Victorian Agribusiness Summit 2009 The Future of Wine Joanne Butterworth-Gray Chief Executive Victorian Wine Industry Association November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE INDUSTRY FACTS The infrastructure – Victoria has 21 wine regions 820 wineries 621 cellar doors November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE INDUSTRY FACTS The infrastructure (cont’d) in Victoria 36,000 hectares of wine grapes are grown, of which 19,049 hectares are used by Victorian companies to make appellation wines this equates to 196,130 tonnes of wine grapes crushed by Victorian companies November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE INDUSTRY FACTS The numbers Victorian wine industry employs 11,736 people >1.5M people visit Victorian wineries each year Retails sales of Victorian-made wine = $1.3B Winery tourism generates $32M Grapes or wine sales generate $152M TOTAL REVENUE generated by Victorian wineries = $1.53B Information sourced through the VWIA Knowledge Project 2009 funded by the Victorian Government November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE INDUSTRY FACTS The multiplier Indirect flow on economic benefits from Victorian wine companies in 2007/08 was $4.5B The total retail value of wine grapes grown in Victoria in 2007/08 = $2.6B (includes grapes made into wine for sale by Victorian companies + grapes/wine exported for sales by non-Victorian companies) November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – RETAIL SALES What is Victoria’s market share? Victorian wine companies generate 50% of the value of the sales of Australian wine in domestic markets – a retail value of $1B The value of exports has taken tumble for Victoria – as it has across Australia – down to 11% of the value of the national wine exports November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE - REGIONS Regional comparison – value of wine sales in warm vs cool regions Warm = $417M Cool = $932M November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE - COMPANIES Company size & distribution 50% Victorian wine companies hold only 11% hectares under wine grapes, yet 64 companies grow 58% of the state’s grapes for production 50% Victorian companies crush <20tonnes wine grapes, yet 8% crush >400tonnes November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE - REGIONS Regional snapshots Hectares grown by Victorian wine companies for production and sales Yarra Valley is the largest – 3596ha Henty is the smallest – 46ha November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE - REGIONS Regional snapshots Tonnes crushed by Victorian wine companies for sales Mildura Murray Darling is the largest – 46,000T Yarra Valley = 38,000T Beechworth = 217T November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE CHALLENGES Getting the trade balance right – supply vs demand Exports vs imports – between regions and states Can we create an index of self-sufficiency? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE CHALLENGES Victorian wine companies have exemplary performance in domestic markets – how to retain that 50% market share? Who are our real competitors? With only 21% of Australia’s production, how does Victoria retain its voice in marketing programs? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE CHALLENGES Export markets represent a real challenge for Victorian wine companies – 630 (77%) crush <50tonnes – how do boutique businesses regain market share in a market where the consumer is trading down? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE CHALLENGES Water to wine ratio – regions with secure non-irrigated supply show >revenue generated per ML water used What is the implication for dryland vineyards? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE CHALLENGES Environmental sustainability – What is the cost implication? What is the impact on vulnerability of supply? Where will the market barriers exist in the future? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE FUTURE Opportunities 46% Victorian companies expect to grow investment in marketing Tactical campaigns to support this positive outlook Maintain Victorian Government investment in joint initiatives “Put Victoria On Your Table” November 14, 2018 Victorian Wine Industry Association

November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE FUTURE Wine tourism Define the relative economic contribution of wine sales associated with tourism Understand the reasons for travel How important are cellar doors to Victorian tourism? November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE FUTURE Quality vs quantity Define “brand Victoria” as a quality offer premised on Diversity Quality Personality November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – THE FUTURE Data collection – intelligent research Refine data collection to deliver a competitor analysis for Victoria wine by state and region - Brand Profitability Sustainability November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE – CONCLUSION Do small wine producers have a future? YES – if they are sustainable, profitable, and above all knowledgeable YES – if organisations at state, regional and national align policy and programs YES – if industry demonstrates value in ongoing government investment November 14, 2018 Victorian Wine Industry Association

VICTORIAN WINE INDUSTRY Thank you Joanne Butterworth-Gray Chief Executive Victorian Wine Industry Association www.winesofvictoria.com.au November 14, 2018 Victorian Wine Industry Association