De Bortoli confidence undented by financial hit

In the wake of the AU$1.6 million net loss posted by De Bortoli Wines, Mark Wilson, the company’s UK general manager has highlighted a number of contributory factors and painted a confident picture for 2010.

In a year when the Australian dollar climbed by around 30% against the pound, all Australian producers with a major UK export business were hit with the same exchange rate problems. Indeed, it has been reported that Yellow Tail suffered a 50% profit fall, while additional costs from Australian Vintage’s restructuring last financial year is said to have resulted in a loss of $123.64m.

The exchange rate aside, Wilson pointed to a number of other elements behind the De Bortoli figures, which relate to the 12 months to the end of June 2009.

The fires which ravaged Victoria earlier this year meant the company had to write off its 2009 estate wines, while additional losses arose from capital tied up in the stockmarket.

Nevertheless, Wilson told the drinks business: “We are going to be in profit next financial year”, adding: “This is a family business, so we can look longer term and we’re not tied to shareholders.”

He added that De Bortoli has also been “investing lots on the green side in Yarra, moving towards organic viticulture. We’re also now recycling water in Riverina, which has been quite a financial investment.”

The oversupply issues facing Australia as a whole are not helping producers’ margins, which are then being hit from the other side by rising costs associated with the country’s widespread water shortages. Wilson describes this as “a fundamental issue”, revealing: “We’re making half the margin of before based on the cost of goods in 2008.”

Wilson also drew attention to the financial sacrifices being made by De Bortoli as a result of its commitment to demonstrating the quality of Australia’s wines to a UK market which has become all too used to viewing the country as a source of cut-price brands.

“Traditionally Australia has sold its best wines to the top restaurants in Sydney or Melbourne,” he explained, adding: “We’re making a commitment to sell our best wines in the UK at a lower price than they’d fetch in Australia so that we can bring them to the attention of people here.”

De Bortoli is one of the largest private wine groups in Australia, owning brands including Willowglen, Noble One and Windy Peak.

Gabriel Savage, 16.12.09