It’s time. Wine industry growth is happening and is forecast to continue for the next decade.
Obviously, it will have the usual kicks and dips along the way, but the smart operators and investors will see positive returns.
Why you ask?
Our cost bases are fairly stable, wine grape demand is strengthening as are grape prices, we have a stable currency that is in favourable trading range, Australia has rapidly shrinking tariff restrictions with our close trading partners directly North – the Asian region and for the first time in our trading history the tyranny of distance have become other countries (Europe & Americas) problems not ours.
Australians understand Asia so much better than a decade ago, Asian culture has filtered all through our society. There are so many factors that point to stable growth in our wine and agricultural sectors.
So we need to plan and prepare to service the forecast growth in trade -this is the opportunity.
We will run into a shortage of quality wine grapes and experienced growers in the next few years.
Let’s take a look at the McLaren Vale and Adelaide hills regions. Most vineyards that I walk through are underperforming on a number of fronts.
For example – percentage of fruiting cordon, irrigation system integrity & efficiency, pasture management and soil nutrition. On the management front items such as budgeting & cost tracking, cashflow, environmental programs and compliance issues.
The list may seem daunting but to run a profitable enterprise diligence is required. Technology in the vineyard sector has come a long way in recent years and continues to evolve and improve. This is helping to reduce costs, but initial investment is required.
We estimate that our regions can improve cropping levels as well as grape quality by as much 15-20%. Therefore, theoretically we can invest in and improve on our existing vineyard stock without rushing out to start greenfield developments.
Food for thought. Opportunity knocks, time to move.