Interview with Charles Melton Wines, Barossa Valley, South Australi

Hi Lindsey,

I have spent much of the last ten years managing Australian wineries sales both 
domestically and internationally. At Charles Melton Wines we only make a limited 
amount of wine each year and sell out of each vintage so do not experience the 
issues that a lot of Aussie wineries are currently facing. Below I have put 
together a bit of an overview of the market.

1. How do you feel about Australia's current wine market? 

There has been a real consolidation in the Australian market in the past few years. Producers have had to change their production to suit the demands of the market both domestically 
and internationally. I feel as though as an industry we are starting to get the 
mix in balance.(supply versus demand) A few low yielding vintages have also 
helped in not leaving us with too much of a surplus as an industry. Our 
domestically market has travelled well and some emerging export markets have 
really helped the industry. 

 
2. How many cases do you produce annually? 

Average approximately 15,000 cases per annum.

3. About what percentage of your wine is exported? 

Approximately 30-35%. 

4. Which countries do you choose to export to and why?

 We have traditionally exported to the UK, Ireland, Canada and USA as did most Australian wineries in the past. The exchange rate with a weak Aussie dollar was our advantage as a 
country when we were developing these export markets. Sales were strong when our 
currency was weak in comparison to theirs. The rapid increase in the Australian 
Dollar compared to the USD, Canadian dollar, Euro and Pound has made Australian 
wines a lot more expensive in these countries. 
Here's an example of the rise in the Aussie dollar compared to these export 
markets. Highlighting the exchange rate towards the end of 2008 compared to what 
it is today and showing you the increase in the Aust dollar. 

US Dollar  now $1.05   Oct 08 .64   64% increase
UK Pound   now .68 Oct 08 .39   74% increase
Can Dollar   now 1.06 Oct 08 .78   36% increase
Euro    now .8085  Oct 08 .48   65% increase

This has meant that we have also lost our competitive advantage against 
producers that trade and operate with USD, English pound and Euro. (eg. Spain, 
Italy, France, South America.)
Therefore most Aussie brands have needed to support the exchange rate increase 
by lowering their prices during the last few years to maintain market position. 
Emerging markets with a strong currency similar to the Aussie dollar have 
therefore come into play the last few years. Eg. Asia/Russia. 
The Aussie domestic market has travelled pretty well during this time which has 
kept many wineries afloat but there is definitely an increase threat from 
imports due to the competitive advantage they now have importing into our 
country. Plus their lower costs of production. Staff, taxes, shipping etc. 
Consumers are far more conservative when it comes to high end wines with the 
increase reporting of doom and gloom for the world economy and the possibility 
of Australia experiencing the recession that much of the world has experienced 
since 2008.

 
5. How would you compare Australia's wine market to California? 

Very hard question. Both countries have a wide range of producers from high volume, low 
priced wineries to small volume, super premium wineries. Both countries have 
quite loyal domestic markets. California would be experiencing the advantage of 
a low US dollar for their export markets at the moment. The premium regions in 
both countries should still be travelling pretty well due to the limited nature 
of their production. 

Feel free to send me an email or give me a call if you have any further 
questions and good luck with your studies?


Regards,
Sam

Interview with Molly Dooker, McLaren Vale, South Australia

I've decided to copy and paste the response that we got, so you can see the exact responses ( I still can't repeat enough how much I love these guys! ) :

Hi Lindsey,

We are so happy to hear that you loved the winery tour here and most of all the 
wines! Sorry that I have not gotten back to you sooner, I wanted to gather some 
information from both the Winemakers (you may have met, Pete) and our Australian 
National sales person (Nick) who had a great back ground in the industry. So 
here goes:

1. What do you think about Australia's current wine market?
Australia’s wine market is facing one of the most challenging times in its 
history. Five key structural issues have adversely impacted the industry, 
namely;
 # The Global Financial Crisis (GFC) has reduced worldwide demand for Australian 
wine consumption (along with other luxury goods).
 # Oversupply – Extensive vineyard plantings planned during the high growth era 
of the late 90’s and early 2000’s are now producing fruit. Australian 
viticulture production now supplies approximately 200% of domestic consumption, 
leading to increased pressure on exports and downward pressure on both grape and 
finished wine prices at a time when global demand for wines is reducing.
 # The strong $AUD – since the GFC, the Australian dollar has risen 
significantly against foreign currencies, raising Australian wine prices at a 
time when global and export wine prices are in decline.
 # Water / Weather  – Continued drought and high water prices in Australia have 
impacted the cost of growing grapes. Recent vintages have also seen heat waves 
(2007 / 2008) and large scale botrytis infections / crop losses (2011) which 
have decimated grape grower’s incomes.
 # Competition – significant improvements in large scale, low cost, quality 
winemaking in France, Italy, Spain, Chile and Argentina have displaced 
Australia’s previously unassailable position as the world’s low cost value wine 
producer,
Despite this, Mollydooker sales continue to grow in Australia both via the trade 
and direct to consumer channels.

2. How many cases do you produce annually?
We try and aim at 60,000 cases every year. This may fluctuate by +/- 10,000 
cases depending on season variation.

3. About what percentage of your wine is exported?
90%

4. What countries do you choose to export to, and why?
Canada, Denmark, Germany, Hong Kong, Indonesia, Israel, Japan, Singapore, 
Switzerland, Taiwan, Thailand, Singapore & Malaysia, United Kingdom, and USA. 
Mostly Sarah and Sparky had personal relationships with these people, and also 
persistent people who keep asking for our wines.

5. How would you compare Australia's wine market to California?
Australians, like Californians, are very parochial. We tend to drink a lot of 
Australian wine and particularly from those regions where we live. Our favourite 
varietals are Chardonnay, Shiraz and Cabernet Sauvignon. 70% of all Australian 
retail wine sales occur through the supermarket chains Woolworths and Coles, 
which creates significant price competition in the market. This combined with 
the oversupply, means there are great bargains to be had for consumers

I'm not sure if you have the chance to check out our website (both a Aussie and 
USA), you might find some of the info and videos quite helpful as well: 
www.mollydookerwines.com 

We wish you all the very best success with your studies. :)

Simone
Helping Hand

SENIOR PROJECT QUESTIONS!!

So we know it's a little later than we planned, but it has also been a lot harder than we thought to gather information from the various winemakers across South Australia.  So anyways, here are our 5 questions we asked to various winemakers and owners:

1. What do you think about Australia's current wine market?

2. How many cases do you produce annually?
3. About what percentage of your wine is exported?
4. What countries do you choose to export to, and why?
5. How would you compare Australia's wine market to California?