It’s hard to believe that an entire industry can be so bad off.
I’ve previously written about how tough it is for wineries to make money and how even the guys who sell wine for $800 a bottle can still lose their shirts, and the vintage report from this year’s Winemakers’ Federation of Australia drives the story home with a devastating statistic: 85% of Australian winemakers are operating at a loss according to their research.
It’s right there, clear as day on page 5.
This is based on estimated grape growing costs and average selling prices for grapes in each region. The full methodology is at the end of the report. The CEO of Wines of Western Australia talked about some of the limits to the data gathered here, but it seems up to snuff.
It also does a breakdown by region and shows that some places, like cooler climate vineyards are doing significantly better while warm climate vineyards are doing really dismally (92% of warm climate winemakers in Australia are operating at a loss).
But even the cooler climate areas are not in the clear – “doing significantly better” means that only 43% of the wineries in those regions are losing money. !!!
Talk about lowered expectations.
Is Australia just really bad at making wine?
Australia’s great at making wine – it seems like they’re just more honest about losing money when things go pear-shaped. Rather incredibly, most of the wine producing world is having a hard time breaking even.
Robert Joseph’s recent article in Meininger’s tries to figure out why there are so many people still working in what seems to be a doomed industry. And he alludes to the similar plight of winemakers in France and in New Zealand.
While there are always success stories that catch the public’s eye (like all of our own Angel-funded winemakers), there are a tremendous number of failing businesses in our business.
Every day, I thank my lucky stars that Naked Angels rescued my family’s vineyard when they did. If we hadn’t been picked up at just the right time, we’d be just one more of those winemaking families that are busting their humps to lose money year after year.