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Mid-range Australian producers squeezed

Most medium-size Australian wineries failed to make a profit in 2003, according to a report published earlier this month.

‘Unfortunately, more than half the small wineries that participated in the study generated a loss before tax,’ said industry analyst Stephen Harvey, part of the team that produced the report.

The high rate of Australian plantings in the late 1990s – particularly in red grape varieties, recent bumper vintages, and the slow-down in the growth rate of export sales, came at the same time as a worldwide glut of grapes. This resulted in losses for many medium-sized wineries, the report said.

‘We expect these losses to contribute to increased consolidation within the industry, particularly for wineries with revenue between AUS$1m and AUS$5m,’ Harvey said .

‘Our current estimate of the 2004 vintage, at over 1.8m tonnes, suggests that pressure in the industry’s supply position is likely to continue,’ said Stephen Strachen of the Winemakers Federation of Australia.

The report shows wineries with revenue under AUS$1m made 6.3% pre-tax profit and those with revenue over AUS$20m made 15.3% pre-tax profit.

But medium-sized wineries in between reported overall pre-tax losses of 4.8%.

The figures appeared in the 2003 Annual Financial Benchmarking Survey by Deloitte and the Winemakers Federation of Australia.

Written by Jack Martin

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