The Winemakers Federation of Australia (WFA) is proposing a $1.5 million food and wine centre to be built in Shanghai as part of a seven-point plan to reform the Australian wine industry. The centre would raise awareness of Australian wines in China, which is the fastest-growing wine market in the world, and give consumers access to premium food and wine tastings and educational materials and courses.
On Wednesday the peak body industry released the “WFA Actions” detailing a series of steps that the industry should take in the midst of the struggles it has been dealing with.
In a letter to the industry WFA President Tony D’Aloisio said the wine industry has been hit by a “perfect storm” which has impacted its profitability and reduced asset values.
“Unless we restore industry profitability and lift asset values to acceptable levels, the industry will not make the most of the opportunities it has and there could be continued adverse impacts on jobs and growth in regional Australia,” Mr. D’Aloisio said.
Speaking at the plan’s launch Mr. D’Aloisio said the industry has been doing it hard in recent years, summarizing a “triple whammy” of factors that have affected both the supply and demand.
First is the exchange rate which had a profound impact on exports. WFA’s 2007 records showed that exports by value were at 60% and by 2012 had dropped to 43%, the exchange rate being a crucial factor in the decrease.
Next is the agricultural risk on both the supply and demand side. When supply exceeds demand adjustments are difficult and the surplus in supply increases the buyer and supermarkets’ power.
The third factor is the increased manufacturing costs that manufacturers are not able to absorb with increased prices. Mr. D’Aloisio says there has definitely been a price deflation at the retail end.
With the aim of repositioning Australian wine for growth and sustainable profit, the WFA released 33 actions grouped under 7 initiatives all aimed at delivering positive outcomes for the wine industry.
Aside from the food and wine centre in Shanghai, the plan also includes other marketing initiatives such as investment for stronger presence in trade shows, partnerships with Tourism Australia and a social media-based platform to promote Australian wine.
The Plan also calls on the Australian Government to double the level of funding to Export Market Development Grants and reform the eligibility criteria for receiving grants. WFA says a lot of the most innovative wine leaders in the country are being excluded from receiving grants based on present arrangements and this creates an artificial ceiling on the impact of the program.
WFA also plans to support national retailers in the development of a “Buy Australian First” campaign to regain market share and re-engage Australian consumers.
Read the entire seven-point plan here.
“The proposed Actions cover the most pressing areas where we believe the greatest difference can be made,” Mr D’Aloisio said.
“This is the most significant body of work the industry has undertaken in many years and was made possible by the funding support of the Wolf Blass Foundation and the Grape and Wine Research and Development Corporation.”
The WFA is now seeking industry and stakeholder feedback on the WFA Actions, as well as the Expert Review’s analysis which are available for download on their website.
The consultation period will run until Friday 18 October and include public forums in seven regional areas.