Wine Industry Restructuring Action Agenda
Oversupply is having a debilitating impact on Australian wine businesses and restructuring the supply base is essential.
The aim of the Wine Industry Restructuring Action Agenda is to facilitate the adjustment process, to bring about more sustainable operating conditions as soon as possible, and to dispel any notion that the industry can trade its way out of its current problem or rely on the government to step in.
The original WRAA statement was released to the wine industry by the Winemakers’ Federation of Australia, Wine Grape Growers’ Australia, the Australian Wine and Brandy Corporation and the Grape and Wine Research and Development Corporation on 10 November 2009.
The main points made in the statement are:
- Structural surpluses of grapes and wine are now so large that they are causing long-term damage to our industry by devaluing the Australian brand, entrenching discounting, undermining profitability, and hampering our ability to pursue the vision and activities set out in the Directions to 2025 industry strategy.
- Coupled with inefficient and/or inappropriate vineyard and wine operations, oversupply is amplifying and exacerbating fundamental problems in the industry, notably our decreasing cost competitiveness. As such it is compromising our ability to adopt new pricing structures and market solutions and adapt to changing market conditions.
- At least 20% of bearing vines in Australia are surplus to requirements, with few long-term prospects. On cost of production alone, at least 17% of vineyard capacity is uneconomic.
- The problems are national – although some regions are more adversely affected – and are not restricted to specific varieties or price points.
- The industry must restructure both to reduce capacity and to change its product mix to focus on sales that earn viable margins. Bailouts are not an option and neither governments nor industry bodies should be expected to provide the answers; tough, informed decisions must be made by individual growers and wineries, from as early as the 2010 vintage.
In December 2010, a follow-up statement was issued.
This second statement reports on progress and outlines the next phase of initiatives designed to assist the industry’s transition to a new structure based around long-term sustainability and market opportunity.
See Wine sector must continue to focus on transition (Dec 2010) for full version of the second statement.
See Wine Industry must confront reality of oversupply (Nov 2009) for full version of the original Statement
Download the original statement (2009) in PDF format
Download the supporting document to the original statement
This paper presents selected explanatory graphs and tables in support of the statement
Download the second statement (2010) in PDF format