July 05: Still facing challenges of drought, bushfires, smoke and Covid-19, Wine Australia has incorporated a Vision-2050 document in conjunction with Australian Grape and Wine, based on which a Strategic Plan for 5 years has now been released that includes spending A$200 million in R & D, marketing and regulation, writes Subhash Arora who suggests that similar planning is required at the national level in India if we ever hope to make a mark in the world market
When Tony Battaglene, CEO of Australian Grape & Wine announced Vision 2050 report last month, he said that with the document created in conjunction with Wine Australia, they looked beyond the immediate and significant challenges of bushfires, smoke and COVID-19 and set a range of ambitious targets to strive for by 2050. These included making it grow to a A$15 billion industry with a net-zero emissions target, and become the number one valued product in each key market where they operated in.
Strategic Plan 2020-25
The Strategic Plan 2020-25 is a part of Vision 2050 Report released a couple of weeks ago and identified 5 priorities: Market Australian wine; Protect the reputation of Australian wine; Enhance grape and wine excellence; Grow sustainable environments; and Build business sustainability, excellence and leadership. To that extent, $200 million have been set aside, out of which A$65 million are for the first year, according to a Report by Food and Drinks Business
This money comes from levies paid by the industry and matching R&D funding from the federal government. Unfortunately, in India there has been no law or policy to deduct this money from bottle sales and fund this money. So no plan has ever taken off. After years of toiling and bickering even on the name, Indian Grape Processing Board was formed with lofty ideals but with no statutory contribution by the industry and subsequent zero contribution, the coffers were soon empty and the Board is now defunct with no initiative or inclination from the government to revive the promotion of ‘Wines of India’ initiative. (In India, wine is generally equated to spirits and is subject to violent opposition by anti-alcohol lobby)
Wine Australia CEO Andreas Clark says, “We have adapted and changed the way we work during Covid so that we can continue to provide our key services over the next twelve months. We have reduced our operational costs, moved to more cost-effective delivery of activities and are drawing down on our reserves to maximise our investments in the sector’s priorities.”
Vision 2050 aims to increase market growth at 3% CAG, achieving around 250% in value to become a $15 billion industry from the current A$6.3 billion, with a net-zero emissions target; and exploiting their export success to become the top valued product in each key market they operate in. Australian wines had taken a big hit over a decade ago and was perceived as producing cheap wines, in countries like the US. Having changed that perception to quite an extent, the Vision will continue to improve the perception of the quality of Australia wine.
During the global meltdown in 2008-2009 Australia had decided to increase their presence in China in a big way and starting from a low base, were very successful thanks to the concerted planning to focus on the Chinese market and became No.1 exporters to China, beating the leader, France. With the current change in the wind direction, they are gearing up for any eventuality; the producers are working in unison with Wine Australia and the Australian Grape and Wine to focus on other markets as well, while trying to maintain the leadership position in China.
“Our targets for 2050 are ambitious, but Vision 2050 provides the road map to achieve them, through innovation, hard work and a great product. We can grow value at all price points across the value chain and drive prosperity in our sector and across regional Australia,” says Battaglene.
Australian wine industry
Wine grapes are grown in every Australian state. South Australia, New South Wales and Victoria are the largest wine grape producers. In 2018 there were estimated 6,251 wine grape growers with a vineyard surface area of 146,128 hA generating a gross sales value of A$1.11 billion. There were an estimated 2,468 wineries with total production of 1.29 billion litres with a gross value of A$6.3 billion. Australian wine is export oriented with approximately 60% exported to China, US, UK, Canada and Hong Kong etc. It is the sixth largest producer and fifth largest exporter of wine in the world.
The statistics show the potential of wine making and its impact on the economy in India with proper direction and support from the government and its agencies some of which need to be still introduced. It is a long term process requiring a 50-year plan but good results are inevitable. It will also help tourism grow. The leading producer Sula Vineyards already welcomes 400,000 visitors to its winery in Nashik every year, adding significantly to its top and bottom line and popularising wine.
Of course, the number of wine tourists is much larger in Australia which saw an estimated 8.3 million visits to the wineries from both domestic and international travellers last year. These travellers spent A$9.3 billion in Australia during their trip. Domestic travellers constituted 88% of the number but international visitors contributed half of the spend in Australia.
Australia’s wine grape growers, winemakers and wine tourism operators contributed A$45.5 billion to the Australian economy in 2018-19 and aim to contribute more than double at A$100 billion in 2050. The industry directly employs 69,000 people and indirectly 163,790.
One cannot doubt the firm resolve and the positive results of Strategic Plan 2020-25 and the Vision 2050. Are there any lessons for the Indian wine industry? Plenty, if there were a proper coordination between the industry and government, which is rather unlikely in an atmosphere of mutual distrust and after losing out a golden opportunity earlier. It is anyone’s guess where the Indian wine industry is heading with everyone trying to remain or become number one, but looking inwards-like the frog in a well.
Indage Vintners, the real pioneers of the Indian wine industry had magnanimous plans of globalisation of Indian wine industry and take it to unprecedented heights 20 years ago, but the melt-down and poor execution (including a couple of aborted ventures each in Australia and UK) made their plans go awry and they went bust. The industry cannot afford any more such mishaps, where every producer is working to stay afloat without much help or planning from the government-a dire need of working together and following the Australian example of meticulous planning and execution notwithstanding.
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