All gloom and doom

The two majors, along with Lion Nathan and Australian Vintage, report significant decreases in winery assets. Lion Nathan said its wine operations, which were much smaller than the beer operations, had profitability affected by the economic environment in the U.S., Britain and Australia. For the six months to 31 March 2009 the wine division’s EBIT fell 55.7 percent to AUD 3.5 million.

Australian Vintage, whose brands include McGuigan, Miranda, Tempus Two and Yaldara, reported a half-year loss of AUD 127.8 million and its shares have slumped to AUD 0.17 each, representing a drop of 87 percent from 2007.

Retailers are responding to the wine glut in a fashion: they slash prices. Wine at AUD 1.99 per bottle – cheaper than some bottled waters – has been offered by major retailer Dan Murphy as a result of the oversupply crisis for Aussie wines.

The Winemakers Federation of Australia’s director Mitchell Taylor, summing up a recent winemakers’ meeting, said that about 20 percent of vines needed to be phased out in the next three years in order to address the imbalance.

There is some concern that as growers walk away from or neglect properties disease could spread to viable remaining vineyards.