WINE TASMANIA SUBMISSION TO WINEMAKERS FEDERATION OF AUSTRALIA CONSULTATION PAPER

Transcription

1 WINE TASMANIA SUBMISSION TO WINEMAKERS FEDERATION OF AUSTRALIA CONSULTATION PAPER October 2013 Submitted to: Paul Evans Chief Executive Officer Winemakers Federation of Australia Submitted By: Sheralee Davies Chief Executive Officer Wine Tasmania

2 Executive Summary Wine Tasmania is the peak body representing grape growers and winemakers in Tasmania. The Wine Tasmania Board has considered the Winemakers Federation of Australia s strategic expert review of industry dynamics and profitability and provides this response on behalf of its wine producer members. Wine Tasmania appreciates that issues and activities impacting on the national wine industry also impact on Tasmanian wine producers. For the purposes of providing succinct input, this response focuses on issues of particular relevance to the Tasmanian wine sector, as summarised below. 1. Grow the Demand Opportunity Wine Tasmania supports activities to grow demand for Australian wine within domestic and export markets. Wine Tasmania recommends a focus on regional promotion, particularly within the domestic marketplace, where the generic Australian message is less relevant. 2. Hasten the Supply Correction This issue is not particularly relevant for Tasmania, where vineyard area is being expanded rather than reduced and all fruit sits within A and B grades. Nonetheless, vineyard profitability is an issue for Tasmanian wine producers, as with many other wine regions. 3. Maximise Open and Fair Domestic Competition Any activity and initiatives to encourage retailer collaboration and support of the local wine sector would be supported. Whilst the focus of Tasmanian wine sales is the on-premise segment, a number of wine producers are selling through retail and this is expected to increase over the coming years. 4. Reform the WET Rebate Wine Tasmania supports the WET rebate legislation being updated to reflect the original intent to assist smaller producers and regional communities. Given the different operating models within Tasmania, the impact and wording of eligibility is of great importance, with further considerations and details outlined on pages Monitor the Future of Wine Tax Arrangements Wine Tasmania supports ongoing monitoring of wine tax arrangements and would like the opportunity to be involved in future consultation regarding potential changes or updates. 2

3 6. Continue to Engage in the Wine and Health Debate Wine Tasmania supports evidence-based analysis to assist the development of initiatives to encourage moderate and responsible wine consumption and policy representation on wine / health issues. Additional Issues for Consideration: Research, Development and Extension Of equal importance to growing demand and balancing supply / demand is a focus on quality and efficiencies through research, development and extension (RD&E). Wine Tasmania supports retention of the Australian Wine Research Institute s node positions and RD&E in the areas of cool climate viticulture and oenology. Environmental Stewardship Wine Tasmania supports a system to assist wine producers assess and improve their own sustainability, which is able to be tailored for smaller producers and promoted to consumers / customers. 3

4 Tasmanian Wine Sector Overview Tasmania has 160 individual licensed wine producers throughout the state. There are some 230 vineyards covering around 1,500 hectares, with grapes processed through 30 winery facilities. Contrary to most mainland wine regions, demand for Tasmanian wine continues to outstrip supply, all Tasmanian wine produced is in the super-premium or ultra-premium wine categories, prices for both Tasmanian grapes and wine are some of the highest nationally, and our wines consistently receive independent wine show awards and accolades. The value per litre of Tasmanian wine exported is almost four times the national average, and Tasmanian wine represents more than 6% of Australia s on-premise listings nationally, despite Tasmania representing less than 0.5% of the national wine grape production. Of the 160 licensed wine producers, more than 100 producers sell only within Tasmania and are therefore reliant on the tourism market and sales through cellar door, whilst around 50 sell off-island, including active Tasmanian wine exporters. Recent investment in the Tasmanian wine sector includes the purchase of the Tamar Ridge Estates wine assets by Brown Brothers in 2010, Shaw + Smith s acquisition of the Tolpuddle Vineyard in 2011, the Hill Smith Family Vineyards purchase of the Jansz Parish Vineyard from Frogmore Creek in 2012 and, most recently, the Treasury Wine Estates purchase of the White Hills vineyard in northern Tasmania. The Tasmanian wine sector enjoys strong collaboration with the state government and with complementary food, beverage and tourism operators. As a single Geographic Indication, wine producers are united under the Tasmanian Wine Brand and undertake collaborative promotion, with a focus on the domestic marketplace. 4

5 Wine Tasmania Overview Wine Tasmania is the peak representative body for Tasmanian grape growers and winemakers, with a focus on promoting the island state as a benchmark wine region of world renown. Established in 2006 as a public company limited by guarantee, the Wine Tasmania Board is chaired by independent director Graeme Lynch. Other directors are Will Adkins (Brown Brothers Tasmania), Julian Allport (Moores Hill), Nick Glaetzer (Glaetzer-Dixon Family Winemakers), Natasha Nieuwhof (Goaty Hill), Keryn Nylander (independent) and Scott Dawkins (Deloitte - independent). Wine Tasmania represents more than 98% of Tasmanian wine production, with around 100 state-wide producer members and 40 associate members. All activities undertaken by the industry body are designed to generate value for our members. Wine Tasmania s Strategic Plan further outlines details of our role and is available at Wine Tasmania s key roles, as outlined in the Strategic Plan, are as follow: 1. Drive demand for Tasmania s wines through targeted and collaborative marketing and promotion 2. Encourage sustainable production and market-led growth 3. Support individual wine businesses and profitability to stabilise the base for future growth 4. Advocate and manage issues on behalf of wine producers For further information, please contact Wine Tasmania on phone , mail@winetasmania.net.au or visit 5

6 Wine Tasmania Feedback on WFA Actions 1. Grow the Demand Opportunity Wine Tasmania supports activities to grow demand for Australian wine within domestic and export markets. Wine Tasmania recommends a focus on regional promotion, particularly within the domestic marketplace, where the generic Australian message is less relevant. There is an opportunity to further leverage activities through partnerships with state / regional wine associations, including the important visitors program, providing both efficiencies and local expertise to enhance the regional and overall messages. Partnering with regions also contributes to the desired tourism linkages and supports the national alignment between Wine Australia and Tourism Australia. 2. Hasten the Supply Correction This issue is not particularly relevant for Tasmania, where vineyard area is being expanded rather than reduced and all fruit sits within A and B grades. Nonetheless, vineyard profitability is an issue for Tasmanian wine producers, as with many other wine regions. Wine Tasmania is currently commissioning financial and market analysis to inform and assist its producers and there may be benefit in sharing this research to input the national information. 3. Maximise Open and Fair Domestic Competition Any activity and initiatives to encourage retailer collaboration and support of the local wine sector would be supported. Whilst the focus of Tasmanian wine sales is the on-premise and independent retailer segments, which should also be considered in initiatives, a number of wine producers are selling through major retailers and this is expected to increase over the coming years. 4. Reform the WET Rebate Wine Tasmania supports the WET rebate legislation being updated to reflect the original intent to assist smaller producers and regional communities. Given the different operating models within Tasmania, the impact and wording of eligibility is of great importance and impact and requires further clarification and consultation. 6

7 In terms of the Tasmanian wine sector, there are 160 licensed wine producers, with only 30 processing facilities. A large number of vineyard owners have their fruit contract processed into branded wine, but do not own a processing facility. Others share / lease winemaking space to be able to make their own wines, but do not own a winery. Additionally, a number of these vineyards do not have cellar doors and some are supported by alternative employment, particularly in the early stages of their commercial business development, where it can be difficult to realise a profit on the vineyard business alone. The WFA paper raises a number of questions, as briefly outlined below: Does the definition of Production Assets on page 32 of the WFA paper indicate the need for a producer to own both vineyard AND winery assets? If so, this will negatively impact the majority of Tasmanian wine producers and would be strongly resisted by Wine Tasmania. Does the Substantial Investment criteria on page 32 of the WFA paper intend that an eligible producer must have a processing facility OR cellar door OR work 250+ days in the business, or is the intention that an eligible producer must meet all three criteria? How are 250+days working in the business defined (and monitored)? Does this refer to combined employment of several part-time employees? Are contractors included? What is the situation if a producer leases, rather than owns, a vineyard? Is there any consideration to mail order sales of branded wine, versus the physical construction of a cellar door / tourism facility? There are close to 80 licensed Tasmanian wine producers that do not have a processing facility or a cellar door outlet, own a vineyard, but rely on some off-farm employment and income to support their vineyard operations and sales of branded wine. It is understand that these producers would not meet the criteria outlined in the WFA paper. These vineyards are employers of seasonal, part-time and contract labour and contributors to regional communities, but may not have the need or capacity for full time employees. These producers should not be considered virtual wineries, but rather contributors to regional communities and employment, despite not having capital investment in winery infrastructure or cellar door facilities. These producers certainly do have legitimate investments in our wine regions and are very much a part of the Tasmanian Wine Brand. The WFA intention to remove misuse of this rebate is supported, however there may be some unintended casualties in the current proposal. 7

8 Perhaps it would be of value to identify specific examples of misuse and develop criteria to exclude these individuals and companies that are not truly small wine producers contributing to regional employment and communities. As the proposed changes are currently drafted, several small wine producers making this regional contribution would be excluded from the rebate. It is also worth noting that the Tasmanian wine sector predominantly falls into the A Grade categorised by Centaurus Partners (around 75%), with some B Grade fruit / wine also produced. Wine grapes within these grades have been identified by Centaurus Partners as profitable (page 32 of Centaurus Partners report). Wine Tasmania is very supportive of the WET rebate being removed from New Zealand producers. 5. Monitor the Future of Wine Tax Arrangements Wine Tasmania supports ongoing monitoring of wine tax arrangements and would like the opportunity to be involved in future consultation regarding potential changes or updates. 6. Continue to Engage in the Wine and Health Debate Wine Tasmania supports evidence-based analysis to assist the development t of initiatives to encourage moderate and responsible wine consumption and policy representation on wine / health issues. Other Issues for Consideration Research, Development and Extension Of equal importance to growing demand and balancing supply / demand is a focus on quality and efficiencies through research, development and extension (RD&E). This has not been particularly highlighted in the report, but is critical in supporting wine quality at all levels and improving producer performance and profitability. The Australian wine sector has long been highly regarded for its RD&E agenda, and this has contributed to competitive advantages for the benefit of wine producers. There has been very limited cool climate research undertaken or supported through industry levies. The Australian Wine Research Institute (AWRI) has entered into partnerships with the Tasmanian Institute of Agriculture and with Wine Tasmania to undertake cool climate RD&E at no cost to industry levies. 8

9 This has resulted in a major three year research project into cool climate Pinot Noir and sparkling wine, the results of which continue to be disseminated for the broader benefit of the Australian and global wine community, including through the 8 th International Cool Climate Symposium and dedicated Pinot Noir masterclasses in the Mornington Peninsula, Yarra Valley and Tasmania in late This research project was led by Wine Tasmania, with a Consortium of Tasmanian-based businesses matching funds provided by AusIndustry for a total budget of $1.8M. This project resulted in the establishment of the first AWRI node in Tasmania and this position has subsequently been supported through direct and indirect contributions from the Tasmanian Institute of Agriculture and Tasmanian wine producers. It is now understood that this position is under threat, due to the Grape & Wine Research and Development Corporation s (GWRDC) lack of support for the AWRI to continue this and the other node positions. This position has been extremely valuable for the cool climate community, not just Tasmania. It has resulted in commercial and practical uptake of research findings, contributing to improved wine quality and producer efficiencies. Wine Tasmania confirms its support for continuation of the AWRI node positions and further commitments to cool climate RD&E as part of the national agenda. Environmental Stewardship Wine Tasmania supports a system to assist wine producers assess and improve their own sustainability against a set of Best Practice parameters and recognised metrics. Wine Tasmania would like recognition of an EMS tailored for smaller producers that can achieve equivalence with FreshCare for accreditation under EntWine. Wine Tasmania also supports EMS accreditation that is able to be communicated and promoted globally to consumers / customers, not currently available under EntWine. 9