SA wine industry continues to be challenged by significant and complex headwinds

Image SAWIA

Bentleys SA and the South Australian Wine Industry Association (SAWIA) have released the 2022 South Australian Wine Industry Snapshot, a survey of 120 of the state’s wine businesses of all sizes.

Analysis of survey results shows that business confidence is at its lowest point in the six years of snapshot reporting.

“Wine businesses identified significant and complex headwinds, including high yields and subsequent oversupply, partly due to the exceptional 2021 vintage; putting pressure on the 2022 and now 2023 vintage where lack of facilities and storage are both concerns,” Tim Siebert, partner at Bentleys SA said.

“A significant number of lost or ceased grape contracts represent a major market change and a considerable risk to the industry. We heard stories of grapes left on the vine this year and indeed fear that the issue is only just becoming clear.

“Understanding these negative issues provide businesses with opportunities to see their exposure points, look at key risks, plan and evolve. Great insight can be established by focusing on innovation and operational efficiency.”

Other core contributors to the decline in business confidence include the rising costs of business and inflation, such as freight and energy, combined with labour shortages, and an over saturated domestic market due to the lingering effects from the punitive China wine duties have continued to contribute to a surplus of red wine, some of which has been placed in other markets, some is simply unsold.

“New export markets remain the best option for growth, whilst domestic markets remain very competitive to increase wine sales,” said Siebert.

A key challenge for the South Australian wine industry is attracting suitable or experienced staff to work in the industry.

“Labour availability remains challenging in almost all occupations in the wine value chain. Location and housing are also limiting issues, but to attract and retain labour, businesses will need to assess their attractiveness as an employer and ensure they remain alert to the competition and changing market conditions,” said Brian Smedley, Chief Executive of SAWIA.

“Improving profitability while maintaining market share is a key issue for many wine businesses. With the loss of sales to the China market, a change in focus is required to look for sustainable growth in wine markets as part of an appropriate geographic expansion strategy using existing or new markets. In addition, working collaboratively with industry bodies and government in targeted trade activities is beneficial.

“South Australian wine businesses are actively looking for new markets and new channels to distribute their wine which is a world-class product. Wine businesses have benefitted from increased wine sales via online channels.

“However, wine businesses will need to provide more timely and personalised experience tailored to the online world which is unlike other marketing channels.

“With business confidence low, it is evident that there is a greater need than ever before for investment in marketing and business strategy, with a key focus on training programs in eCommerce. Undertaking education and training suitable to your business needs will be invaluable to your business sustainability.”

 

Are you a Daily Wine News subscriber? If not, click here to join our mailing list. It’s free!