Winery in receivership as a sector struggles to survive

Receivers at Ferrier Hodgson are attempting to sell collapsed Victorian winery Boggy Creek Vineyard as a leading wine industry figure warns hundreds of grape growers and winemakers are fighting for survival in Australia’s beleaguered wine sector.

Mark McKenzie, executive director of Wine Grape Growers Australia, says a dramatic oversupply of grapes, a high Australian dollar and international competition have combined to push the Australian wine industry into chaos.

“A lot of businesses in the sector are under quite severe financial duress,” he says. “The last couple of year, particularly uncontracted grape growers, are getting returns below the cost of production. “

His organisation has just released a report documenting the scope of the problem. The Wine Restructuring Action Agenda, released last week and supported by four key industry organisations, shows the industry faces a national surplus of 100 million cases a year, which is expected to double within two years.

WGGA is calling for grape production to be cut by around 20% for the good of the industry. McKenzie says that while organisations like his cannot force people to quit their grape-growing businesses, they can arm growers with the detailed forecasts to help them decide if they can really decide.

“The first port of call has to be for the industry to recognise the scope of the problem. Number two, it’s really about getting information to people about whether they have a viable business or not. “

Flannery blames much of the industry’s demise on the sharp increase in production of so-called premium grapes, particularly in cooler and temperate regions of Australia.

While many new growers were lured in with the promise of lucrative exports, the strong Australian dollar, increased wine taxes in Britain and high production of wine in countries such as France, Spain and Chile, have hit Australia’s wine exports hard.

“Like a lot of agriculture sectors, we overshot the mark,” McKenzie says. “We are trying to cram a lot more fruit into that premium end of the market and it just keeps this downwards pressure on prices.”

ASIC documents show receivers were appointed to Boggy Creek in mid-October. But the property, which produced its first commercial vintage in 2000, has only recently been put up for sale.

Given the state of the industry, finding a buyer will not be easy.