Winemakers reject oversupply claims

The Winemakers’ Federation of Australia (WFA) has rejected claims made by Foundation for Alcohol Education and Research (FARE) that the oversupply challenges facing Australia’s wine industry are over and it should be subject to a $1.5 billion tax increase.

“The conclusion by FARE that ‘by all objective measures the wine glut is over’ reveals a lack of understanding of all of the relevant issues, which are very complex,” said Paul Evans, Chief Executive of the Winemakers’ Federation of Australia.

“FARE’s analysis is based on a simplistic focus on a narrow subset of production data that tells us very little about the key issue confronting the industry - profitability,” Evans continued.

“It fails to grasp that oversupply is about more than just data on the physical surplus. It is also about confronting unprecedented exchanges rates, a high cost base, and fierce competition abroad and at home from foreign wines.”

According to Evans, the industry is going through “considerable structural adjustment” and ongoing oversupply is still a potential issue if yields return to normal.

“The suggestion that the industry has now recovered enough to have a $1.5 billion tax increase dictated to it is just not credible,” Evans concluded.