The latest sorry figures and wan turnaround
promises from Evans and Tate underline the crisis creeping up on the Australian wine industry – profitless
prosperity.

While we’re exporting plenty of plonk, not
many wine companies are making a decent return on the game. The smaller outfits
that have splurged on particularly flashy infrastructure – all those ritzy
cellar doors from Margaret River to the Hunter Valley – are suffering most with no end to the squeeze in sight. On top of
a simple over-supply of grapes at one end, the Woolworths-Coles retail duopoly
is crunching margins at the other end as they steadily take control of the
domestic industry.

If that wasn’t enough, domestic consumption
figures aren’t exactly setting the world on fire despite wine never being
cheaper in real terms and prices likely to at least stay steady and quite
possibly fall further.

And it seems even the biggest are hurting. One
hears hints that Foster’s is struggling to make good Trevor O’Hoy’s promises
about the Southcorp takeover with the cost-cutting pressures spilling over into
the beer business everywhere from selling overseas breweries to cutting back on
paper clips and maintenance at its massive Yatala operation.

With the retail duopoly out to take a greater
share of the nice profit margins enjoyed by Australia’s
beer duopoly, the costly wine expansions aren’t bringing many smiles.

It all looks like better stuff to drink
than invest in.

Peter Fray

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