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Australian wine production 90 percent ‘unprofitable’ in some areas

Several inland Australian wine regions are almost entirely unprofitable, according to analysis by the country's winemaker federation that highlights a gulf in earnings between areas.

More than 90% of production in Australian wine regions including Hunter Valley, Riverland and Swan District is unprofitable, said the Winemakers Federation of Australia (WFA) this week.

Its figures underline the difficult conditions many Australian winemakers and grape growers face.

But its report also points to a two-speed Australian wine sector, with wine production in cooler climate regions much more profitable; albeit 43% of cool climate production is still loss making, according to WFA figures.

‘Many producers in the warm inland regions in particular continue to experience enormous challenges,’ said WFA chief executive Paul Evans. ‘Our analysis shows that 92% of production in warm inland areas is unprofitable.’

Conditions in some areas have also improved in recent years. Only 28% of Barossa wine production is loss making, versus 50% three years ago.

Evans said it was positive that grape prices across Australia have risen by 5% in the past year, albeit off a low base. He said Australia’s new free trade agreements with several Asian countries, including China, helped to provide a ‘window of oppotunity’ for growers.

‘We must urgently seize the potential to grow demand for Australian wine and help address the on-going structural mismatch between supply and demand at profitable price points,’ he said.

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