Adjacent to Hatten Wines’ vineyard cellar door is a small Balinese Hindu shrine, a receptacle for daily offerings. As well as any supernaturally protective role it may play, the shrine acts as a clue to the winery’s origin and history. Demand both for table grapes and fermented rice beverages, for use in Balinese religious ceremonies, has been instrumental in the birth of Hatten Wines, and thus the creation of a wine industry in Indonesia.
By far Indonesia’s major player, Hatten Wines was founded in 1994 by Ida Bagus Rai Budarsa (Gus Rai), a member of a prominent Brahmin-caste family based in Sanur in Bali’s south. There, his father had set up the island’s first commercial brewery/distillery making brem, a naturally fermented rice wine, and arak, a rice spirit; both sought after as Balinese Hinduism temple offerings.
As a child, Gus Rai washed bottles in the family business before studying agricultural science in Java. He started growing grapes on elevated pergolas in the north-west of Bali, where the climate is drier than in the more heavily populated south. With the help of a French winemaker, he launched Hatten Wines with a rosé made from a table grape Alphonse-Lavallée. The grapes had long been grown in Bali mostly for ceremonial use.
Gus Rai added to the vineyard two white wine grapes he found growing in Java — Belgia, a Muscat, and the mysterious Probolinggo Biru. The local range was then expanded to include a red, a white, a fortified red, plus a sparkling rosé and a sparkling white, made by méthode traditionnelle. In all, there are more than 18 products and more than 1.5m bottles produced each year.
In 2007 Gus Rai branched out, creating the Two Islands range from frozen juice imported from the Barossa Valley. “He’s really passionate about South Australia in general and particularly Barossa Valley, where he has some really good, long-term friends,” says James Kalleske, the current Hatten Wines winemaker, about his CEO. Kalleske himself comes from the Barossa Valley but developed his expertise studying at Curtin University and working in Margaret River, both in Western Australia. Since arriving in 2012, Kalleske has added a Sauvignon Blanc, a Pinot Grigio and a Pinot Noir to the Two Islands range. Each year the company ships 35 to 40 containers of frozen juice from growers under long-term contracts in South Australia’s premium wine districts.
The main market, at around 70 percent of sales, are the more than 5m international tourists who arrive in Bali each year. The local wines enjoy a price advantage. A combination of three different government taxes — including one equivalent to 90 percent of the wholesale price — increased by a retail margin of 30 to 50 percent, can easily triple the price of an imported bottle. Around 25 percent of Hatten’s output goes to Jakarta and other parts of Indonesia, and it has a small export market in Hong Kong.
Hatten Wines also enjoys a quality advantage due to the fact that importers of wine to Indonesia have volume quotas. They are restricted to importing only from large producers that can supply tens of thousands of bottles of the same line. As Kalleske puts it: “I’m not saying that the big producers are bad. They make fine wines, but they’re not interesting… We are making single-vineyard interesting wines but because we’re not paying the import tax on the alcohol, they end up being half the price of a lot of the big bulk producers’ wines.”
The company no longer enters its Two Islands range into international awards competitions because it doesn’t require “that kind of thing to sell it”, says Kalleske. However, for the Balinese wines, “we have got a lot of people’s preconceptions to deal with”, he believes. Competitions “can show people that we are not making horrible stuff that gives you a headache… but we’re making good wine”. In the Hong Kong’s Asian Wine Review competition this year, Hatten won Gold for its Pino de Bali fortified dessert wine. It was also awarded Winery of the Year in 2017 in a field of 100 wineries from nine Asian nations.
Partly to raise their company profile, Gus Rai and James Kalleske helped establish the Asian Wine Producers Association. This is an alliance of wine producers from, in descending order of number of individual country members: Japan, India, Thailand, Indonesia, Korea and Myanmar.
Success has brought imitation, with four winemakers now active in Bali, three of which have popped up since Kalleske arrived in Bali. “Each of those only makes one range of wine,” he notes, either from local or imported grapes, including from concentrate. “We’re the only ones bringing in frozen, high-quality, single-vineyard grapes. In the local grapes, we’re the only winery that has any research and development happening in the vineyard.”
About a year ago Kalleske was delighted to hire “the only person we know from Indonesia with a wine-making degree, so very, very special”. Jakarta-born Jeremy Pramana, who had studied viticulture and winemaking in Bordeaux and Burgundy, carries out viticulture research and development. Experimental plots of varietals have been planted and Kalleske is keen soon to start producing Shiraz and Chenin Blanc.
Hattens has also taken the initiative to educate its market, offering free training from a qualified sommelier to the staff of Bali’s hotels, restaurants and cafes. “We don’t brainwash them into thinking Hattens is the best,” says Kalleske, “we just give them general wine training.” The classroom has recently added training up to WSET levels 2 and 3.
As well as not facing any import competition from small-scale wineries, another key advantage the local industry enjoys is that the Muslim-majority nation of Indonesia does not permit the importing of bulk wine — wine has to arrive in its final packaging. Kalleske muses that if that restriction were ever removed, big companies would set up bottling plants and dominate the market. “That’s why the Two Islands range has a less secure future than Hattens,” he says, “because Hattens is always going to be unique and interesting.”
Not surprisingly, Kalleske is keen on the introduction of regulation and accreditation to assist in preserving Hatten Wines’ good name. He cites the experience of Thailand, whose wineries had a bad reputation for blending until they formed an association and instituted a strict annual audit regime. “We do have issues with some people using imported ingredients and then saying it’s Balinese on the label which, if it’s not good wine, can damage the Bali wine brand we’ve spent so long trying to build up,” he says. “Or, if it’s really great, because it’s from good-quality imported ingredients and it’s labelled as Bali wine, but it’s not, then that’s not helping Hatten, which is playing by the rules in producing genuine Balinese wine.”
After 25 years since he founded Hatten Wines, Gus Rai is able to spend an increasing amount of his time on community and ceremonial obligations, which he can afford to do since his staff now exceed 200 in number. After severely dropping for two months last year due to volcanic activity, tourist arrivals to Bali are back to normal. The gods do seem to be smiling on him.
This article first appeared in Issue 2, 2018 of Meininger's Wine Business International. For mroe great stories, why not subscribe?