News
Issue No. 12 - August/September 2003
Tighter Market Crushes Small Winemakers
Wineries with an annual revenue between $10 million and $20 million have emerged as the most profitable of the Australian wine sector, according to a major industry survey.
The benchmarking survey, conducted by Deloitte Touche Tohmatsu and the Winemakers Federation of Australia, found that wineries at the smallest end of the sector recorded trading losses, while profitability peaked for wineries achieving between $10 million and $20 million in annual revenue.
Wineries with sales above $20 million recorded a decline in profitability against last year’s survey, as they fought for a larger share of domestic and export markets.
The survey, Winning Strategies in the Wine Industry – Benchmarking for Success, examined the financial performance of wineries across Australia in 2002.
“Competition is growing as more wineries strive to establish themselves and the bigger listed companies step up their product discounting,” says Deloitte Touche Tohmatsu Partner, Stephen Harvey.
“Unfortunately the survey shows that many small wineries, with an annual revenue of less than $1 million a year, are struggling to get ahead.
“In this sector, many wineries recorded trading losses, with overall earnings before tax or the sector being negative.”
Surveyed wineries in the less than $1 million revenue category derived net case sales of 55 % of revenue, and bulk wine of 37.2 percent of revenue. This mix of bulk wine may have reduced overa...
