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Life among the vines
Murray Burton CPA wasn't into wine when he started Ferngrove Vineyards Estate 10 years ago. But his taste has matured as his business has grown.
The story of the Australian wine industry is peppered with tales of those inspired to start a vineyard after drinking a great bottle of red or white. But that can’t be said of Murray Burton CPA — he wasn’t even a wine drinker when he started Ferngrove Vineyards Estate in 1996. How did an accountant with no taste for wine create a business that is now the third largest producer of wine in Western Australia, producing 5800 tonnes in its last vintage?
Burton’s career path has been unconventional to say the least. Growing up on a beef farm in Walpole on the south coast of WA, the 51-year-old developed a passion for flying at a young age and dreamt of becoming a pilot. He joined the Royal Australian Air Force at 23, but his dream ended when he was deemed unfit to fly due to a hay fever allergy. He settled for the next best thing: becoming for 11 years an air traffic controller, with the rank of flight lieutenant.
It was during a posting to Malaysia that Burton began to contemplate his next career move. He enrolled in a business degree via Curtin University’s distance education scheme.
After being posted back to Perth, Burton left the Air Force to start a delicatessen business with a friend. A second soon followed, which Burton ran with his wife for five years before selling up in 1991 to buy into the accounting firm Galluccio Griggs in the Perth suburb of Leederville. His accounting career began.
But Burton’s entrepreneurial spirit was still alive. Keen to diversify his family’s beef farm, he’d read the Strategy 2025 paper by the Winemakers Federation of Australia, which included its strategy for achieving $4.5 billion in annual sales. The wine industry was booming and Burton recognised the business possibilities. There was one major obstacle: Burton knew nothing about wine. He manoeuvred around this by receiving advice from those who did.
The Western Australian government put him in touch with Ted Avery, who had enjoyed a distinguished career in the wine industry as general manager of Houghton Wines, Sandalford Wines and CEO of Goundrey Wines before becoming a consultant. Burton also contacted Merv Lange, an old friend from his football and cricket days who owned Alkoomi Winery in Frankland, 360km south of Perth and 100km inland from the Burton farm.
Avery and Lange convinced Burton that his family farm was not suitable for growing grapes. Acting on their advice, in 1996 he bought 400 acres in the Frankland region after mortgaging the family farm. The vineyard has since grown to more than 900 acres, and has invested an estimated $50 million in the Frankland region in the past 10 years. Burton developed a sophisticated grape-growing plan soon after starting Ferngrove.
He drew up a prospectus under the managed investors scheme whereby investors received tax breaks for investing in the vineyard and the money raised was used for infrastructure. Although the value of the crop has decreased due to the greater production of grapes by competing vineyards, investors also get income from bottled wine sales.
Some in the wine industry have criticised grape-growing schemes such as Burton’s, suggesting they have caused both an oversupply of grapes and a sharp drop in prices.
Burton admits that Australia currently has an oversupply of wine. This situation has been brought about, he says, partly by what he and others have done: plant large vineyards. 'If you look at just planting vineyards without looking to sell the finished product, then we have contributed to oversupply,' Burton says. 'On the other hand, the industry doesn’t grow unless people put vineyards in the ground and take a risk.
'The main difference between what’s happened in the past and what’s happened more recently to create this [oversupply] problem is the degree of risk the individual has had to take has been sufficiently reduced by provision of taxation benefits. Companies have set themselves up simply to do business in tax reduction — be it through vineyards or trees.' Burton also ponders the fact that tax-based schemes have a reduced amount of risk in comparison to what could be classed as genuine growers — those who buy and plant vineyards.
Burton has thought beyond the tax-break benefits of vineyard investment. A winery was built in 1999 and is being improved to cope with processing up to 7000 tonnes of grapes. Yet not all this fruit is made into Ferngrove wines; the company has bulk-wine contracts with Foster’s, Orlando and Tyrrell’s. In the 2006 vintage, there were about 400 tonnes left over for sale on the spot market. This is not a figure that worries Burton — he sees it as 'leaving room to grow the brand if needed'.
During Burton’s 10 years in the wine business he admits to a few disappointments — poor weather and other minor problems — but he has never felt like calling it a day. And he’s still a successful accountant with Galluccio Griggs. 'I was an accountant first and I enjoyed working with clients,' he says.
'Although Ferngrove took a lot of time at the start, it has grown to such a size that, with 75 staff, my day-to-day involvement is limited. I really can’t contribute to the wine side as I don’t have expertise in winemaking. I’m not a marketer. We have accountants working in the finance department and a very good CEO. I am surrounded by highly competent people who run that company, so I’m an accountant.'
Merv Lange and Ted Avery are still on the board of Ferngrove and a strong bond has grown between the three over the years. Lange describes Burton as 'a low-key, honest Aussie bloke' with whom he had no hesitation investing money. 'My spare dollars are hard-earned, so I would only be involved with honourable people,' Lange says. And despite a varied career, Burton says he hasn’t moved far from his roots. 'I’m a farm boy at heart,' he says. '[It’s] about growing something from the ground up — tending the vine then picking the grapes, crushing, fermenting then drinking the finished product, and even making a profit out of doing so. Just walking through the vineyard is very therapeutic.'
Do you have a mentor?
Two: Merv Lange and Ted Avery.
Who do you admire in business?
Michael Chaney, former managing director of Wesfarmers and now chairman of the National Australia Bank. He has a practical and firm commitment to what he has to achieve and doesn’t deviate from the path. A good business thinker.
Apart from your own wines, which do you recommend?
Cape Mentelle Zinfandel, Goundrey Reserve Shiraz, Alkoomi Blackbutt (a Cabernet Sauvignon, Cabernet Franc, Malbec and Merlot blend).
What are you reading now?
Not a great novel reader, [so] lots of journals and any book on flying.
Reference: June 2006, volume 76:05, p. 21-22
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