Over half of WA wineries ‘unprofitable’

The Winemakers’ Federation of Australia (WFA) has revealed the number of loss-making wineries in Western Australia to be more than half, due to a weakening dollar and “economic performance” of export markets.

As reported by the ABC, a recent vintage report by the WFA showed that Western Australia is a “poor performer” when it comes to profitability data, which is based on grape growing costs per tonne.

The WFA analysis classified profitable production as a return of greater than $300 per tonne, low profitability at between $100 and $300 per tonne and break-even production between 0 to $100 per tonne. Those wineries unable to make a return on grape growing costs were classed as “unprofitable”.

The proportion of loss-making wineries was at 50% in Margaret River, 61% in the Great Southern and the data showed almost all Swan Valley wineries, 98%, were unprofitable.

Wines of WA CEO, Larry Jorgensen, admitted that many Australian winemakers are struggling to make a profit, saying that the reduced value of the Australian dollar and the economic performance of some of our major export markets have affected profitability.

But he said those “macro economic” factors were reversing. “Trading conditions in most of our markets are improving,” he said.

“Without the benefit of being able to read into the future, we suggest that the [downward] trends should be reversing.”

The number of profitable wine businesses in the Margaret River region remains unchanged year-on-year at 30% while the Great Southern saw a rise in profitable wineries from 12% in 2014 and 16% in 2015.

But Jorgensen said profitability data is not always reliable. “One of the issues we have as an industry is getting relevant and accurate information,” he said.

“We need to try to make sure the information we gather is correct and inclusive, and that the conclusions that we can then draw from it are more valuable to us.”