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5/11/2014

Tahbilk owner toasts the weakening Aussie dollar

Alister Purbrick, owner of Victorian winery Tahbilk, has described the idea of the Australian Dollar falling below US85c as “sensational”.

The fourth-generation Purbrick to run the business is rubbing his hands at the prospect of fatter margins as he exports his wines to Canada, the US, Britain and Sweden, reports The Australian.

Like any exporter, the high local dollar has hurt margins, with retailers such as Dan Murphy’s and First Choice Liquor able to bring in cheaper imported wine and undercut local winemakers.

And if that’s not bad enough, competition for shelf space for branded wines such as Tahbilk is made all the harder as private label wines elbow their way into stores.

“As far as the Australian market is concerned, it’s still as tough as it has been for four or five years,” he told The Australian.

“There is still a lot of competition in the marketplace for brands and the unbranded (private label) issue is now not just in the big chains but the banner groups, independent retailers, have their own branded product as well.’’

Woolworths, Coles and German discounter Aldi have a wide selection of private label wines, with many of the unbranded offerings of lower quality at heavily discounted prices.

According to reports in The Australian, retailers typically make a better margin on private label wines and will devote more shelf space to their home brands, putting pressure on proprietary branded products like Tahbilk.

“And of course imports continue to grow in marketshare, admittedly a lot of it is Marlborough Sauvignon Blanc, but having said that imports across the board now have a significant chunk of the market, and that takes shelf space from brands,” Purbrick said.

Tahbilk has managed to navigate its way through the tough trading environment with its latest financial report showing full-year net profit rose to $514,000 in 2014, from $212,376 in the previous year. Sales were flat at $10.6 million.

Much of the profit increase was helped by the Purbrick family stripping $2.5m in costs out of the business, which mainly came from redundancies and changes to its processes, according to The Australian.

The company also had an earnings cushion thanks to its popular members wine club, which now accounts for 65 per cent of sales.

Canada remained Tahbilk’s biggest export market, and the weakening dollar has helped put some wind back in its sales.

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