By James Atkinson
Australia’s wine producers need to be weaned off their addiction to WET rebates so they can be sufficiently motivated to sell the majority of the wine they produce overseas, says Kingston Estate Wines managing director Bill Moularadellis.
At last week’s Wine Industry Outlook Conference, Moularadellis said every Australian wine producer has a responsibility to sell 60 per cent of what they produce in international markets.
“That’s our share of the heavy lifting. The big elephant in the room… is what policy setting is preventing people from getting out there and selling wine internationally?” he said.
“That is this drug that we are on called rebate. It is an addiction that we must wean ourselves off of, because what it is doing is preventing us from focusing our attention as a collective onto markets that we should be.”
“We do need to get on the methadone program… so we can actually start focusing on where we have to sell this wine,” Moularadellis said.
On the same panel, Accolade Wines general manager – Asia Pacific, Michael East said the country’s wine producers needed to make themselves more relevant to retailers in the domestic market, as reported yesterday on Smart Licensee.
But Moularadellis said focusing on the domestic market is only part of the solution.
“We produce more wine than we can sell in this country. If we don’t set the policy so that 2500 producers have to get on aeroplanes then we will all be condemned to this oversupply because we’re not getting out there to sell wine where we need to,” the Kingston Estate boss said.
85% of all the wine produced in Australia is produced by the top 10 – 15 brands. Surely they are better placed to deal with the ‘overproduction’ issues.
The 2300 small producers in the country, who add to the rich fabric of interesting and handcrafted wines, do not necessarily have the volumes to sell cheap wine + ‘WET’ overseas. If they did manage to sell wine overseas, the price of their wines would definitely not include the equivalent of the WET Tax in their price structure, so I am not quite sure on your rationale.
Do not forget that the WET Tax is a 29% additional tax imposed upon the producer who, in the vast majority of the total 2500 cases in Australia, is a small family-run business. Imagine if an additional 29% tax was imposed on other small family-run businesses in Australia such as butchers, bakers and hairdressers. They would almost certainly need a rebate to survive. Why is it so different with the wine industry?
Yes, and that would be a great way to destroy all your regional competitors in the wine industry.
Better way would be to get the rebate off the NZ wines so the Australian taxpayer is not subsidising the NZ wine industry.
Well said, David!
I think Bill needs to take a Bex and have a good lie down. When he refers to every Australian wine producer, does he mean all those who sell 100% of their production of premium wines, or does he mean those in the warm to hot climate regions who are producing “C” and “D” grade fruit to produce inferior wine that the international market has rejected?
His own industry body (WFA) has admitted that 17% to 20% of vineyard area is superfluous to requirement, and it sure as hell isn’t located in Tasmania, Coonawarra or Margaret River.
Where are Bill’s vineyards?
Steady on gents, this is a free market economy, not a prep school egg and spoon race where everyone gets a prize. That rebate is capped at $500K turnover. So the majority of all the little guys are able to claim the rebate on 100% of their turnover, not so the big players-it’s paltry to the overall scheme of things. What you are asking here is “big guys get out and leave the domestic market for the little players”. Why should they? Who puts in the most dollars for R&D?, Who puts in the most dollars for promotion domestically and oversees. Who puts in the most dollars for industry memberships and support. And who does not-and benefits from riding on the coat tails and complains loudest about removing the WET rebate? To expect the big players to leave the domestic market to make it easier for part timers and try hards to survive is plane wrong, it’s a crutch for the WET rebate addicted, and they need weaning off the drug. Problem is, it has gone on for far too long and a sense of entitlement has evolved that fires the passion of the debate over who has the right to turn off the life support system. As for the NZ situation, that is tied up with a Free Trade Agreement with our KIWI friends and abolishing the rebate will be collateral damage and political ramifications no doubt will ensue.
This is not a happy time, wine is a discretionary spend, the domestic market is saturated, get off shore to sell or wither and die, don’t expect a $500K leg up each year to go on forever.