10. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Background
The first grape vines arrived in Australia with the First Fleet in 1788
Export growth occurred in the 1990’s
Dominated by a handful of varieties (Chardonnay, Shiraz, Cabernet
Sauvignon & Merlot)
World's fourth largest exporter of wine with approximately 750 million litres
a year to the international export market with only about 40% of production
consumed domestically
11. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – 2025 Vision
• The vision is that by the Year 2025 the Australian wine industry will achieve $4.5 billion in annual
sales by being the world's most influential and profitable supplier of branded wines, pioneering
wine as a universal first choice lifestyle beverage
• Export growth is expected to occur in three phases:
Volume growth (1996-2002) during which the rapid vineyard expansion of recent
years will overcome product shortages thereby enabling expansion in existing
and penetration of new markets.
Value growth (2002-2015) which will place increased emphasis on building brand
strength, sector share and margins.
Pre-eminence (2015-2025) when Australia will have established brand leadership
in specific market segments.
• Grape production will need to rise from the existing peak of around 850,000 tonnes (1996) to
1,650,000 tonnes (2025)
14. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Exports
15. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Domestic
Consumption
16. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Winery Balance
17. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Winery Balance
Private Equity
Private Equity
$190 M write down
$30M loss 2011/12
19. 2014 AMS 40th Anniversary Industry Conference proudly presented by
The Australian Wine Industry – Summary
Since 2007 the profitability of the Australian wine industry has declined significantly
This decline in profitability has been driven by a ‘perfect storm’ that has intensified by;
Export returns have declined sharply
Domestic margins have been squeezed by retailers
The decline in export demand has created an
‘oversupply/under-demand’ of grapes and wine in certain quality
segments
Basically the Australian Wine Industry is positioned in the ‘mature’ phase of the industry life-cycle and possibly
entering the ‘decline’ phase!
The ‘Optimism’ of the Wine Australia’s 2025 Strategy drove huge investment and growth in the Australian
Wine Industry……..and hence resulted in reaching oversupply…….a position that has cause significant brand
damage!
23. The Riverland
•Soldier Settlement
•2hrs NE of Adelaide
•400,000t of grape/year (82% growers grapes)
•22% of the national crush
•62% of SA crush
•300mm rain/year
•20,739Ha (Barossa 11,168Ha)
•Reputation for bulk wine
27. 2014 AMS 40th Anniversary Industry Conference proudly presented by
Ricca Terra Farms
Established in 2003 by Ashley & Holly Ratcliff (200t)
Good profits in early years…..no need to think strategic!
Growth over 11 years to 1,200 tonnes
Past 5 years has seen profits eroded significantly
A strategy of doing nothing would have be disastrous
……..our approach was to make change…..think how we could
create s strong competitive advantage!!
30. ‘Discover the critical factors in a situation and design
ways of coordinating and focusing actions to deal with
those factors’
‘Good strategy works by focusing energy and resources
on one, or a very few, pivotal objectives whose
accomplishments will lead to a cascade of favourable
outcomes’
2014 AMS 40th Anniversary Industry Conference proudly presented by
The Core of Strategy (Good Strategy/Bad Strategy)
31. Discover the critical factors in a situation?
Ricca Terra Farms was growing grapes that were;
1. easily substituted by customers
2. not valued by customers
3. in abundant supply within the industry
Ricca Terra Farms was growing a ‘Commodity’ crop……if Ricca Terra Farms did
not change it would fail.
2014 AMS 40th Anniversary Industry Conference proudly presented by
The Core of Strategy (Good Strategy/Bad Strategy)
32. Producing at a lower cost than competitors, or if can deliver more
perceived value than competitors, or a mix of the two, then you
have an competitive advantage
Extending a competitive advantage requires looking away from
products, buyers and competitors and looking instead at the
special skills and resources that underlies a competitive advantage.
In other words ‘build on your strengths’
2014 AMS 40th Anniversary Industry Conference proudly presented by
Competitive Advantage
51. Discover the critical factors in a situation?
Ricca Terra Farms was growing grapes that were;
1. easily substituted by customers – No longer the case
2. not valued by customers – Highly valued
3. in abundant supply within the industry – Very limited supply
Ricca Terra Farms was growing a ‘Commodity’ crop……if Ricca Terra Farms did
not change it would fail.
2014 AMS 40th Anniversary Industry Conference proudly presented by
The Core of Strategy (Good Strategy/Bad Strategy)
52. Producing at a lower cost than competitors, (yes) or if can deliver
more perceived value than competitors (yes), or a mix of the two,
then you have an competitive advantage’
Extending a competitive advantage requires looking away from
products, buyers and competitors and looking instead at the
special skills and resources that underlies a competitive advantage.
In other words ‘build on your strengths’ (we are quickly building a
reputation of growers who grow high quality grapes and help
promote customer’s wine – difficult to replicate by competitors)
2014 AMS 40th Anniversary Industry Conference proudly presented by
Competitive Advantage
55. 2014 AMS 40th Anniversary Industry Conference proudly presented by
Final Comments/Thoughts
Identify the critical factors influencing your business
Finding your competitive advantage is critical
Be honest about your business & industry’s future
Work out what you passion is, what you can be the best at and
make sure the two can drive resource engine
Build a brand or otherwise be a commodity producer!
Keep things simple!
56. 2014 AMS 40th Anniversary Industry Conference proudly presented by
Thanks
Australia Macadamia Society
The Yalumba Wine Company
Oxford Landing Estate
