Australia’s wine industry is in big trouble

Did you know that there are 2,600 wineries in Australia? Yes? OK, well, did you know that after the coronavirus pandemic (if it ever ends) there will probably be about 1,820? That’s per Tony Battaglene, chief executive of Australian Grape and Wine, who told ABC:

“We’ve got 2,600 wineries at the moment and 30 per cent of that we could lose. That’s anything up to 700 or 800 businesses, it’s that serious. I’m very worried.”

Wineries that rely on guided tours and in-house customers are the ones he means; also those that sell a lot to restaurants. In late March, for example, South Australia prohibited all cellar doors from serving the public. Only recently has that directive been relaxed, permitting takeaway orders.

This has provided little relief, however. Ditto for the stimulus packages offered by Canberra.

“We are very much a wine business that focuses on selling wine directly to our customers and the cellar door is our lifeblood, that is where they first meet us,” said Mary Hamilton, CEO of Hugh Hamilton Wines. “So you can imagine that has a really big impact on a business when you cut that off dead.”

Grape growers are also feeling the squeeze.

“Grape growers may not have received their final payments for the year, so when winemakers are in trouble, if they go under, then the grape growers will also come under stress,” Battaglene explained. “So it goes right through the supply chain.”

It’s the entire industry, really. Take distributors. These companies exist as a middleman between wineries and the service industry—restaurants, hotels, cafes, pubs, etc. Currently there is no need at all for distributors, and Battaglene questions whether they will ever completely bounce back.

“It could be the end of the distribution network as we know it in this country,” he said, adding:

“I think there are going to be some dramatic changes that come out of this crisis. Obviously the growth of online and direct sales is a big one… It may well be people need to take things into their own hands, so we’re going to see a lot of producers who decide they need to control their route to market.”

Elsewhere, Battaglene emphasised cash flow as the key to keeping the industry afloat. This means making timely payments: from winemakers to grape growers, and then from retailers, restaurants, and distributors to winemakers.

“In times like this,” he told The Shout, “meeting our contractual and moral obligation to pay on time and in full is critical. Businesses do not have the option to make a unilateral decision to introduce longer payment terms. If you are having cash flow issues, pick up the phone and negotiate.”

“Every link in the supply chain relies on the others to be profitable and sustainable. If payments aren’t made at points along the chain, we risk not only the futures of individual businesses and their employees, but the viability of the sector as a whole.”

Visit the Australian Grape and Wine website for more info about the Aussie wine sector, or get a hold of them via email or phone. Looks like they have separate numbers for Adelaide and Canberra. Perhaps it’s time for them to buy an 1800 number, which allows Australians to call toll free from anywhere in the country.