Wine Victoria Policy Priorities report

Victorian values

The Wine Victoria (WV) Policy Priorities report has been out for some time (since July 2016) but has just come TKR’s way. The basics, as per the report:

  • 21 regions
  • 800 wineries
  • 3000 vineyards
  • 25,000 hectares of vines

The bad news being:

“A membership survey conducted by Wine Victoria found that 65 per cent of the industry did not make a profit in the 2011-12 financial year, further 2012-13 annual wine sales and tax data analysis by Wine Victoria indicates that this figure could be closer to 90 per cent.”

Exports of Victorian wines have declined in the traditional markets since 2007, as they did across Australia. The report pushes for more attention to be paid to cellar door, rather than “supplying monopoly retailers”.

Exports are worth $197 million a year, the report says, with the top markets being China, the UK, US and Hong Kong.

The domestic/export split is the same as it is across Australia: export 60 per cent, domestic 40 per cent. WV follows the general mantra of being known as the producer of premium, but does nothing to back this up with figures.

This wasn’t in the Victorian report, but Wine Australia figures for 2015 show the Murray Darling, Swan Hill, Riverina and Riverland region produced 1.2 million tonnes of grapes out of Australia’s 1.67 million tonnes, with 70 per cent exported.

The majority of Victorian wine is produced along the Murray and Swan Hill, but WV appears to push that to one side and concentrate on its other regions, ignoring the fact that river wines will account for most of Victoria’s exports.

Using the Yarra Valley as an example: just 16 per cent of its production was exported. Across the border in probably Australia’s best known wine region, the Barossa, just 20 per cent of production was exported.

It’s understandable that Victoria makes a lot of its premium wines and wants to increase exports in the higher price sectors. Nothing wrong with that approach, but TKR thinks there may be more to be extracted from tourism, cellar door and direct sales via wine clubs etc. Thankfully WV appears to be on top of this aspect:

“Distinct wine regions and cellar door experiences were identified as a key part of this economic success [tourism]. Of Victoria’s 800 wineries, 600 have cellar doors, each year about 1.5 million winery visits occur. Wine-specific tourism in Victoria has an economic value of more than $1 billion per annum.”   

Tourism Victoria estimates regional tourism has the potential to contribute $7 billion to the state economy by 2020. Wine plays an important part of this regional tourism and if all cellar doors become involved the benefits could be huge.

After all the positive spin, under the heading “Challenges” there is the reality:

“A recent Wine Victoria membership survey revealed that despite the high proportion of Victorian wine companies having a cellar door facility, almost three quarters of survey respondents derived less than 40 per cent of their total wine sales from direct cellar door sales in the 2012-13 financial year. 

“This is a worrying issue as the domestic retail market is consolidating, meaning there are limited routes to market leading to clear profitability issues. This was confirmed by a Wine Victoria survey which found that 40 per cent of respondents did not make a profit in the 2011-12 financial year. Further analysis by Wine Victoria indicates this figure is closer to 90 per cent.

The report continues with sections on the environment, healthy drinking and so on. But we will leave it at this point, as we feel tourism and direct sales leading to profitability are the focus. We end with this recommendation from the report:

“Wine Victoria welcomes the Government’s commitment to develop a wine tourism strategy. We recommend that this strategy is developed in close consultation with the industry and we look forward to working with Tourism Victoria on this task.”  

Leave a Reply

Your email address will not be published. Required fields are marked *