Winemakers' Federation of Australia targets return to profitability in new plan

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  • Thursday 29 August 2013

A new, three-year, A$36m strategy has been unveiled with the aim of restoring profitability to the Australian wine industry.

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The 33-point plan, set out by the Winemakers’ Federation of Australia (WFA), covers seven main areas and focuses mainly on creating extra demand for Australian wine, increasing the operating budget of lead trade body Wine Australia by A$2m a year.

It also suggests spending a total of A$7.5m on tourism initiatives, A$4.5m on a new Australian Food and Wine Centre in Shanghai, and A$3m on attending wine trade shows around the world.

But the plan, which is now out for consultation, stops short of proposing a vineyard buyback scheme, instead putting forward a A$7m budget for data collection and vineyard research.

WFA president Tony D’Aloisio said Australia’s wine industry had been hit by a ‘perfect storm’ in recent years, including challenges related to grape supply, consumer demand, retail power, taxation and exchange rates.

‘Unless we restore industry profitability and lift asset values to acceptable levels, the industry will not make the most of the opportunities it has and there could be continued adverse impacts on jobs and growth in regional Australia,’ he added.

The plan comes in response to a specially commissioned Expert Review on the performance of the industry, undertaken by independent economists Centaurus Partners and including detailed analysis of demand, supply and market distortions.

The Australian wine industry more than tripled in size between 1991 and 2007, from 400m litres to 1.2m litres, with revenues increasing to A$5bn.

However, value and profitability have been eroded since then by a chronic oversupply of grapes, increased competition from other producing countries, retailer consolidation at home and abroad, and exchange rate pressures.

The consultation period on the WFA strategy and Expert Review will run until 18 October, and the plan could be implemented from November onwards.

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