Contact: Melinda Loew
Deloitte
Media & Communications Manager
+61 2 9322 7146

Contact: Nick Stevens
Deloitte
Leader, Deloitte Wine Industry Survey
0410 045 281

Profitability for wineries with less than $1 million of revenue has improved significantly in the last year survey according to the Deloitte annual financial benchmarking survey of the Australian wine industry: Vintage 2005.

The survey examines the financial performance of wineries located across Australia for the 2005 financial year, and provides the wine industry with data upon which to benchmark results.

According to Deloitte Partner and leader of the Deloitte Wine Industry Group, Mr Stephen Harvey, this improvement for smaller wineries appears to be driven by an increase in other revenue, which this year includes the Wine Equalisation Tax Commonwealth Producer rebate (‘WET rebate’).

"Tax relief is particularly important for small wineries with less than $1 million of revenue as generally they have higher grape costs, wine costs, overhead cost per litre and packaging costs than larger wineries.

"Fierce competition, excess wine production and greater retail consolidation are placing extreme margin pressure on all wineries and the WET rebate is a welcome relief to Australia’s small wineries.

"The increase in this rebate for 2006 should improve profitability for small and medium wineries in coming years."

Mr Harvey said this year the survey has been dissected to include data on the best performing wineries in each category and the data clearly demonstrated the better financial performance of the top quartile of performers in each category.

"This indicates that there are significant rewards for wineries which effectively manage their business and match their production volumes to consumer demand."

Stephen Strachan, Chief Executive Officer of the Winemakers’ Federation of Australia, said the survey results are encouraging but are still indicative of the difficult trading conditions.

"It is pleasing that the survey results have confirmed that the Federal Government’s WET rebate of up to $290,000 has relieved some of the financial pressures experienced by smaller wineries for the 2005 financial year end.

"While increasing the rebate up to $500,000 will provide further sustainability to winery profits, this survey shows continued pressures on margins and high inventory levels," Mr Strachan said