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October 26, 2005
Australian Wine Prices Falling
Foster's Group expects a surplus of grapes in Australia could put pressure on wine prices, but the company is well placed to deal with it.
GLOBAL beverages firm Foster's Group expects a surplus of grapes in Australia could put pressure on wine prices, but the company is well placed to deal with it.
"The area of concern would be the Australian vintage that's been in surplus for probably 12 months," Foster's chief executive Trevor O'Hoy said today after the company's annual general meeting.
"And we think it's going to be challenging for the next 12 to 18 months from an industry standpoint."
But Mr O'Hoy said Foster's was actually short of its requirement for grapes and two-thirds to 75 per cent of Australian production was exported.
"Where there will be some tensions, clearly, are at retail level. When you do have a surplus it's a fact of life that pricing is competitive," he said.
"But that particular part of our business, the Australian wine consumer, represents less than 15 per cent of our profitability. "Being a net exporter of premium wines has actually put us in the right spot," he said.
The Australian wine industry is battling a global glut on wine grapes, which is keeping wine prices down.
Several listed wine companies have reported losses or reduced profits as the narrowing margins on wine eat into earnings. Foster's recently bucked the trend to report a strong profit.
The company booked a 17 per cent increase in annual net profit to $936.1 million in the year to June 30, 2005, including $454.3 million gain, mostly from the sale of the Lensworth property group.
Source: dailytelegraph.com; “Australia: Wine prices to fall“ editorial staff, October 24, 2005
Posted by fortna at October 26, 2005 02:19 PM