AUS: Australian Vintage optimistic as oversupply subsides
The group is sounding confident about its prospects for 2014
Australian Vintage is “cautiously optimistic” that the global wine industry is returning to an even keel between supply and demand, but has warned the group faces short-term issues.
In a speech at the company's AGM today (20 November), chairman Ian Ferrier said that he expects industry conditions to “slowly improve” as demand outstrips supply. Global wine output fell from 26.4bn litres in 2011 to 24.8bn litres in 2012.
“We are cautiously optimistic that globally the wine industry appears to be moving towards balance, as consumption increases and oversupply decreases,” Ferrier told attendees.
Ferrier said the company's 2013 vintage has been “strong”, yielding 153,000 tonnes - a “big jump” from 2012. He noted that 2012's vintage was the smallest since 1975.
But he added: “The large 2013 vintage is a reminder that the production potential in the Australian market is still too high.”
Ferrier said the group still faces challenges in the short term, pointing to frost during October and November in New South Wales, South Australia and Victoria.
But he added: “The Australasia, North American segment is showing stronger demand than in the past few years ... the UK/Europe segment performance to October 2013 is below expectation but we expect this to pick up in the remaining nine months.
"The weakening of the Australian dollar, which everyone keeps foreseeing, particularly with our trading partners in the UK and in Europe, is expected to improve margins in our markets."
In August, the group reported flat full-year net profits.
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