Commercial Vineyards Are Becoming More Viable | Chifley Securities

It has been over 40 years since a smiling Len Evans led the revolution which saw wine drinking become fashionable for Australians and exports, mainly to the US and UK, surge in wine drinking. The glory days came to an abrupt end around a decade ago as corporate takeovers of family run vineyards and thousands of hobby-farm sized entrants combined to create a slew of wine on the local and export markets.

Treasury Estate’s 2013 decision to dump 35 million litres of wine it couldn’t sell in the US highlighted the problem and it was the large producers across the Murray-Darling basin who took on the brunt.

Following last year’s vintage, Murray Valley Wine Grape Growers’ Mark McKenzie summed up the state of the industry, telling the media inland producers were facing a full blown crisis due to oversupply and falling prices of wine.

Looking ahead, Australian Grape and Wine Authority Chair Brian Walsh announced a 5 year industry plan saying, “We believe our two strategic priorities should be to increase demand and the premium paid for Australian wine and to increase the sector’s competitiveness.”

For vineyards close to capital cities, another path to profitability has been found, not in the major retailing chains but with the close association between wine and a relaxing weekend spent with friends. Small to mid-sized wineries are taking advantage of their scenic settings to heavily promote on-site entertainment, including weddings and wine tours, cashing in on the day trip market’s thirst for tastings and cellar door sales.

For picturesque wineries close to their market, a day amongst the vines appears to be the key to a bountiful future but for the large inland producers, the impact of the great wine glut looks set to linger for a while yet. Consider your options, and think outside the box if you own or are considering purchasing a commercial vineyard.