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Plant more grapes, growers told
4 Dec 2003
Winegrape growers have warned that vineyard expansion has halted due to a squeeze on wine profits. Low prices for the 2004 vintage, added to poor yields from last year's drought, will limit vineyard investment in the short term. Returns on bearing vineyards and vineyard margins are less than half of those five years ago. Australian Wine and Brandy Corporation board member Michael De Palma said that even the banks are not prepared to lend money for plantings, as "everyone is very nervous".
The average rate of return on winery investments declined from 7.6 per cent in 1997-1998 to 4.2 per cent in 2000-2001 and is unlikely to have improved since, said AWBC strategist Lawrie Stanford. Return on bearing vineyards fell from 14.7 per cent to 4.8 per cent in the same period.
However, the industry needs to increase grape production, Mr Stanford said, as without more vineyard investment, there could be a shortage of grapes within years. While current conditions don't appear to favour new investment, the industry needs to look at a growth strategy to supply future demand, he stated.
The Advertiser, 4/12/03, page 65.
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