High yields, oversupply and the lingering effects of China’s wine duties have all impacted confidence in the South Australian wine industry, according to a survey of local businesses.
Labour shortages and local economic factors such as inflation and the rising costs of doing business, like increasing freight and energy bills, are other contributors to the decline in confidence.
The 2022 South Australian Wine Industry Snapshot, released this week by Bentleys SA and the South Australian Wine Industry Association (SAWIA), is a survey of 120 of SA businesses and shows confidence at its lowest point in the six years of Snapshot reporting.
Partner at Bentleys SA, Tim Siebert, said wine businesses identified significant and complex headwinds which are now putting pressure on the 2023 vintage.
“A significant number of lost or ceased grape contracts represent a major market change and a considerable risk to the industry,” he said.
“New export markets remain the best option for growth, whilst domestic markets remain very competitive to increase wine sales.”
Inventory levels remain high, particularly for red wine, with current stocks expected to last 2.6 years compared with 1.5 years for white wine, which is considered to be about right.
Chief Executive of SAWIA, Brian Smedley, said businesses need a change of focus after the loss of sales to the China market.
“With business confidence low it is evident that there is a greater need than ever before for investment in marketing and business strategy with a key focus on training programs in eCommerce,” he said.
“Wine businesses have benefited from increased wine sales via online channels.”
The Snapshot identifies the need for three-way financial forecasts at least three years ahead, making informed decisions with a long-term view and reviewing forecasts quarterly.