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One-third of Oz wineries predict good growth

Published:  23 July, 2008

More than one-third of Australian wineries polled in a recent survey expect to increase their profitability by 10% or more over the next five years - with only 4% of respondents predicting a decline over the period.

Eric Wisgard, corporate affairs manager for the Australian Wine and Brandy Corporation (AWBC), said during an industry seminar last Thursday (14 July), that some 235 wine companies took part in the survey, which was conducted by market research firm Hudson Howells as part of the AWBC and Winemakers' Federation of Australia's (WFA) Directions' strategy. The 235 respondents, all of which were parent companies, were divided into six revenue bands.

In all, 37% of companies predicted that they would achieve a minimum of 10% profitability growth (defined as net profit after tax and interest); 10% predicted no growth; and two companies - whose identities were not revealed - believed that they would go bust within five years. Looking at annual domestic sales revenue, 49% expected 10% growth or better, while two-thirds predicted similarly high growth in their export sales.

Surprisingly, companies in the top revenue bracket (A$75 million and above) gave the most pessimistic replies - and Wisgard admitted that such firms planned to reduce their reliance on their own source' and buy in fruit.

He added: What was most surprising was the level of optimism about profitability and sales growth. Also, nine out of 10 companies plan to grow their own grapes over the next five years.'

Not everyone agreed with the survey's findings, however. Geoff Krieger, general manager of the Hunter-based winery Brokenwood, told the audience: Most of the respondents must have been smoking something funny! They must be dreaming if they think that in the future, they will be able to lift net profit after tax by selling more wine. That's just crazy thinking.'