| Prices of the Australian wines are forecast to be even lower during the next five years from existing low levels, reports ACN Newswire, Australia.
Although there is a rising sense of cautious optimism in the industry for the first time in three years of glut, there's been a reminder from the Federal Government's prestigious commodity forecaster, ABARE (The Australian Bureau of Agricultural and Resource Economics) that the wine industry needs to cut costs further and become more efficient if it wants to hold its world market position over the next five years.
A recent edition of The Economist magazine had a feature on the Chilean and Argentinean wine industries and their differing approaches to the same segments Australia operates in. They are both planning more investment and production in the same price segments in the huge UK and US markets where Australia is present. This is going to put more pressure on the pricing of Australian wines.
Wine industry has been beset with problems across a broad front, with huge wine and grape surpluses, unfavourable exchange rates, big retailers squeezing producers, increased production costs and overseas competition and large debts.
Glut of grapes and wine in may regions including North and South America hasn't helped the matter either. The UK is the biggest market for Australian wine and the US is the second biggest, still growing fairly quickly. The UK glut has hit the Hardy brands of Nottage Hill and Banrock Station while US buyers have trimmed purchases.
Driving the UK glut is the expansion in retailer private label wines purchased in Australia from struggling local wine producers (or grape growers and turned into cheap cleanskins to be re-labelled in the UK ). Tesco , Britain 's biggest retailer has been a leading power in the expansion of this sector.
Quite often the wines bought are so similar to the popular brands from Hardy, Orlando (Jacob's Creek), Southcorp/Fosters, that it is almost impossible to tell the difference except for the much lower price point.
Meanwhile, prices of wine industry shares have been falling. The losses have not been confined only to the smaller companies, whose share prices are still down by anywhere from 60 per cent and 95 per cent. Even big-leaguer McGuigan Simeon lost 70%, plunging into losses.
Read the complete account in http://www.acnnewswire.net |
