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‘There are good reasons to be positive’

Some aspects of recent industry performances make it easy to take a gloomy view of prospects in the Australian wine sector, but there are positives as well. In fact, there are some positives that suggest the turnaround we have been waiting for is beginning. That is the opinion of Lawrie Stanford, manager, information and analysis, Australian Wine and Brandy Corporation. He said the export outcomes in the 2004–05 financial year were the perfect example of a good-news bad-news story. “They also carry the signs of a possible turnaround. “It is possible to make the case for better times being on the way,” said Stanford. He said the corporation’s June 2005 Wine Export Approval Report indicated that the average price per litre fell by 5.1%. “Clearly bad news, particularly since this was the fourth year in succession of declining prices.” A small positive was that the decline in 2004–05 was less than the year before – “has the trend started to reverse?” “There are reasons to believe it could,” he said in an article in Wine Australia magazine (the AWBC’s official publication). “In the first instance, Australia has dealt with new plantings that have driven the oversupply problem and assuming average yields in the immediate future, things should start turning around from this point as the harvest sizes grow modestly and the sector has the opportunity to draw down excess stocks. “Moreover, Californian oversupply seems to have been resolved and we hear US consumers are moving back up the price point scale,” said Stanford. The turnaround in the downward slide of the average dollar-per-litre value for exports was related to another positive. This was the encouraging turnaround in the fortunes of ‘middle priced’ wines (the A$5.00 to A$7.49 per litre price bracket). After two successive years of decline in the volumes sold into this important price bracket — there was 18% growth in 2004–05. “This turnaround is very positive because it heralds better opportunities for ‘cooler climate’ fruit that currently dominates the sector’s oversupply. We’d like to see this growth continue. “On the other side of the coin, a negative is that volumes sold into the highest price points continued to decline – something that the new Wine Brand Australia campaign is aiming to address.” Australian wine shipments reached 661 million litres in 2004–05, up a healthy 14% on the previous year, a record volume, and definitely a plus. The value of shipments reached A$2.748 billion, and while fractionally short of the record set at year-end May 2005 (A$2.751 billion), it was still up by 8% on 2003–04. In a positive sense, the incremental volume of wine exported this year was more than the previous year. It grew some 80 million litres to exceed last year’s increment of 73 million litres. Good news! “If you are looking for bad news though, the 2004–05 increment was well short of the stand-out year for incremental growth, in 2002–03, when the growth was 92million litres. “Similarly, values grew by A$203 million in 2004–05, more than the A$159 million growth the year before but less than the A$416 million in 2002–03,” he said.

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