14 July 2008 - Volatile market conditions during the 2007 vintage and a relatively strong Australian dollar resulted in Australian wineries facing difficult times, according to the 2008 Annual Financial Wine Benchmarking Survey Report, released today by Deloitte and the Winemakers’ Federation of Australia.

The study examines the financial performance of wineries located across Australia for the 2007 financial year, and is based on individual financial results and information provided by wineries to Deloitte.

Deloitte Partner and leader of the Deloitte Wine Industry Group, Mr Stephen Harvey said, the low yielding 2007 vintage placed pressure on the industry due to the expected rise in overhead costs per litre produced that were associated with the low yielding vintage.

“During 2007, wineries experienced volatile market conditions, due mainly to climatic conditions which resulted in lower levels of supply. However, improved weather conditions in early 2008 increased production to a higher level for the industry overall,” Mr Harvey said.

“Wineries with revenues greater than $20m responded well to 2007 market conditions and recorded earnings just below 20% of revenue, while wineries with revenues less than $1m continued to record low earnings before tax. However, the small wineries reported gross margin increases of almost 20% which was a substantial improvement on the previous year.”

Mr Stephen Strachan, Chief Executive of the Winemakers’ Federation of Australia, said financial performance activities such as the Deloitte survey are integral to creating a sustainable future for our industry.

“Many wineries, both small and large, have benefitted from the individual business advice provided by Deloitte in response to financial data submitted,” Mr Strachan said.

“In an increasingly competitive domestic and international market environment, such exercises are invaluable for demonstrating paths to greater profitability and business growth.”

Mr Stephen Harvey
Leader, Deloitte Wine Industry Group
Partner, Assurance & Advisory
Mob: 0414 407 204
Tel: + 61 (0) 8 8407 7204

Penny Boothman
Director, Communications, Winemakers’ Federation of Australia
Mob: 0419 833 107
Tel: + 61 (0) 8 8222 9255