The South Australian wine snapshot reveals a general drop in business confidence, but also shows plans for vineyard expansion.
The third annual South Australian Wine Industry Snapshot – a collaboration between Bentleys SA and the South Australian Wine Industry Association (SAWIA) – has revealed that confidence among local wine businesses has declined as energy costs, and water access and security, continue to challenge profitability.
On a more positive note, winemakers are taking advantage of free trade agreements in Asian markets to explore export opportunities, and participants indicated development of an additional 850 hectares of vineyard.
“The snapshot aims to provide South Australian wine businesses with insights to inform decision making,” said Mr Tim Siebert, Partner, Bentleys SA.
“We explore the challenges, risks and opportunities, with the aspiration to contribute to the long-term sustainability of the wine industry in South Australia,” said Mr Brian Smedley, Chief Executive, SAWIA.
View or download the 2019 SA Wine Industry Snapshot here
One hundred wine businesses participated in this year’s study, many of which are mature, private companies that grow their own grapes for wine making purposes.
Despite increased global demand for wine, business confidence among wine businesses has declined in contrast to the past two years.
Asian export markets, particularly China, continue to play an increasingly important role, as winemakers take advantage of free trade agreements and the value of the Australian dollar to explore new markets.
Notwithstanding, sustained profitability continues to be a significant concern for many wine businesses.
“Understanding and managing the profitable parts of a business and the controllable expenses is key to success when value can be influenced by vintage,” said Mr Siebert.
Energy costs, along with water access and security, continue to be the most negative environmental influences for wine businesses to manage.
Despite a high-quality vintage, the unfavourable weather conditions resulted in reduced production in some regions, also contributing to a loss of confidence.
Many participating wine businesses plan to redevelop and increase the size of their vineyards over the coming five years. Participants indicate development of an additional 850 hectares, with their primary motivations being addressing disease issues and improving varietal mix.
Despite this planned expansion, no additional water consumption is projected, indicating increased focus on water efficiency.
“The wine industry is complex, and it can be difficult to find time to devote to improving business operations, never mind finding the information required to compare and improve performance,” said Mr Siebert.
“We hope this report makes it easier for wine businesses to compare their operations to the wider industry,” said Mr Siebert.
“It is an exciting time for the South Australian wine industry – one which demands innovation, agility, and improved practices to remain competitive and sustainable,” said Mr Smedley.
“We thank the wine businesses that participated in this study, and we encourage ongoing support as we endeavor to inform, celebrate and strengthen the wine industry of South Australia,” said Mr Smedley.
For assistance with overcoming environmental challenges and improving business profitability, contact your local Bentleys advisor today.