18 Dec 2013

Record harvest for wine industry

7:34 am on 18 December 2013

The wine industry is boasting a turnaround in profit for its record 2013 harvest, as it recovers from unusually low supply the previous year.

Deloitte's Vintage 2013 report tracks the results of wineries making up nearly half of the industry's export sales revenue for the year.

It shows the $2 billion wine industry harvested a record 345,000 tonnes of grapes and improved its profitability. But it was the large wineries that made the most money, while many operators turning over less than $5 million struggled to make a profit.

Deloitte associate director Tim Burnside said that trend could lead to more mergers and acquisitions within the industry.

However, the industry had learned from previous years' gluts and lack of supply, and was better placed to ensure there were markets for the wine it produces.

"What we've seen through this year's survey is increased profitability, which is a trend that we've seen for two or three years now, which is extremely positive after the tough years that wineries went through in 2008 and 2009," Mr Burnside said.

"That has come about primarily through a lower harvest in vintage 2012, which has meant that some much-needed demand has come back into the market through lower supply."

As well, wineries operated on lower margins through the tough times and that meant they watched their costs. As a result, they were now better placed to deal with an possible glut and were more profitable than in the past.

Next year's harvest was also looking positive, with the optimism of recent years expected to continue, Mr Burnside said.

"But my understanding is that the harvest could be larger again than the vintage 2013 harvest, which again comes back to managing that supply and demand balance and, I guess, ensuring that there are markets for the wine that's produced to prevent the glut that we've seen in the past."