilization in the four year period increased from 25,000 tonnes (including 5000 tonnes to Brandy) to 43,000 tonnes, with minor tonnages to brandy. Whilst the return to producers was depressed by the Brandy excise impact on costs and by the pricing pressures of a highly competitive market, the improved capacity to accept grapes and also reduce the unit cost of overheads were positives which served supplier shareholders well.
The subsequent evolution of the Company was facilitated by these events.

Jack Hill came to the BCW in 1977 with a strong background in the management of Rural Cooperatives and in the senior management of manufacturing and marketing operations in the Dairying Industry.