Wine manufacturing declines

IBISWorld’s latest report on wine manufacturing in Australia has revealed that the industry is in the middle of a downturn.

The wine producing industry has been faced by the high Aussie dollar, rising competition from new low-cost wine producers, and volatile economies in key export markets.

The report stated that the industry revenue will decrease at an annualised 1.6% over the five years through 2012-13, with revenue expected to reach $7.09 billion, the PR Web reports.

IBISWorld industry analyst Ryan Lin said “a vast oversupply of wine and wine grapes, has forced down prices, squeezing margins and forcing many producers out of business”.

At the same time, the wine manufacturers are losing bargaining power against supermarket giants and consumer preferences are changing.

Lin stated that the chronic oversupply of wine in the market has been pushing producers to address the problem by writing off assets, closing down wineries and destroying vines.

He went on to say that “moderate growth is forecast for 2013-14 as the strong dollar and sluggish global economy takes a toll on exports, while weak price growth constrains domestic revenue performance and profitability.”

According to the report, producers will aim to shift their focus to premium wines in the two to three years leading up to end of 2017-18 and Asian markets will play an increasingly important role in the industry’s future.

Winemakers will likely work on producing single vineyard wines, while focusing more on cellar door and online sales.

The four largest Australian wine producers are Accolade Wines, Treasury Wine Estates, Premium Wine Brands and Casella Wines. 

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