Western Australian Industry Strategic Plan 2014–2024 Contents GI Regions and Sub-regions

Foreword...... 03 Acknowledgements...... 05 Executive Summary...... 07 Industry Profile...... 11 Pathway to Success...... 21 Strategic Framework...... 22 Action...... 37 Implementation Plan...... 38 Glossary...... 41 Bibliography...... 42 Appendices...... 44 Industry Workshops...... 44 Industry Online Survey...... 54

© of Western Australia 2014 Wine quality in Western Australia has never been better. The key factors at play are the maturing age of , the pedigree of our vignerons and winemakers, our pristine environment, and the exceptional run of strong starting in 2007.

Increasingly, our regional stories are developing reform to create alternative access to market for small depth and authenticity based solidly on provenance. producers extremely important. The people who have invested their life in developing It is also imperative that medium and large producers regional strengths are best placed to share these continue to expand export markets. A bottle exported stories and are doing so with increasing success around is one less on the domestic shelf, and these developing the world. markets offer the best solution to our capacity to grow Foreword We are maturing nicely. Recent extraordinary more fruit than we can currently sell at sustainably international and domestic wine show results prove we profitable margins. are focusing our energy correctly with the right varieties All roads lead to Asia, and more specifically, China. in the right regions. This story will remain the biggest tale WA sends more than 50% of our exported wine into Asia of our industry in the coming decade. and about a third of this into China. Innovation will give us some benefit, however the Asia takes 60% of valued above evolving maturity of vignerons and winemakers working $10 per litre FOB, a category that is profitable and to achieve excellence with new clones and the right sustainable. As China’s middle class continues to grow, varietal selection for the region and site will pay the so should its demand for more premium products, biggest dividends. including quality wines that cannot be produced in bulk. We stand at the dawn of a broader view that generic The potential of this market should be patently obvious Australian marketing themes are a thing of the past. to all. When considered beside the existing trade Most importantly, Tourism Australia, for the first time, relationships that WA shares with China in other sectors, will invest significant resources to promote the wine, the opportunities presented are significant and must food and lifestyle of Australia to a world of high value be realised through a collaborative and strategically consumers searching for authentic experiences. It will implemented approach that utilises all the resources that represent Australia as it is today, a cosmopolitan society can be accessed by a unified and influential industry. still strongly connected to its food producers focusing on our unique expression of food and wine. The runaway In conclusion, the development of this strategic plan has success of Margaret River Gourmet Escape is very been a highly constructive process of engagement with symbolic of how we will continue to interact with our industry in shaping our future. It is clear we need to be wine and food ambassadors in the future. focused on a unified voice with strong regional brands championing their provenance and personalities. The state of play in general from the wine producer’s perspective on domestic sales remains grim. The larger Nigel Gallop retailers continue to increase market share to more Chair, Strategic Review Reference Group than 70% and that share continues to be filled with April 2014 house brands. This makes the need for liquor licence 03 04 Acknowledgements Strategic Review Reference Group

Chair: Nigel Gallop Fraser Gallop Estate, Margaret River Members: Jim Campbell-Clause AHA , Dunsborough Peter Forrestal Independent wine journalist Cathy Howard Whicher Ridge Estate, Geographe Denis Horgan , Margaret River Kate Lamont Lamonts, Swan Valley Hunter Smith , Great Southern Redmond Sweeny President, Wines of Western Australia Snake and Herring, Margaret River Glynn Ward Department of Agriculture and Food Anthony Wilkes Ferngrove Wines, Great Southern Regional associations: Wine Industry Association Geographe Wine Industry Association Great Southern Wine Producers Margaret River Wine Association Manjimup Wine Region Association Peel Wine Association Pemberton Wine Region Association Vignerons Association Swan Valley and Regional Winemakers Association Partner organisations: Department of Agriculture and Food Perth Region Natural Resource Management and Wine Research and Development Corporation Wines of Western Australia

05 06 This Strategic Plan is the result of a wide-ranging strategic review of the Western Australian Wine Industry in consultation with industry participants and stakeholders in late 2013. Industry fully supports the plan and gives the state peak body, Wines of Western Australia (WoWA), and Regional Associations, the mandate to implement this bold and ambitious strategy.

Vision A Western Australian Wine Industry that grows sustainably and profitably, Executive built on the reputation of its great fine wine regions.

Summary Objective The fine wine regions of Western Australia are recognised as some of the best, most distinctive and pristine in the world.

Pathways to success A unified, focused, proficient and strategically influential industry. Regional fine wines of provenance and authenticity.

Mission Develop a unified, influential voice to create opportunities for the fine wine regions of Western Australia. Work in partnership with national industry and government bodies to strengthen Western Australia’s position as the pre-eminent regional fine wine producing state in Australia.

Charter Wines of WA provides stewardship of the industry. Regional Associations are the custodians of their regional brands.

07 This Strategic Plan sets out an agenda of 10 strategic 2. Industry-wide funding for state and 4. Focus on regional fine wine production focus areas with objectives, initiatives and timelines. regional bodies Western Australia is predominantly a fine wine The strategy will achieve these objectives by working to The organised industry structure needs secure funding producing state. maximise and align the existing and potential resources to be effective. of industry and government at the national, state, Industry will work collectively to grow the reputation of regional and local levels. The plan ensures a long-term WoWA will work with industry to develop an our fine wine regions and their capacity to deliver. industry-wide secure funding model and canvas its strategic direction while taking immediate action on Targets include: priority issues. WoWA will establish Working Groups to introduction with industry. • Developing a critical mass of successful producers address the strategic focus areas and develop actions 3. Grow the demand for regional fine wines in in each region united behind a clearly articulated and key performance indicators (KPIs) to pursue the domestic and international markets regional identity. linked objectives. The industry will pursue the strategic market • These producers achieve national and international Strategic focus areas development plans of regions in partnership with recognition for their wines, which is measurable industry and government. The plans will align with through show results and other formalised review 1. Form a unified industry structure national industry strategies but will focus on regional fine systems (Parker, Halliday, Langton’s). Industry needs a unified voice to effectively harness wines and key domestic and emerging Asian markets. • Increased and co-ordinated industry-relevant RD&E and co-ordinate the available resources of industry and Targets include: efforts to improve grape and wine quality, improve government in the best interests of the industry’s future. and reduce costs of production. • Doubling exports to $100 million in the next Industry will form a unified structure with WoWA and three years. • Investigating profitable fine wine business models Regional Associations. and existing successful fine wine regions around • Increasing WA’s regional fine wine share of key the world that focus on sustainably profitable fine WoWA and Regional Associations will formalise their domestic markets. roles, responsibilities and relationships. wine production. • Re-engaging with North American, UK and Core functions include: European markets. 5. Expand wine and food tourism • WoWA advocacy, co-ordination of effort, • WA’s regional fine wines to become the wine of The industry needs to capture the unrealised tourism representation and policy formulation. first choice for WA consumers. opportunities and synergies between the food and wine • Regional Associations promote and market • Greater focus on marketing fine wine regions from sector for mutual benefit. regional brands, identify and address local issues. Wine Australia Corporation (WAC) internationally Initiatives include: over the coming five years. Regional Associations will develop strategic and • Partnering with the tourism and food sectors at • A Wine Australia Office in Perth that has export marketing plans in a collaborative manner ensuring state and regional levels. resources are utilised efficiently while achieving the development resources co-funded by WA’s federal • Alignment with national industry strategies to greatest impact. levies to WAC, the State Government and the WA Wine Industry. expand domestic and international wine and food tourism. To achieve these targets, industry will seek to extend the WA Wine Industry International Marketing Plan to a value of $5 million over the next five years and include a domestic strategy that aligns with these targets.

08 6. Improve engagement with RD&E • Developing an industry self-funding mechanism The industry needs to make better use of the RD&E for biosecurity and consult with industry on its resources available to benefit from the rapid adoption of implementation. relevant research and innovation. WA sends more than 8. Improve industry environmental performance Initiatives include: and sustainable use of natural resources 50% of our exported • Collaborative RD&E programs with industry, The industry will work to continuously improve its wine into Asia and government and university partners that support environmental performance, improve access to suitable the strategic objectives for fine wine production, land and water and adopt practices that lead to the about a third of this environment and sustainability, biosecurity and sustainable use of natural resources. market development. Initiatives include: is into China. • Co-ordinated RD&E efforts to build industry • Disseminating information about the community’s capacity in focus areas including grape and wine environmental expectations and government quality, cost of production, winemaking and pest demands for sustainability. and disease management. • Facilitating access to tools and resources that • Strengthened industry framework to better identify assist the wine industry to continuously improve and address state and regional RD&E priorities. its environmental performance. 7. Improve industry biosecurity and enhance our • Improving communication and information clean and green competitive advantage flow between industry and government on The industry will develop and implement biosecurity the management and access to limited natural plans in collaboration with government and relevant resources, such as suitable land and water. cross-sector industries. • Promoting RD&E to support sustainable environmental practices in viticulture and The plans will pro-actively protect industry’s low pest winemaking. and disease status and enhance its clean and green competitive advantage. 9. Social responsibility and health Initiatives include: The industry and individual grape and wine businesses will pro-actively promote responsible wine consumption • Developing and implementing biosecurity plans for in our markets. the Western Australian wine industry through the Guard system. Industry will support and engage in relevant • Undertaking an education campaign to increase public health initiatives at national and state levels, industry awareness and participation on biosecurity collaborating as required with WFA. issues. 10. Taxation • Implementing on-farm biosecurity practices to The industry should continue to work with WFA on tax monitor for pest and disease threats and provide policy to ensure that profitability for WA businesses is surveillance for early detection and response to assured under any amendment to the WET system or potential threats. any future taxation regime.

09 10 The landscape of the wine industry, domestic and international, has changed considerably since the last Western Australian Wine Industry Strategic Plan was released in 1997. At that time the industry was young, growing rapidly and establishing its reputation as a premium wine producing region of the world. The industry is maturing and needs to decide on the direction it wants to take as it adjusts to the challenges in a global wine market.

Industry In the last five years the wine industry has experienced Figure 1. World wine consumption (million litres) one of the most turbulent periods in its history. 2000–2012 (Source: International Organisation of Vine Profile A combination of factors has led to price competition and Wine, OIV) and commoditisation which has impacted on industry’s value and profitability. 26,000 ) A new plan was needed to better manage these 25,000 challenges and build on the industry’s reputation as home to some of the best fine wine-producing regions in 24,000 the world. The plan would provide a pathway for grape and wine businesses to capitalise on new opportunities 23,000 onsumption (ML to become more profitable, target future growth, 22,000 encourage investment and achieve the collective goals of Western Australian Wine Industry participants. 21,000 orld wine c W World wine industry 20,000 1 7 2 Consumption trends 3 2011 2012 200 2010 200 200 200 2005 2008 2006 2009 2004 2000 World consumption of wine was 24,300 million litres in 2012 as shown in Figure 1. After eight years of growth, consumption fell in 2008 and 2009 as a result of the Countries that were historically large consumers world economic crisis. Consumption was expected to and producers, such as France, Italy and Spain, have increase to 25,200 million litres in 2013. The European reduced consumption. The USA is becoming the largest Union decreased demand, which was partially market in terms of volume (2,900 million litres in 2012). compensated by increased demand from North America Wine consumption is rising sharply in Asia, particularly and Asia. China (1,780 million litres in 2012, up 67% since 2000). Wine consumption in the world’s top wine consuming countries is shown in Table 1.

11 Table 1. World wine consumption in 2012 (Source: OIV) The world’s vineyards About 62% of wine comes from Europe, primarily France, Italy and Spain. In the ‘New World,’ the USA, Argentina, Although the worldwide area under vines tends to Total Per capita Australia, South Africa and Chile predominate as shown be stable, it has decreased in recent years to about consumption consumption in Figure 4. Country (million litres) (litres) 7,528 million hectares in 2012 as shown in Figure 2. The reduction has mainly been in Europe due to World exports France 3,000 48 removal and subsidised conversions in the face of falling Global wine trade was valued at over A$32 billion in USA 2,900 9 prices and over-production. Spain, France and Italy, 2012 as shown in Table 2. While production has declined the three countries with the largest plantings of vines, slightly over the past four decades the quantities traded Italy 2,300 37 have reduced areas. In the southern hemisphere and have increased markedly and sales showed an increasing Germany 2,000 24 USA new plantings have continued at a moderate rate trend prior to 2009. (0.3% increase in 2012 from previous year). China 1,800 1 Three European countries, France, Spain and Italy, European countries account for about 58% of the world’s supplied 74.2% of global exports by value in 2009 as UK 1,300 20 vineyards as shown in Figure 3. shown in Figure 5. Wine exports have been a success Russia 1,000 7 World wine production for Australia with exports doubling to A$1.8 billion in the decade to 2009. Argentina 1,000 24 World wine production increased during the 1970s but declined during the 1980s and 2000s. Wine production Spain 900 20 was expected to fall to 25,200 million litres in 2012, Australia 500 24 a decline of about 11% since 2000. Portugal 500 43 Figure 2. World area planted to vines 2000–2012 Figure 3. World vineyard area by country in 2012 Canada 400 (Source: OIV) (Source: OIV) South Africa 400 7900 1,200 World total 24,300 ) 7800 es 1,000 ) es 7700 800

7600 600 ea (’000 hectar

7500 ar 400 rd ea (’000 hectar

Ar 7400 200 in eya V 7300 0 1 e e 7 2 3

A

azil alia 2011 r key

Italy frica US eec anc 2012 Chile 200 2010 200 200 200 2005

2008 Br Spain 2006 2009 2004 China 2000

Tu ealand Fr Gr gentina

Portugal

y Hungar

Romania Austr

Ar

w Z w

South A South Ne

12 Figure 5.Top five wine exporting countries by value in US$ from 1970 to 2012 (Source: OIVandFAO) Figure 4.World wineproduction by mainproducing country (Source: OIV) Wine export value (US$) Wine production (ML) 10,000 12, 4, 4, 6, 6, 8, 5, 3, 2, 2, 1, 000 000 000 000 000 000 000 000 000 000 000 0 0

France Fr

anc Italy e

Spain

USA Italy China

Australia

Chile Spain

Argentina

South Africa

Austr Hungary alia Portugal

Romania

Greece Chile 2012 2005 2000 2012 2009 2000 1990 1980 19 70 Brazil populations withcapacity to pay. over thepast two decades,reflecting increasing in 2009. Importsinto Asiahave increased, particularly represented about11%of global importsby value largest net importers ofwine. The UKand USA each Northern Europe andtheUSA are traditionally the World imports (Source: OIV) Table 2.Top world wineexporters in2012 export growth thanAustralia over thesame period. Chile, SouthAfrica andNew Zealand have seen stronger 7.6% by volume. Other‘New World’ producers suchas terms in2012 with5.9%ofglobaltrade by value and Australia was theworld’s fourth largest exporter invalue Total Rest oftheworld South Africa Argentina New Zealand USA Chile Australia Portugal Germany Spain Italy France Country (A$ million) 32,624 10,109 3,044 Value 1,966 1,966 3,453 3,453 1,390 1,390 1,805 1,805 6,051 1,256 1,256 989 989 730 730 918 918 913 913

(million litres)

Volume 9,903 1,499 1,947 2,120 396 735 365 339 762 752 401 413 176

13 Japan, China, Hong Kong and Singapore are now among Table 3. Top world wine importers by value (A$ million) in 2012 (Source: OIV) the global top 20 importing countries. Despite its increasing production Australia imports major quantities European Union North America of wine with US$365m of wine imported in 2009. UK 5,127 USA 5,121 The top 26 world wine importers by value accounted for Germany 3,112 Canada 2,002 93% of imports in 2012. North America, non-EU Europe and Asia showed the most dynamic growth (see Figure 6 Netherlands 1,070 Mexico 193 and Table 3). Belgium 1,253 Total North America 7,316 Figure 6. World wine imports by region and value France 821 (Source: OIV) Sweden 703 Asia Rest of Denmark 648 China 1,599 World 7% North Other Top America 23% Italy 397 Japan 1,593 Importers 3% Austria 270 Hong Kong 1,049 Ireland 321 Singapore 481 Asia 15% Finland 240 Total Asia 4,721 Poland 233

Czech Republic 223 Other Top importers Lithuania 212 Australia 604 Total EU 14,695 Brazil 305 Rest of Europe 8%

Rest of Europe Rest of world EU 45% Switzerland 1,205 Other importers 2,171 Norway 414

Russia 1,063 World total Total other Europe 2,682 All importers 32,494

14 Australian Wine Industry Australian exports Figure 9. Australian wine export volume in millions of litres from 2004 to 2013 (Source: Wine Australia) The Australian wine industry tripled in size from 1991 to Exports represent the largest market for Australian 2007. Almost all of this growth was exported. wine. They peaked at 80% of total production in 2007 In 2007 exports peaked at 800 million litres (value (see Figures 9 and 10). 900 A$3 billion), 12 times the level in 1991. Production grew In the five years to 2013 export volumes declined by 800 from about 400 million litres in 1991 to a peak of about 12.5% while export value fell by 40%. Contributing factors 700 1.47 billion litres in 2004. It has since declined to about

were the global financial crisis, the high Australian dollar, ) 600 1.23 billion litres in 2012 (see Figures 7 and 8). increasing international competition and a decline in consumer preference for Australia’s C and D quality 500 Figure 7. Australian wine grape plantings and wines in its major markets, the USA and UK. Australia’s 400 olume (ML production from 2002 to 2012 (Source: ABS) top export wine markets by value are shown in Figure 11. V 300 2,000 200 Figure 8. Australian export and domestic volumes in 100 1,600 millions of litres (Source: Wine Australia) 0 2011 2012 2013 2010 20 07 2005 2008 2009 2006 1,600 2004 1,200

oduction (’000t) 1,400 800 1,200 Figure 10. Australian wine export value in A$ million

) from 2004 to 2013 (Source: Wine Australia) 1,000 400 3,500 800 3,000

0 olume (ML 600 V ea (’00 ha) and pr 7 2 3 2,500 Ar

2011 400 2012 2010 200 200 200 2005 2008 2006 2009 2004 Vineyard area (’00 ha) 200 2,000 Wine grape production (’000t) 0 1,500 7 2 3 2011 olume (A$ million) 2012 2010 200 200 200 2005 2008 2006 2009 2004 V 1,000 Domestic Volume Export Volume 500

0 7 2011 2012 2013 2010 200 2005 2008 2006 2009 2004

15 Production concentration Figure 11. Australian wine top export markets Grape and wine production (A$ million) in 2013 (Source: Wine Australia) The Australian industry is dominated by a few major Wine grape plantings in WA were about 13,000ha producers with two of these accounting for over 50% 500 in 2012. Around 70% of the vineyard area is in the and 16 accounting for 86% of production. Some 2,300 Margaret River and Great Southern regions (see Table 4 producers account for less than 14% of production. 400 and Figure 13). The four largest Australian wine producers collectively Table 4. Number of wine grape properties and area accounted for about 40% of industry revenue in 2013. 300 planted in Western Australian wine regions in 2012 This represents a medium level of concentration in global (Source: DAFWA) terms. The major companies are Treasury Wine Estates, 200

alue (A$ million) Number Area

Premium Wine Brands, Accolade Wines Holdings V Australia and Casella Wines which represent about 16%, 100 of planted 11%, 9% and 8% market share respectively. Region properties (ha) Other major wine producers include Australian , 0 Blackwood Valley 49 435

e

y A

Foster’s Group, Lion, McWilliam’s Wine Group, De Bertoli, ong US

China Geographe 107 869 Japan ealand

Warburn Estate, Samuel Smith & Sons, and Brown Canada German Singapor Brothers Milawa Vineyard. w Z Great Southern 150 3,424 Hong K Netherlands ed Kingdom Ne Margaret River 386 5,960 Position of Western Australian Wine Unit Western Australia produces about 45 million litres of Manjimup 28 393 wine annually, representing nearly 5% by volume of Figure 12. Value of WA wine exports by destination in (Source: ABS) Peel 13 108 Australia’s production, but 12% of the value. It produces 2012 as A$ million Pemberton 45 971 nearly one quarter of Australia’s fine wines (specialty and 18.0 super-premium). 16.0 Perth Hills 46 168 WA exports fell from $52.9m in 2006 to $33.0m in 14.0 Swan District 249 897 2010 but rebounded to $45.3m in 2012 with large 12.0 sales increases to China and Hong Kong. China is now Total 1,073 13,225 WA’s largest export market representing 35% by value. 10.0 Western Australian wines are exported to more than 60 8.0 Western Australian grape production peaked at nearly

countries. The top 10 destination countries by value are alue (A$ million) 6.0

V 88,000 tonnes and 56 million litres of wine in 2004. shown in Figure 12. 4.0 Since 2010 grape production has stabilised at around The average FOB price of WA export wines in 2012 was 2.0 68,000 tonnes and wine production at about 45 million A$6.48 per litre compared with A$2.61 per litre for the 0 litres (Figure 14). e e E rest of Australia. The average price across WA’s top five A ong US UA

anc China export markets was A$7.29 per litre. Japan Fr Canada Denmar k Singapor Hong K ed Kingdom Unit

16 Figure 13. Vineyard area by percentage in Western Diverse and integrated supply chain (Source: DAFWA) Australian wine regions The Western Australian industry is complex and Swan multi-layered with many different business models. District 7% Blackwood It is dominated by small, mostly privately-owned and Perth Hills 1% Valley 3% family-operated businesses. There are more than Pemberton 7% Geographe 7% 500 grape growers, 400 wine producers and over 300 . Peel 1% Manjimup 3% The largest three wine businesses together produce nearly 40% of the total wine, while the next five largest companies account for about 15%. The major companies are Accolade Wines Holdings Australia, Fogarty Wines and Ferngrove Estate. Other major wine producers include , Burch Family Wines, Cape Mentelle, Leeuwin Estate and . The wine Margaret Great production supply chain is diverse and highly integrated River 45% Southern 26% with a reasonably high level of engagement by industry participants. Distribution and marketing channels are diverse.

Figure 14. Western Australian grape and wine production from 1998 to 2012 (Source: Wine Australia)

90,000

) 80,000 es 70,000 60,000 50,000 40,000 oduction (t) and

olume (’000 litr 30,000

ape pr 20,000 wine v Gr 10,000 0 1 7 2 3 2011 2012 1998 1999 200 2010 200 200 200 2005 2008 2006 2009 2004 2000

Wine grape production (tonnes) Wine production (’000 litres)

17 Fine wine production Table 5a. Western Australian horticulture industry value chain analysis for 2010 and estimate for 2015 Western Australian wine production is based predominantly on premium varieties, and cool and Year 2010 2015 maritime climate viticulture. Farm gate value $725m $879m Western Australia is a relatively low yield, high cost producer of high quality fine regional wines. The future GVAP $829m $1.0b of the industry lies in the production of fine wines from Value added $1.6b $1.9b WA’s premium wine regions at premium prices. Value of industry $2.3b $2.8b Value of the wine industry to Western Australia Ratio of final sale value to The wine industry is a significant contributor to 3.3 3.3 farm gate value the Western Australian economy. Wine is a major value-adding industry with significant regional Industry with highest farm Wine Wine economic and employment benefits. Wine is the gate value largest value-adding horticulture industry in Western Highest value-adding Australia according to estimates by the Department Wine Wine industry of Agriculture and Food shown in Tables 5a, 5b and 6. The value of wine at the point of final sale was estimated Industry with highest Wine Wine at $684 million in 2010 and expected to grow to flow-on benefits $795 million by 2015. Industry with highest Carrots Carrots The value of wine increases 10 times from the farm export value gate as to the end consumer as wine. (Potatoes Industry with highest are the next highest, increasing value by seven times.) growth rate in value added – Avocados The average increase in value across all horticulture by 2015 industries is three times. Wine represented 41% of the $1.1 billion total value added by the main 11 horticulture industries in 2010. The total value of horticulture at the final point of sale was estimated at $2.35 billion of which wine accounted for about 30%. The industry is highly reliant on the domestic market, principally the local WA market. About 48% of the total value was generated through wine sales in WA, 40% in eastern Australia and 12% in exports. Direct sales to customers are strong, accounting for up to 21% of total sales and up to 80% of income for some small wine companies. Direct sales are the most profitable channel to market. 18 Table 5b. Comparative Western Australian horticulture industry value chain analysis for 2010 and estimate for 2015 Figure 15. Contribution of different horticulture industries in total value added (2010) Farm gate value GVAP Value added Value of industry Horticulture industry ($m) ($m) ($m) ($m) Apples 5% 2010 2015 2010 2015 2010 2015 2010 2015 Avocados 2% Wine 41% Fruits 202 273 234 316 286 386 397 534 Carrots 6% Citrus 3% Vegetables 336 386 398 458 593 667 909 1,024 Cutflowers 7% Cutflowers and nurseries 122 146 132 159 281 337 355 426 Pears and Wine 65 73 65 73 473 569 684 795 Stonefruit 4% Other 0.8 1.1 0.8 1.1 1.1 1.4 1.6 2.1 Total 724 879 829 1,007 1,633 1,960 2,347 2,782

Table 6. Value chain analysis of selected horticultural industries for 2010 Table Potatoes 23% Grapes 4% Strawberries 5% Eastern Final sale Farm gate Export states Value Industry value/farm value value sales value added1 value2 gate value Product ($m) ($m) ($m) ($m) ($m) ($m) Apples 34.3 0.9 3.2 59.5 79.7 2.3 Avocados 20.1 0.6 9.6 23.4 32.6 1.8 Carrots 56.4 50.4 11.8 65.0 105.1 1.9 Citrus 17.8 – 0.7 35.0 46.0 2.6 Cutflowers 35.3 4.6 23.9 81.6 103.1 2.9 Pears and stone fruits 25.9 3.2 4.0 42.7 57.5 2.3 Potatoes 54.1 7.1 2.6 268.0 384.2 7.1 Strawberries 55.4 3.9 31.5 53.8 93.7 1.7 Table grapes 27.5 1.1 1.0 42.3 47.2 1.7 Wine 65.1 32.9 102.3 427.9 684.4 10.5 1 Value added: sum of profit, wages, interest, rent 2 Value of industry: final sale value of product (sum of retail, interstate supply and export values)

19 20 Western Australia is the pre-eminent regional fine wine producing state in Australia. The industry faces increasing competition from many other Australian regions and the world. This Strategic Plan informs what the Western Australian Wine Industry should now do to ensure a profitable future.

The pathway to success for the Western Australian Wine Through consultation with the wine industry and Industry is through: associated stakeholders a number of priorities and strategic focus areas have been identified that will be Pathway to • a unified, focused, proficient and strategically the starting point for action. influential industry Success • regional fine wines of provenance and authenticity. Fine wine definition The Strategic Plan enables the Western Australian Wine The definition of fine wine in the strategic review Industry to grow in value, profitability and sustainability was based on the Australian wine industry quality by building on the reputation of its great fine wine segmentation of grapes and wine developed by WFA. regions. It positions the industry to capitalise on new The five segments (A, B, C, D, E/F) are defined on price: opportunities to become more profitable, target future The definition of fine wine includes the A and B quality growth, encourage investment and achieve the collective segments which make up icon, ultra-premium and goals of the WA Wine Industry. super-premium wines. There was some debate within The industry will work in partnership with industry the WA industry that under this price definition of and government to align and maximise the resources quality the domestic price for fine wines is A$20/bottle to create opportunities for the fine wine regions of and over. Western Australia.

Quality Grape price Domestic retail price Export FOB price code Wine quality segment* (A$/tonne) (A$/bottle) (A$/litre) A Icon and ultra-premium >2,000 >30 >10 B Super-premium 1,501–1,999 15–30 7.50–9.99 C Premium 601–1,500 10–15 5.00–7.49 D Popular-premium 301–600 7–10 2.50–4.99 E/F Commercial <300 <7 <2.50 Bulk wine is allocated to its own quality segment, under $1/L to E/F, and more than $1/L to D.

* Adopted from Lokshin, Rabobank

21 Strategic Focus Areas and Initiatives

Forming a cohesive industry structure • Formalise state peak body and regional associations’ roles and relationships. 1 • Compile core principles and policies. Strategic • Develop strategic and marketing plans for each region. Creating funding certainty for the peak body and regional associations Framework • Develop an industry-wide, sustainable funding model. 2 • Consult with industry on the structure of a wine industry-specific funding model. • Canvas industry on introducing an industry-wide funding model.

Growing consumer and market demand • Develop a collaborative marketing plan to increase consumer demand for the fine wine regions of WA 3 in domestic and international markets. • Double WA wine exports to $100 million in the next three years. • Make the fine wine regions of WA the first choice for WA consumers.

Focusing on fine wine production • All wine regions achieve high reputation and high capacity to deliver fine wines. 4 • Investigate and adopt successful wine business models for WA. • Investigate fine wine industry regions that focus on quality and value to provide guidance for the adoption of regional fine wine models in WA.

Expanding the wine and food tourism market • Develop collaborative programs with the food, tourism and government sectors. 5

22 Strategic Focus Areas and Initiatives We stand at

Innovative research, development and extension the dawn of a • Develop collaborative RD&E programs that support strategic objectives. broader view that 6 • Co-ordinate, engage and adopt industry-relevant RD&E. generic Australian • Establish a framework to better identify and address state and regional priorities. marketing themes Enhancing industry biosecurity are a thing of • Develop and implement biosecurity plans for the WA wine industry. the past. 7 • Increase education of biosecurity issues for industry. • Promote adoption of on-farm biosecurity practices. • Develop an industry funding model for biosecurity.

Environmental performance and sustainable use of natural resources • Improve understanding of environmental issues and performance. 8 • Improve access to suitable land and water for viticulture. • Promote RD&E in sustainable environmental practices.

Responsible consumption of wine • Promote responsible consumption of wine. 9 • Contribute to the national alcohol debate in line with WFA policies and research.

Taxation • Work towards more ethical and equitable future taxation arrangements. 10 • Maintain tax rebates for regional communities.

23 Strategic Focus 1

Forming a cohesive industry structure Initiatives Timeline Responsibility Create a unified industry structure which is focused, Form a unified industry structure with WoWA as the 6 months WoWA & RAs proficient and influential at national, state and regional state peak body supporting strong Regional Associations levels of industry and government. championing their brand. Objective: Formalise the roles and responsibilities of the state peak 6 months WoWA & RAs A unified industry which effectively harnesses body and regional associations and their relationships. and co-ordinates the resources of industry and Compile and develop core principles and policies on 1 year WoWA government in the best interests of the industry’s key issues. future (stewardship). Regional Associations develop strategic plans for their 1 year RAs to lead, WoWA specific needs and priorities.

A unified, focused and influential industry is better able The core role of WoWA is advocacy at national industry “Individuality/Regionality to effectively harness and coordinate the resources of and government levels and co-ordination of effort at state industry and government to achieve the best outcomes level. Other functions include representation on national with Cohesion ...” for the industry’s future. industry and government bodies, accessing additional (Mt Barker Regional Workshop, Appendix 1) funds for key industry programs, policy formulation (e.g. A unified and organised industry taxation, water regulation, environment, occupational Grape and wine producers want a more unified, health safety, liquor licensing); influencing national bodies “In three regional organised and integrated industry with greater on key issues (e.g. social issues, WET) and ensure the WA participation. The representative bodies must be industry receives fair value for its contribution to national workshops, industry showed more influential at national, state and regional levels industry bodies such as WFA, WAC and GWRDC. WoWA of industry and government. The wine industry needs will co-ordinate R&D direction and communication of consistent majority support to strengthen its relationship and engagement with results; and compile the strategic direction. government to help realise its potential. The industry Core roles of Regional Associations include leading for a more organised needs to communicate and pursue Western Australian the promotion and marketing of their regional brands, interests more effectively and articulate a common story representational structure.” developing strategic marketing plans, liaison with the and consistent position on key issues. (Summary of Regional Workshops, Appendix 1) state peak body to benefit from partnerships with Formalise roles and responsibilities other regions, advocacy on local issues, and identifying The industry will formalise its structure around a state regional issues and needs that can be acted on by the peak body and regional associations. There needs to state peak body. The state peak body would support and be clearer delineation and documentation of roles and cooperate with these efforts as required. responsibility. WoWA should continue as the state Greater skills and regional representation on WoWA is peak body and its constitution should be amended required for it to better identify and issues and needs at to formally document this structure and the roles and state and regional levels. responsibilities of each representational level. 24 Strategic Focus 2

Creating funding certainty for the peak Initiatives Timeline Responsibility body and regional associations Investigate and develop an industry-wide secure funding 12 months WoWA & RAs The organised industry model requires consistent, model for regional and state bodies. sustainable funding and greater participation for it to be effective. Provide greater education to all regions about the nature 12 months WoWA & RAs of a new funding model and how it can be structured to Objective: obtain industry consent to implement the accepted model. An industry-wide secure funding model which With industry consent, introduce a new funding model 12 months RAs to lead, WoWA expands the number of participants and increases structured specifically for the wine industry. value to producers.

The organised industry model requires consistent • supports useful partnering models with other “In three regional workshops, sustainable funding and greater participation by industries and non-wine industry bodies industry showed consistent, producers to be effective. Grape growers and wine • allows the ability to rapidly engage with the entire producers have an appetite to support a sustainable industry on specific funding strategies, such as majority support for a industry-wide self-funding model which is independent, biosecurity and RD&E equitable and cost effective. • strengthens the capacity of regional associations to sustainable funding model, The industry would support a new funding model that: service their growers and producers providing a mandate • captures all industry participants • provides flexibility for regions to fund specific services • provides financial certainty over a forward for Wines of Western projection of several years (i.e. structured • ensures current voluntary participants will pay the Australia to investigate the financial modelling) same or less. • provides a framework that is independent of The Agricultural Produce Commission (APC) in Western implementation of such a individual personalities and incumbents to industry Australia is a legislated system for the industry-wide structure in collaboration positions collection of a ‘fee for service’ which can be structured • funds both the state and regional bodies specifically for the wine industry. The APC is used successfully by several horticulture and agriculture with Regional Associations.” • provides funds for advocacy and leverage at both industries to provide relevant services to their producers. (Summary of Regional Workshops, Appendix 1) the national industry and government levels • allows the industry to seek leverage on Smaller regions should consider pooling their funds to collected funds provide more cost effective services while maintaining individual regional identity. • gives State Government and national industry certainty about governance and effective use of funds

25 Strategic Focus 3

Growing consumer and market demand Initiatives Timeline Responsibility Grow the demand for Western Australian regional fine Develop and pursue market development programs of 6 months WoWA, RAs & WAC wines both domestically and internationally. regional associations in collaboration with industry and Objective: government partners that increase the consumer demand for the regional fine wines of WA on international and Increase the value of WA wine exports to all our key domestic markets. The new programs build on the success international markets and increase market share in all of the International Marketing Plan 2011–2014. key domestic markets. Develop an international marketing initiative with support 6 months WoWA, RAs, producers & DAFWA of government to double wine WA wine exports to $100 million in the next three years. This would support the efforts of WA’s leading 20 international brands and new entrants, and encourage greater regional participation in line with their regional and marketing plans. Explore opportunities to collaborate with government, 6 months WoWA, RAs, DAFWA wine value chain, retailers, and food and tourism sectors to increase consumer demand for Western Australian wines within WA. Regional wines to become the wines of first choice by Western Australian consumers.

Increasing consumer demand for the regional fine wines of production value in 2005 compared to the national “Do we wait for the collapse of Western Australia in domestic and international average of 60%. Although WA wine export value has markets is a key objective for the industry to drive grown from A$33 to A$45.3 million in the last two years, and see who has survived?” sustainable future profit growth. exports only account for 13% of production. (Swan Valley Regional Workshop, Appendix 1) The demand for fine wine at higher price points is China is now WA’s largest export market increasing more growing in the key domestic markets plus China, UK, than 150% to A$16 million and fine wine exports to the North America and emerging Asian markets. WAC has United States have shown resurgence. Increasing wine projected an undersupply of quality grapes for fine wine exports will have a positive effect on domestic demand to meet future demand in these markets. Fine wine price by balancing supply and assisting smaller producers who points are still solid in several other key international concentrate their efforts on the domestic market. markets such as Scandinavia and Canada. The WA wine industry has potential to more than Increase exports double exports to A$100 million in the next three years. Exports would increase from 13% to nearly 30% of total The Western Australian industry needs to increase wine production and whilst still below the national average, exports significantly. Exports reached a peak of only 20% fit more comfortably with our production profile.

26 A new collaborative plan with industry and government Retail concentration is having a major negative impact The new plan would align national industry marketing partners is required to boost exports, building on on prices for local producers in some regions. WFA are initiatives with Western Australian having a greater the success of the WA wine industry’s International working with the national retailers and competition focus on regional fine wines, China and other high-end Marketing Plan now in its final year. The new plan would regulator to improve fairness, transparency and equity emerging markets in Asia. Proposed national industry support individual brands and regions to drive export in the domestic market through a Code of Conduct and (WAC, WFA) initiatives1 include core marketing value and encourage greater regional and producer other measures. The state peak body will further work programs, social media-based platforms to promote participation. The initiatives would align and collaborate with WFA on this issue. Australian wine, partner in an Australian Wine and Food with WAC core objectives providing a greater focus on Centre in Shanghai, regional programs, and calls for the There is also potential for Western Australia to leverage regional fine wines and markets in Asia. This could lead government to fast-track the ‘Australia-China Free Trade off WFA’s proposal to support national retailers in to regional fine wines from WA being established as Agreement’ to enable the full export potential of the fine the development of a ‘Buy Australia First’ campaign a luxury, clean and green brand in Asia with routes to wine segment to be captured. which aims to capture market share from imports and market in China improved for WA exporters. re-engage Australian consumers. China is predominantly a market and other Access to market must be focused on by the peak state markets are vitally important for white wines from the body to ensure all producers have strong commercial fine wine regions. We need to re-engage the North opportunities to get their product to market to ensure American, UK and European markets to increase market the authentic messages are heard. Liquor license reform share. Premium is something all the regions for access to market must remain paramount for the of WA have in common. whole industry. Increase domestic consumer demand Collaborative market development plan The Australian domestic market remains the most The industry needs to advocate strongly for marketing important for WA wine producers accounting for 87% support and partnerships within industry, government of WA wine sales. One of the key challenges to drive and synergistic sectors such as food and tourism. profitability in the WA Wine Industry is to retain and The Western Australian Wine Industry’s International build market share and price-points in the mature Marketing Plan has been successful in boosting exports Australian domestic market through the promotion of through collaboration, partnerships and co-ordination of regional fine wines. effort. An extension of this plan is needed to build on this The WA market accounts for 40% of WA wine sales. success and to include the domestic market. There is potential to grow value share by increasing WoWA should advocate for partnerships and funding consumer demand from Western Australians for regional for the plan and play a co-ordinating role. Regional fine wines. These should become the first choice by Associations would implement the marketing initiatives Western Australian consumers and visitors to WA. for their regions. Explore opportunities to develop an annual program The industry could explore opportunities for a Western to engage with high end and off-premise Australian wine ambassador similar to those engaged by gatekeepers to increase awareness across the whole other Australian food sectors such as the Australian Lamb supply chain of all our fine wine regions, including a campaign and the MLA, Elders, and Shangri-La joint major event executed in collaboration with strongly venture that promotes high-end Australian beef in China. branded partners who provide synergistic opportunities.

27 Strategic Focus 4

Focusing on fine wine production Initiatives Timeline Responsibility There is unrealised potential to increase value and Develop strategies to support the success of each wine 6 months RAs & WoWA profitability by focusing on fine wine production. region to produce fine wine with high international Objective: reputation and high capacity to deliver. Increase the value and profitability of the Western Identify the characteristics of successful, profitable fine 6 months WoWA, RAs, DAFWA Australian Wine Industry through improvements in wine businesses in Western Australia. grape and wine quality and the adoption of profitable Develop a collaborative RD&E program with industry, 1 year WoWA, RAs, DAFWA, CU, UWA, fine wine and regional association business models. government and university partners and co-ordinate AWRI, GWRDC effort to lift the proportion of fine wines from 40 to 70% of production by value within 10 years. Investigate existing wine industry systems and regions 1 year WoWA, RAs DAFWA that focus on quality, profitability and building the value of grape and wine businesses. Consult with industry on their modification and application to WA.

Western Australia is predominantly a fine wine producing Increasing fine wine production “The only way forward is to state. The fine wine regions aim to be recognised as To build on this success as a fine wine producer, some of the best, most distinctive and pristine in the focus on quality.” each Regional Association, in collaboration with its world, on par with world-renowned wine regions such as (Margaret River Regional Workshop, Appendix 1) members, needs to develop a critical mass of successful Bordeaux, and the Napa Valley. producers who are united behind a clearly articulated Develop our regions regional identity. These producers will achieve national and international recognition for their wines, The common goal of the Western Australian Wine which is measurable through show results and other Industry is for its wine regions to develop a high formalised review systems such as the James Halliday reputation and sustainable capacity to deliver fine wines Wine Companion rating, the Parker Report, Langton’s to the world. The industry collectively supports each and Regional Reviews. In focusing on this region in its effort to achieve this goal. Margaret River collaborative commitment to both producing and has had great success in developing their international marketing fine wine, demand for fruit of commensurate brand which will continue to gather momentum. quality will increase ensuring the production of such fruit Their well organised marketing plan should continue to is sustainably profitable. be supported. This success can be duplicated in other regions focused on fine wines with very clear and united business plans that are also supported by government.

28 There is potential to achieve this through the application Potentially successful business models include: that can contribute to the development of a clearly of relevant research and the restructuring of vineyards • growers of high quality grapes that make fine wines articulated regional identity. This regional identity will be to deliver high quality fruit. Improving the quality of based on the measurable strengths of the region with • mid-sized producers with competitive costs and fruit and vineyard mix has the potential to address the regard to variety, wine style and regional personality high-quality established and desired brands projected undersupply of fine wine grapes. and personalities. • small high quality wine companies (up to 10,000 By 2024 Western Australia will be making better wines, cases), including ‘icon’ wineries, selling mostly Key to success is the development of a critical mass of technically and qualitatively. The wine styles and quality direct to loyal customers producers in each region with the capacity to deliver the will be based on a combination of championing regional/ promise of the region. The role of Regional Associations, • companies able to create and/or capture unique varietal strengths and consumer preferences in our key with support from WoWA is to ensure producers have market opportunities using commercial payments markets. Wine quality will be better in every region by the opportunity to pursue the standards articulated in to growers and winemaker’s resources. ensuring the right varieties and clones are grown in the region’s identity statement. each region and site and this will be driven by Regional A clearer understanding of profitable business models Associations who provide stewardship over their clearly will help support fine wine regions in Western Australia. articulated regional identity that is supported by a critical The industry should seriously investigate the factors that mass of committed producers in each region. As a contribute to successful fine wine business models that result, the production of lower grade fruit and wine will could be modified and adopted for the profitable and be reduced. sustainable development of grape and wine businesses in Western Australia. Quality is one of the WA Wine Industry’s greatest strengths. Successful fine wine business models would assist the Western Australian Wine Industry to achieve its aims of: Fine wine business models • financial sustainability The Western Australian Wine Industry has many different business models with significant variation in • demand to outstrip supply by 2018 performance. Some are doing well while others are • profitability at every point in the value chain struggling. Businesses will make decisions based on • sustainable price positioning. their individual position, strategy and view of economic This would be an important resource to facilitate further fundamentals. investment in a profitable wine agribusiness. The best opportunities exist for: Clearly and eloquently articulated • producers of high quality fruit and/or fine wines regional identity • producers who are able to establish a niche brand, There are successful wine industries around the world market and/or method of distribution that focus on quality rather than quantity to sustain • cost efficient producers who can offer product profitability and build asset value for their grape and that is “fit for market” at sustainably profitable wine businesses. These include the European ‘ price positions. system’ and that used in California’s Napa Valley. Regional Associations should consult with their grape High quality, fine wines remain sustainably profitable in growers, wine producers and industry stakeholders on domestic and export markets. the potential to adopt the aspects of these systems

29 Strategic Focus 5

Expanding the wine and food Initiatives Timeline Responsibility tourism market Explore opportunities for collaboration with Tourism WA, 1 year WoWA & RAs The diversity of wine tourism opportunities within the tourism sector, the WA Food Council and our food Western Australia is not fully realised. sector partners to co-invest in initiatives to expand both Objective: domestic and international wine and food tourism markets. Capture the tourism opportunities and synergies Collaborate with our key national industry partners, WFA 2 years WoWA & RAs between the food, wine and tourism sectors for and WAC, to ensure Western Australian Wine Industry mutual benefit. interests are addressed in the national Wine and Food Tourism Strategy and resources are allocated to Western Australia.

A strong connection between wine and food provides The industry needs to leverage the wine, food and “By 2024, Wine and regions with increased destination appeal, introducing tourism-based economic development in Western visitors to wine via their interest in food and vice versa. Australia to increase recognition of our wine regions. Tourism are successfully Enriching the wine experience supports and encourages Food sector partners that the wine industry should collaborative marketing, and diversified offerings provide working together … ” consider strengthening relationships with for mutual more profitable returns. (Swan Valley Regional Workshop, Appendix 1) benefit include: Collaborate and partner with the food and • WA Food Council tourism sectors • Buy West Eat Best The wine industry should consider joint investment • Agrifood 2025+ Gourmet Way “There is a strong desire for with Tourism WA with a view to attracting visitors to experience WA and develop a taste for our products. • Wineries and cafés. many wine businesses to Wine tourism can stimulate profitable wine sales through The Margaret River Gourmet Escape is a successful build sales volumes in direct cellar doors, restaurants and other direct sales channels. collaboration with the tourism and food sectors which Direct sales to consumers, including cellar door sales, needs to be continued and extended to other regions. to customer channels. Wine mail order, e-commerce and function sales are the most The industry should also explore opportunities for a profitable for any wine business as the receives Western Australian wine ambassador, similar to those tourism is a key strategy in full retail price. Direct sales to unlicensed customers engaged by other Australian food sectors. account for around 20% of total Western Australian achieving this.” wine sales. Sales to licensed customers (retailers, (Industry Online Survey, Appendix 2) restaurants) account for 80% of total sales in many small wine businesses.

30 Strategic Focus 6

Innovative research, development Initiatives Timeline Responsibility and extension Develop collaborative RD&E programs with industry, 1 year WoWA, TC, GWRDC The RD&E resources of industry, government government and university partners that support the and universities need to be better targeted and industry’s strategic objectives for fine wine production, co-ordinated to drive innovation and profitability in sustainable management of environment and natural the Western Australian Wine Industry. resources, biosecurity and market development. Objective: Co-ordinate innovation and RD&E efforts to build industry 1 year WoWA, TC, RAs, GWRDC, WAVIA Increase industry engagement in RD&E and adoption capacity in strategic focus areas, such as grape and of research outcomes and innovations to improve wine quality, improving genetic material, winemaking, grape and wine production practices and profitability. management of pests and diseases and cost of production. Strengthen industry framework to better identify and 6 months WoWA, TC, RAs address state and regional RD&E priorities through the Western Australian Wine Industry Technical Committee.

“We need industry-relevant grape and wine producers to share their knowledge and • Investigate the need for a dedicated industry learn from the best in Western Australia. development officer, part-funded by WA industry, to co-ordinate delivery of research and RD&E to drive innovation …” Other key RD&E initiatives for the wine industry include: extension information. (consistent message from all three Industry Workshops) • Collaborate with industry, government and • Improve the genetic resource available to industry university partners on RD&E programs that through improved clonal material, new varieties RD&E is a major driver of innovation and profitability in target WA Wine Industry needs and support the and rootstocks. For example, the ARC project, the wine industry. Relevant RD&E is required to build the strategic objectives. Genomic basis of clonal variation in Cabernet capacity and skills needed to stay on top of our game. • Co-ordinate RD&E efforts to build industry capacity Sauvignon, is a significant national project led Wine industry RD&E is well organised and highly in focus areas such as improving grape and wine by WA researchers and jointly funded by the capable. Grape and wine producers can access RD&E quality, winemaking, managing risks (e.g. pests and WA industry. capability through a range of industry, government, diseases, climate change, water availability, smoke university and other organisations at national, state and taint) and managing the businesses of grape and regional levels. These include AWRI, CSIRO, NWGIC, wine production. GWRDC, DAFWA, CU, UWA, MU and NRM. • Improve communication of research outcomes and innovation to industry. The Western Australian Wine Industry needs to improve engagement with RD&E providers and funders to make • Improve the framework to identify and address better use of the resources available and to benefit from regional and state RD&E priorities through an the rapid adoption of relevant research outcomes and active Technical Committee. innovation. There is unrealised opportunity for local

31 Strategic Focus 7

Enhancing industry biosecurity Initiatives Timeline Responsibility Western Australia has a competitive advantage Develop and implement biosecurity plans for the Western 1 year WoWA, TC, DAFWA in biosecurity with relatively few major pests and Australian Wine Industry through the Guard system. diseases. Industry and government recognise the need to be more diligent to maintain and advance Undertake an education campaign to increase industry 1 year and WoWA, DAFWA this advantage. awareness and participation on biosecurity issues. ongoing Objective: Implement on-farm biosecurity practices to monitor for 1 year and WoWA, RAs, local industry pest and disease threats and provide surveillance for early ongoing Industry has biosecurity plans and procedures in place detection and response to potential threats. that pro-actively protect against the incursion of significant exotic pests and diseases and maintain and Develop an industry self-funding mechanism for biosecurity 6 months WoWA, RAs enhance our clean and green competitive advantage. and consult with industry on its implementation.

The Western Australian Wine Industry has fewer pests potential pest incursions. The vineyard register would Biosecurity Retail power and diseases than most other wine producing countries provide valuable information for assessing potential WET rebate Imports and regions of the world. This provides both economic grape supply. On-farm biosecurity plans and practices and market access advantages. are an important part of the ongoing diligence in biosecurity. Environment and The industry is under threat from the introduction of exotic pests and diseases. These threats are managed Industry should continue to contribute to the federal sustainability Oversupply by the state and national quarantine introduction and bodies which do the same body of work and ensure no Health and alcohol border protection services. However, a major cost in duplication of resources occurs. managing incursions of pests which are present in (Word cloud from Swot Analysis – Threats, from Industry eastern Australia but not in WA, is the responsibility of Online Survey, Appendix 2) the WA industry if they are introduced. Industry needs a mechanism to self-fund these biosecurity costs. The industry needs better understanding of biosecurity issues and to adopt policies and practices which protect our clean, green competitive advantage. The industry and government recognise the need to be more diligent in biosecurity. There is need for an education and awareness program on biosecurity in the WA industry. An accurate register of viticultural plantings would assist in monitoring, surveillance, early response and management of

32 Strategic Focus 8

Environmental performance and sustainable Initiatives Timeline Responsibility use of natural resources Disseminate information about environmental expectations Ongoing WoWA, RAs, NRM, CU Environmental issues, the availability of suitable land to meet the consumer, industry and government demands and water, and management of natural resources are for sustainability and facilitate access to tools and resources major considerations for future sustainability. that assist the wine industry to continuously improve its Objective: environmental performance. Improved understanding of the impact of Improve communication and information flow between Ongoing WoWA environmental factors on industry, better management industry and government on the management and access and access to land with suitable soils and water, and to limited natural resources such as suitable land and adoption of practices that lead to sustainable use of water and facilitate the adoption of practices that lead to natural resources. improvements. Promote research, development and extension to support Ongoing WoWA, NRM, CU sustainable environmental practices in viticulture and winemaking.

Improved use of natural resources will enhance the The Wines of Western Australia Technical Committee, in Quality Regions Western Australian Wine Industry’s clean and green collaboration with Regional Associations, is best placed status and improve market access. Western Australia to coordinate and drive these initiatives. has the potential to be a world leader in clean, Clean and green Other key initiatives include: green practices. Scale Market growth • implementing system-based approaches to The lack of land with suitable soil and access to quality (Word Cloud from Swot Analysis – Strengths, Industry Online minimise the industry’s environmental footprint water supplies restricts expansion opportunities for Survey, Appendix 2) and improve environmental performance, such as fine wine producers and can drive proponents to EntWine Australia and the Australian Wine Industry inappropriate sites with higher risks to quality and Stewardship program negative environmental outcomes. • ensuring widespread commitment to The industry needs to identify and ensure the availability biodiversity through participation in on-farm and of land and water suitable for future viticulture. Regional community programs and state planning processes need to recognise the • continuing to promote the uptake of more efficient importance of agricultural land and water resources to water use practices, tools and technology the wine industry. Industry should actively contribute to, and advocate for land and water use planning • increasing industry knowledge and facilitate policies and proposals that protect viticulture land use adaptation to climate change and mitigation of where appropriate. greenhouse gas emissions.

33 Strategic Focus 9

Responsible consumption of wine Initiatives Timeline Responsibility The health of individuals and communities is a major Promote responsible consumption of wine to consumers in Ongoing WoWA, RAs, individual businesses, concern of industry and governments of all countries all our markets. WFA in which we market wine. Support the active contribution and engagement of Ongoing WoWA, WFA Objective: industry in consultative public health initiatives at national Ongoing support and commitment to the responsible and state levels to allow outcomes that support the consumption of wine. responsible consumption of wine.

“Key industry issues not The issues around health, alcohol and social • The Western Australian Wine Industry and responsibility are a high priority for the wine industry. participants in our grape and wine businesses being addressed collectively The wine industry is facing a social and political should proactively promote the responsible environment that is increasingly challenging the consumption of wine with our consumers in all with a single, clear position legitimacy of wine. WFA has developed an action plan our markets. (WET, Health, Biosecurity, that acknowledges the industry’s responsibilities as an • Industry should participate in WFA initiatives alcohol producer, while highlighting its commitment to a to promote a responsible industry and funding/partnerships with moderate drinking culture. drinking culture. • The Western Australian Wine Industry supports the government agencies).” WFA ‘Wine and Social Responsibility Strategy’ and (Margaret River Regional Workshop, Appendix 1) proposed actions to ‘Continue to Engage the Wine and Health Debate’ which aims to develop healthier patterns of wine consumption, enhance the social responsibility of the wine sector and provide balance to the alcohol policy debate. The WA industry should help to establish a moderate wine drinking culture in all our markets.

34 Strategic Focus 10

Taxation Initiatives Timeline Responsibility Wine tax arrangements have a significant impact on Monitor future taxation arrangements and seek profitable Ongoing WoWA and RAs wine industry profitability and licence to operate in growth and social licence to operate in the fine wine the community. industry. Work with WFA to evaluate future taxation models Objective: and ensure WA Wine Industry interests are considered. Optimal taxation arrangements and eligibility for the Work with WFA during the WET rebate review process 1 year WoWA and RAs WET rebate to support the growth and social licence to ensure the WET rebate is maintained for WA’s small to operate of regional fine wine businesses in WA. winemakers and regional communities, and any changes do not diminish the profitability of the regional fine wine industry.

“Why do we subsidise The WA industry remains fundamentally opposed to The WA industry supports WFA’s proposed actions to the current ad valorem tax system. It is not the most reform the WET rebate with the following provisions: equitable and ethical system and disadvantages the WA New Zealand products?” • ensure the WET rebate is maintained for authentic Wine Industry which focuses on fine wine production. (Margaret River Regional Workshop, Appendix 1) regional producers The ad valorem tax distorts market signals by providing a competitive advantage to producers of cheaper wine • does not diminish the profitability in the WA Monitor and review future taxation arrangements in the Australian marketplace. The ad valorem tax leaves Wine Industry the Australian wine industry exposed in the anti-alcohol • focuses on and clearly defines authentic producers The WA Wine Industry will pursue proposals for a debate if price of wine becomes a motivating factor taxation system that maintains the profitability of • forms an experienced working group to re-draft regional grape growers and winemakers enabling Reforming the WET rebate the definition them to secure a positive economic impact in regional • any reforms must retain highly skilled winemakers The WA Wine Industry supports maintaining the Wine communities. Future tax arrangements need to be and the grassroots human capital for the future of Equalisation Tax (WET) rebate value. A survey of WA equitable and ethical, do not distort market signals and the industry. wine producers in 2011 established that the WET rebate enable industry to respond to the anti-alcohol debate contributes to ongoing profitability and viability of Industry supports the WET rebate removal from NZ The WA industry will continue to monitor the future 95% of producers. Industry recognises the current producers as it is not in keeping with its original intent. of Wine Tax Policy and its impact on the fine wine WET rebate legislation captures the intent for regional WA opposes any changes to the WET rebate without industry. The WA Wine Industry remains “open-minded” grape growers and winemakers but there are loopholes wider reform. to the taxation future and expects to be a participant that lead to ‘rorts’ which need to be addressed for the in any taxation review on alcohol. The WA industry long-term best interests of industry. supports WFA action to adopt a standing tax force with appropriate industry representation.

35 36 The Strategic Plan to 2024 will guide relationships within the Western Australian Wine Industry and between its industry, government and other partners over the next 10 years. The plan proposes major changes to how the industry is structured and operates in the short and medium term.

Industry will review progress after 6 months and Where a priority is identified and there is an existing 12 months and revise the plan to include any major industry or government body dealing with the issues, changes and improvements. This plan ensures a WoWA will nominate someone to participate as a wine long-term strategic direction, while allowing action to industry representative. be taken by WoWA and the Regional Associations on Proposed Working Groups are: Action current issues. 1. Industry Structure and Funding Priorities (SFA 1 and 2): WoWA and RAs WoWA as the state peak industry body will pursue 2. Market Demand and Consumer Interaction specific issues referred to in strategic focus areas, (SFA 3, 4, 5 and 10): RAs, WoWA, objectives and initiatives included in this document. Industry members 3. Innovation, RD&E, Extension and Biosecurity Implementation (SFA 4, 6, 7 and 8): Wine Industry The proposed implementation plan (see following) Technical Committee indicates the order of priority, industry representational 4. Regulation and Social Responsibility structure and allocation of operational responsibility in (SFA 9 and 10): WoWA, RAs. pursuing the strategic priorities. Where cross-overs of priority issues between Working Form working groups Groups are found, they would collaborate as required. WoWA will form working groups to address the priority Review of working groups strategic focus areas and develop action plans to pursue the linked objectives. WoWA will develop a set of key performance indicators (KPIs) for each Working Group. The progress and The Working Groups will comprise industry members continued status of each group will be reviewed by and draw on other resources where skills and expertise WoWA with reference to these KPIs. are required to ensure there is capacity to achieve the objectives in each strategic focus area (SFA). Review of industry strategic plan Membership will be determined by WoWA and each The new Wine Industry Strategic Plan will be reviewed by group will be accountable to WoWA. WoWA and RAs at six months and 12 months following There may be issues that have been identified as its ratification, and annually thereafter. The review will priorities in the strategic plan that do not require a include assessment of WoWA’s operations, each Working working group to be formed. It may be possible to Group and an update of the priorities to be pursued in combine some of the remaining priority issues into the following year. broader themes to be covered by a single working group. 37 38 Plan Implementation 2 3 1 Strategic Focus and Partnerships Advocacy for Funding develop MOUs Conduct polland constitution and incorporate to Strategy, MOUs;ratify Development of High State Medium of tactics Strategy andexecution MOUs business plansand Develop regional MOUs business plansand Develop regional Level ofrepresentation andpriority High Regional Medium Execution oftactics High High Local Medium 10 4 6 9 8 5 7 Strategic Focus implemented to ensure contents are policy paperandlobby Develop state-specific implemented to ensure contents are policy paperandlobby Develop state-specific Committee management ofTechnical Advocacy and and Partnerships Advocacy for Funding and Partnerships Advocacy for Funding and Partnerships Advocacy for Funding FWBM criteria generate data to develop Moderate process and High State Medium execution oftactics Development and producers foster acriticalmass of regional identity and Input to process, define Level ofrepresentation andpriority High Regional up to state body and extension for relevant research to members, feedback Communicate policy practice operations implementation ofbest Support for in-region practice operations implementation ofbest Support for in-region threats or practices identifying possible for incursions and On-ground surveillance In-region advocacy Medium

Execution oftactics Execution oftactics Execution oftactics High High Local and extension for relevant research In-region advocacy practice operations implementation ofbest Support for in-region expressions offinewine regionally-specific Input to process, defining practice operations implementation ofbest Support for in-region threats orpractices identifying possible for incursions and On-ground surveillance Medium

39 40 ABS Australian Bureau of Statistics

APC Agricultural Produce Commission

AWRI Australian Wine Industry Research Institute

CSIRO Commonwealth Scientific and Industrial Research Organisation

CU Curtin University of Technology Glossary DAFWA Department of Agriculture and Food, Western Australia FAO Food and Agriculture Organisation

GWRDC Grape and Wine Research and Development Corporation

RA Regional Associations

MU Murdoch University

NRM Natural Resource Management

NWGIC National Wine and Grape Industry Centre

OIV International Organisation of Vine and Wine

TC Wines of Western Australia Technical Committee

UWA The University of Western Australia

WAC Wine Australia Corporation

WAVIA Western Australian Vine Improvement Association

WET Wine Equalisation Tax

WFA Winemakers’ Federation of Australia

WGGA Wine Grape Growers of Australia

WoWA Wines of Western Australia

41 These documents were considered in the desk top • The Australian Wine Industry Environment Strategy reveiw of industry. Order of documents indicates ‘Sustaining Success’, Winemakers’ Federation of importance of each document to the review process: Australia. • Strategy 2025. Prepared by the Winemakers’ • Wine and Food Tourism Strategy ‘Harnessing the Federation of Australia (WFA), 1996. tourism potential of wine and food in Australia 2020’, Winemakers’ Federation of Australia. • Directions to 2025 ‘An industry strategy for sustainable success’, Wine Australia, May 2007. • Health and Social Responsibility Strategy 2011 14, Winemakers’ Federation of Australia. • The Western Australian Wine Industry Strategic Plan 1997, Wine Industry Association of Western • Western Australian wine industry research and Australia and the Western Australian Government. development priorities 2010, prepared by the Wine Industry Association Technical Committee. Bibliography • Western Australian Wine Industry 3–Year International Marketing Plan 2011–14, prepared by • Department of Agriculture and Food, Western Wines of Western Australia. Australia Strategic Plan 2011–2015. • Wine Restructuring Action Agenda (WRAA), two • The Marketing Decade ‘Setting the Australian joint statements prepared by the Winemaker’s Wine Marketing Agenda 2000–2010’, Winemakers’ Federation of Australia (WFA), Wine Grape Federation of Australia and the Australian Wine Growers’ Australia (WGGA), Wine Australia and Brandy Corporation, 2000. (WA) and the Grape and Wine Research and • Wine Industry Profile, prepared by the Department Development Corporation (GWRDC): ‘Wine of Agriculture and Food, in ‘Profiles of the major industry must confront the reality of oversupply,’ Western Australian agriculture industries’, 2013. November 2009, and ‘Wine sector must continue • The Chinese grape and wine market 2012, prepared to focus on transition,’ December 2010. for the Grape and Wine Research and Development • An overview of the Australian Wine Sector 2013, Corporation by Rabobank International. Winemakers’ Federation of Australia (WFA), • Innovation driving sustainable success – a presented by Paul Evans at the Australian research prospectus for the Australian grape and Wine Industry Technical Conference in Sydney, wine sector 2010–2012, Winemakers’ Federation 17 July 2013. of Australia. • Strategic Research, Development and Extension • Sustainable Food and Wine Value Chains, prepared Plan 20012 17, ‘From vine to glass: supporting a by Andrew Fearne for the Government of South competitive Australian wine sector’, Grape and Australia. August 2009. Wine Research and Development Corporation • Contribution of horticulture to the Western (GWRDC). Australian economy 2012, Department of • Industry Biosecurity Plan for the Viticulture Agriculture and Food, Western Australia. Industry 2009, prepared by Plant Health Australia • Research, Development, Extension and (PHA), Version 2, August 2009. Commercialisation Plan 2013–2018, Australian Wine Research Institute.

42 • Wine: A Partnership 2010–2015, prepared by the South Australian Wine Industry Council for the South Australian Wine Industry and the Government of South Australia. • Wines of Chile ‘Strategic Plan 2020’ International Markets, Vinos De Chile – Wines of Chile, November 2010 (www.winesofchile.org). • Swan Valley Vision 2012 ‘Securing the future of Perth’s Swan Valley’, prepared by the Swan Valley & Regional Winemakers Association. • Wine for China: the practicalities, prepared by Primary Industries and Regions South Australia (PIRSA), August 2012. • Liquor Control Act of Western Australia 1988. • ‘Wine tourism Uncorked’, Winemakers’ Federation of Australia, 2008. • State Government Strategy for Tourism in Western Australia 2020, Tourism Western Australia, 2010. • AGRIFOOD 2025+: The Future Way – Gourmet Way. Department of Agriculture and Food, Western Australia (www.agric.wa.gov.au). • Environmental Management Guidelines for Vineyards, prepared by Winewatch for Wines of Western Australia, 2011.

43 Appendices

Appendix 1. Industry Workshops Three regional industry workshops were facilitated by Rosscrae International, DAFWA, Regional Associations and Wines of Western Australia in August 2013. The workshops were open to all industry stakeholders and were conducted as open forums to discuss the state of industry within a framework that aimed to determine the following:

• What are the challenges that the industry The following summaries of each workshop show currently faces and what is the current state of that much of the key information that informed the the industry with regard to standard business development of the Strategic Plan was gathered benchmarks such as profitability, return on through the workshop process. investment and projected future performance? • What would the ideal state of the industry in 2024 be if the correct strategies were implemented to address these challenges?

44 Combined Summary Results of All Workshops

2014 Current Reality Strategic Focus 2024 Ideal Future • Industry is currently in/approaching mature Clear understanding of profitable business models • We changed the rules/re-invented our offer business cycle Collaborative focus on market development • Profitable at every level of the value chain • Competition, over-supply, pricing pressure, retail • Stronger more valuable/rewarding industry consolidation/difficult to maintain sustainable Strong advocacy to influence positive change to • We dealt with growth dynamics successfully price models regulatory requirements • Markets, domestic and international, are coming • Cost of production increasing Industry relevant RD&E to drive innovation to us • High level of regulatory intrusion • We are perceived as a luxury brand • Subsidised New Zealand product • We produce some of the greatest wines in the

Business Environment Business • Imported wine competition world from some of the greatest wine regions in the world

• Disparate, fractured industry A unified, strategically influential voice with clearly • WA industry has strong strategic influence at all • Role of representative bodies unclear defined roles for execution at all levels of representation levels of government • Key industry issues not being addressed A sustainable model for revenue raising to support • Cohesive industry – everyone participates collectively with a single, clear position (WET, representation at all levels • We are all clear and hold a consistent position on health, biosecurity, funding/partnerships with key issues government agencies) • Isolation is a factor – we are different to SE Australia Advocacy/Representation

• No clear understanding of market development Clearly defined roles for marketing activity at each • WoWA advocates for market opportunities roles for state and regional bodies representational level • Regional bodies execute tactics • Disparate approach to partnership with Strong advocacy for marketing support/partnerships • Strong working relationships with government government agencies/synergistic industry groups agencies Develop strong inter-industry and intra-industry • Lack of connection with national body activity/no relationships and partnerships • Strong working relationships with synergistic board representation on WAC industries Increase in domestic and international wine tourism Market Development Market

45 MT BARKER REGIONAL WORKSHOP

2014 Current Reality Strategic Focus 2024 Ideal Future • Industry is currently in/approaching mature Clear understanding of profitable business models • Demand outstrips supply by 2018 business cycle Collaborative focus on market development • More competitive in WA market (50–75% are WA • Competition, over-supply, pricing pressure, retail wines) Strong advocacy to influence positive change to consolidation/difficult to maintain sustainable • WA wine consumers make WA regional wines the regulatory requirements price models wine of first choice • Export is difficult Industry-relevant RD&E to drive innovation • WA produces 30% of Australia’s premium wines • High cost of production (up from 20% today) • Cost of production increasing (particularly • What constitutes a premium wine is defined and external costs we cannot control e.g. utilities, understood by producers and consumers licences) • Energetic, vibrant industry • Cost of regulatory compliance increasing • Wine quality in regions increase (40 70% premium • Diminished equity for Brand WA in local market wines) Business Environment Business • Imported wine competition • WA is leader in research • Can’t increase price • Industry financially sustainable • Retail pressure on <300 tonne businesses • Fewer vineyards • WET rebate exists, false economy, propping up 50% of businesses • Australian wine brand diminished in US market • Disparate, fractured industry A unified, strategically influential voice with clearly • Strong regional bodies taking lead on marketing • Role of representative bodies unclear defined roles for execution at all levels of representation and local issues • Key industry issues not being addressed A sustainable model for revenue raising to support • Strong state body, strategic influencer collectively with a single, clear position (WET, representation at all levels Health, Biosecurity, funding/partnerships with government agencies) Advocacy/Representation

46 2014 Current Reality Strategic Focus 2024 Ideal Future • No clear understanding of market development Clearly defined roles for marketing activity at each • WoWA advocates for market opportunities roles for state and regional bodies representational level • Regional bodies execute tactics • Disparate approach to partnership with Strong advocacy for marketing support/partnerships • Strong working relationships with government government agencies/synergistic industry groups agencies Develop strong inter-industry and intra-industry • Lack of connection with national body activity relationships and partnerships • Strong working relationships with synergistic industries Increase in domestic and international wine tourism Market Development Market

The Industry Voice General comments • A majority in the room believed that the current • Less reliance on China, increase export to Europe level of industry cohesiveness, organisation rates • Individuality/regionality with cohesion less than 5 on a scale from 1 to 10, where 1 is • Industry to provide career opportunities/pathways highly disparate and 10 is highly organised. 9 to 2 at all levels supported this view. • Vineyards and wineries in WA are valuable assets • An absolute majority in the room supported the position that industry should be highly organised • Wine is an industry of choice with a centralised core seamlessly linked to • Wine quality is better in every region all levels of industry. All rated it at 7 or higher • Right varieties in right regions in importance. • Tell consumers what we do best • An absolute majority supported the position • Technical quality and R&D that such a model requires consistent and • Innovation sustainable funding. • Remove road blocks • A significant majority supported the in-principle position that a whole of industry fee for service • Retail concentration in Albany has destroyed prices provides the best mechanism for achieving for local producers sustainable industry funding (8 to 3). • Market intelligence for the premium wine sector needed, Suggest Wine Intelligence

47 MARGARET RIVER REGIONAL WORKSHOP

2014 Current Reality Strategic Focus 2024 Ideal Future • Cost of Production increasing Clear understanding of profitable business models • Profitable at every point in the value chain • Subsidised New Zealand products Collaborative focus on market development • Cohesive industry with everyone participating • Imported wine competition • Secure land and water Strong advocacy to influence positive change to • WA wine businesses prepared to erode margins regulatory requirements • Strategic influencer at the national level for sales (Volume vs Margin) • Not necessarily bigger but more valuable Industry relevant RD&E to drive innovation • Retail duopoly has a greater share of the market • Clearer picture of supply and demand and • No barriers to entry in the industry understanding what drives these (decisions, • Opportunistic, cannibalistic behaviour human behaviour) • Distribution channels competing against industry • Better able to predict the future • Difficult to engage the younger generation • Structure and policy framework prepared for

Business Environment Business of consumers growth or decline depending on the cycle • WA lacks influence at the national level • Industry policy on a range of key issues • High level of regulation and intrusion in • WA wine is a luxury brand in Asia the industry • Licensing costs too high and restrictive • Disparate, fractured industry A unified, strategically influential voice with clearly • WA industry is a strong strategic influencer • Role of representative bodies unclear defined roles for execution at all levels of representation • WA has strong, relevant regional bodies • Key industry issues not being addressed A sustainable model for revenue raising to support • WoWA does strategic influencing on external collectively with a single, clear position (WET, representation at all levels issues Health, Biosecurity, funding/partnerships with • Regional bodies do strategic influencing on government agencies) internal issues • Isolation is a factor – we are different to SE Australia Advocacy/Representation • Anti-alcohol lobby is a major factor

48 2014 Current Reality Strategic Focus 2024 Ideal Future • No clear understanding of market development Clearly defined roles for marketing activity at each • WoWA advocates for market opportunities roles for state and regional bodies representational level • Regional bodies execute tactics • Disparate approach to partnership with Strong advocacy for marketing support/partnerships • Strong working relationships with government government agencies/synergistic industry groups agencies Develop strong inter-industry and intra-industry • Lack of connection with national body activity/no relationships and partnerships • Strong working relationships with synergistic Board representation on WAC industries Increase in domestic and international wine tourism Market Development Market

The Industry Voice General comments • An absolute majority in the room believed that the • Let’s do something huge … current level of industry cohesiveness, organisation • Thrive and grow strategy rates less than 5 on a scale from 1 to 10, where 1 is • Stronger more valuable rewarding industry highly disparate and 10 is highly organised. • In 2024 wine businesses have an asset that • 84% supported the position that industry should be continually increases in value highly organised with a centralised core seamlessly linked to all levels of industry. All rated it at 7 or • Industry is clear on key positional issues higher in importance where 1 is not important and 10 • Influential at all levels of government is critically important. • Great wine regions from WA • An absolute majority supported the position • The only way forward is to focus on quality that such a model requires consistent and • Consistent, clear industry-wide message to affect sustainable funding. incremental, meaningful, long-term change • 80% supported the in-principle position that • Clarification of roles and responsibilities a whole of industry fee for service provides • Current oversupply/capacity may be an asset when the best mechanism for achieving sustainable cycle swings up industry funding.

49 SWAN VALLEY REGIONAL WORKSHOP

2014 Current Reality Strategic Focus 2024 Ideal Future • Low grape prices RD&E to drive quality improvements • Exporting 50% of production • Climate change is reality RD&E to drive innovation in product and • A safe choice for consumers • General oversupply market engagement • An edgy choice for consumers • Underselling our product Business models to support premium production • An ultra-premium choice for consumers • Lowered consumer perception of WA products • WA is a premium producer Market Development programs to support premium • Retail consolidation adversely affects all levels price points • Commodification of wine • Threat of imported wine • Difficult to raise capital for expansion or Business Environment Business improvements • Labour costs/input costs are high

• National agenda affects state issues Cohesive, integrated, organised representation • A diversity bringing strength • Poor communication within industry and by Centralised, levied funding model • A strong unified voice advocating on behalf of the industry to stakeholders and decision makers industry WA interests are strongly communicated and pursued • Licensing/compliance constraints • Relationships with other synergistic industries are • Alcohol and Health issues a threat to all strong • International agreements/free trade have not been pursued vigorously • Funding activities is a challenge

Advocacy/Representation • Engagement with national bodies needs to improve • Conservative, pedestrian attitude to change Strong promotional activities • Recognition of WA regions – The world knows us • Wine Tourism is important Education across all levels of the value chain • We built a reputation equivalent to the Napa Valley • Premium products require time to make • Other regions have successfully leveraged off Build relationships with allied/synergistic industries and market Margaret River’s reputation • Wine and tourism have successfully worked together • We have strong relationships across all levels of Market Development Market influence in our key markets

50 The Industry Voice On the current state of industry representation, 40% rated it below 5 and 100% below 7 where 1 is highly disparate and 10 is highly organised. On the need for a high level of organisation, 90% rated the level of organisation to be 7 or higher. On the need for a highly organised voice, 80% rated it at 8 or higher where 1 is no need and 10 is critical and supported the position that such a model requires consistent and sustainable funding. On funding, 90% supported a centrally administered fee for service as an acceptable method of funding General Comments • Do we wait for the collapse and see who has survived? • A plan to thrive is needed • Where do we set the bar for goals? • Any plan requires a formalised review process to ensure ongoing relevance • Need to become a market driven industry • Difficult to determine needs of a diverse industry • Strategy 2025 was a fundamental cause of the current situation • Should there be a prize for everyone? Regardless of how they operate their business? • Co-operative competition – where are the boundaries? • We are good at noting the differences in the industry not the commonalities • We have one of the best grape growing environments in the world. Industry Workshop Poll Results

51 Industry Workshop Poll Results 1. On a scale of 1 to 10 where 1 is highly disparate 2. On a scale of 1 to 10 where 1 is not important In each workshop, participants were asked to consider and 10 is highly organised, how would you rate and 10 is critically important, how do you the issue of industry organisation with regard to the current level of industry organisation? rate the need for a highly organised industry representation, advocacy and collaborative market with a centralised core seamlessly linked to development. Figure 16. Current level of industry organisation all levels of industry?

The questions posed were: 100% Figure 17. Need for high level of organisation 90% Mt Barker 1. On a scale of 1 to 10 where 1 is highly disparate Margaret River 80% 100% and 10 is highly organised, how would you rate the Swan Valley Mt Barker 70% 90% current level of industry organisation? Total Margaret River 80% 2. On a scale of 1 to 10 where 1 is not important and 10 60% Swan Valley 70% is critically important, how do you rate the need for 50% Total 60% a highly organised industry with a centralised core 40% seamlessly linked to all levels of industry? 30% 50% 40% 3. On a scale of 1 to 10 where 1 is not important and 10 20% 30% is critically important, how would you rate the need 10% for a sustainable funding model to support a highly 0% 20% Below 5 5 to 7 7 to 10 10% organised structure of representation? Highly Moderately Highly Disparate Organised Organised 0% 4. In principle, would you support a centrally Below 5 5 to 7 7 to 10 administered fee for service funding model where Current level of industry organisation Not Needed Important Critically Important the revenue raised is returned to the region from Need for high level of organisation which it is collected to support a vibrant and highly organised level of representation? Industry showed consistent, majority support for a more organised representational structure with a centrally administered fee for service model. This provides a mandate for Wines of Western Australia to investigate the implementation of such a structure in collaboration with Regional Associations. Results for each workshop are shown in the following graphs.

52 3. On a scale of 1 to 10 where 1 is not important and 10 4. In principle, would you support a centrally administered is critically important, how would you rate the need fee for service funding model where the revenue raised is for a sustainable funding model to support a highly returned to the region from which it is collected to support organised structure of representation? a vibrant and highly organised level of representation? Industry showed

Figure 18. Need for consistent funding to support Figure 19. Support whole of industry fee for service consistent, organised representation 100% majority Mt Barker 100% 90% Margaret River support for a 90% Mt Barker 80% Margaret River Swan Valley 80% 70% Swan Valley Total more organised 70% Total 60% 60% 50% representational 50% 40% structure. 40% 30% 30% 20% 20% 10% 10% 0% No Yes 0% Below 5 5 to 7 7 to 10 Support whole of industry fee for service Not Needed Important Critically Important Need for consistent funding to support organised representation

53 Appendix 2. Industry Online Survey An online survey of the whole of industry was conducted to gather key data about the current makeup of the industry as well as future intentions of participants. In total, 102 businesses completed the survey.

Industry structure and representation The survey captured information on: In addition to providing data to support the information With regard to industry association/representative • Participants’ profiles gathered in the workshops, the online survey provided organisation fees, participants were asked: valuable information that will be useful in developing • Production and operations Would you support a single fee collection, by a single tactical programs to implement the Strategic Areas of • Business profiles administrative function, which then distributes the Focus of the Plan. • Sales channels and strategies percentages of your fee to the relevant other bodies under a formal and transparent agreement? • The business environment • Industry structure and representation • 39% of respondents were in favour • SWOT analysis • 11% disagreed • 50% needed more information to decide. • Contact information (optional).

Figure 20. Participant profile Figure 21. Business profile Figure 22. Support for industry-wide single Participants represented all regions. fee collection Support 17% Producer 17% Manjimup 2% Yes 39% Peel 2% Perth Hills 6% Margaret Grower 17% River 31% Pemberton 7%

Swan Valley 13%

Producer/ Need more Grower 49% No information 50% 11%

Geographe 15% Great Southern 22%

54 SWOT analysis Figure 24. Strengths ranked in order of priority Weaknesses Participants were asked to list three key Strengths, 70% Key weaknesses in order of importance were: Weaknesses, Opportunities and Threats that they believe Strength 1 60% the Western Australian Wine Industry should consider in Strength 2 • Marketing the review and be acted on either now or in the future. 50% Strength 3 • Industry cohesion • Oversupply Strengths 40% • Costs Key strengths in order of importance were: 30% • Knowledge • Quality 20% • Genetic resources • Regions Clean and green 10% Figure 25. Weaknesses ranked in order of percentage • Scale of responses

0% / y

• Market growth & et 30% een Scale ersity Gr Mark ouris m People Qualit G ro wth Clean T Figure 23. Strengths ranked in order of Industry Div Regions Cohesion 25% percentage responses The diversity of WA’s wine regions was seen as a major 20% 45% strength. Regions were strongly linked with diversity 40% and quality related to their capacity to produce a 15% 35% diverse range of distinctive fine wine varieties and styles. 10% 30% Regional differentiation was an important factor.

25% The industry’s ‘clean and green’ image was a major 5% 20% strength. Key factors were a clean grape growing environment, relative lack of pests and diseases, low 0% s 15% s er chemical inputs, strict quarantine barriers, good quality ce Ov eting Scale Cost 10% Retail Other Supply wledge

water and sustainable use on natural resources. Genetic esour Industry r Cohesion

5% Mark WA’s relatively small scale of production was regarded Kno Consolidation

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Gr provided the flexibility and capacity to compete globally Mark ouris m People Qualit G ro wth Clean T Industry Div Regions Cohesion in high value niche markets. These included geographic isolation and distance to national and international markets; lack of funds for The potential for growth in international and local Quality was overwhelmingly seen as the greatest market development, marketing and promotion; low markets was a strength. Respondents indicated growth strength of the WA Wine Industry. Responses related level of exports and knowledge about access to export would be driven by growth in the economy, population, quality to wines; consumer perception and market markets; competition from imports; poor distribution and exports, and consumer perception and support for reputation for high quality wines; capacity to produce route to market for many wine producers. premium wines and grapes in all regions; increasing WA wines. demand for cool climate wines; climate and location Industry cohesion was a major weakness. Responses of regions suited to production of high quality fruit included fragmentation of industry structure; lack of and wines. unity, coordination and funding of industry bodies; lack

55 of industry cohesiveness and direction; inability to drive Opportunities Figure 28. Opportunities ranked in order of priority essential industry needs to government. Key opportunities in order of importance were: 60% Opportunities 1 Figure 26. Weaknesses ranked in order of priority • Market development 50% Opportunities 2 45% • Industry cohesion Opportunities 3 40% Weaknesses 1 • Wine tourism 40% Weaknesses 2 35% • Quality Weaknesses 3 30% 30% • Genetic resources 25% 20% Figure 27. Opportunities ranked in order of 20% percentage responses 10% 15% 35%

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Kno 15% Industry cohesion was a major opportunity. Respondents Oversupply of wine and grapes was a major issue for 10% indicated that a cohesive approach and was needed to some respondents. The important factors included: over- provide a single, influential whole of industry voice on a 5% production of lower grade fruit holding back prices; too range of critical issues. These included: liquor licensing; many vineyards and wine production capacity; too many 0% tourism; engage with state government and national t s y et ce

plantings in poor areas. een industry bodies on key issues and reforms; access funds ohol ease Other Mark ourism Qualit wledge and resources for major industry initiatives. Industry Incr

Lack of technical knowledge was an important Cohesion Demands elopmen Education Consumer v weakness. Respondents saw this as having a negative Kno Wine tourism and wine and food partnerships were De Wine T impact on production and quality in the long term. Clean & Gr major opportunities. Respondents highlighted a number Health & Alc They indicated a need for more RD&E input, more Genetic Resour of initiatives including: food and wine promotion, grower and winemaker forums and greater innovation in Market development was overwhelmingly seen as develop regional food and wine tourism experiences, products and promotion. the greatest opportunity for the industry. The survey improve co-ordination with tourism industry, increased highlighted a number of focus areas including marketing promotion of food and wine tourism, work more in Costs are a major issue. Respondents highlighted the and promotion of WA’s fine wine regions; expansion of partnership with DAFWA and Tourism WA, and integrate high cost of production relative to other wine regions of export markets particularly to China and other emerging wine and tourism marketing. the world; the high cost of inputs; the tyranny of distance markets in Asia; increased marketing for ultra-premium to the east coast of Australia affecting the cost of doing Quality was a strength that respondents saw an wines; growing WA wine market for WA wines; target business in WA. opportunity to improve on. Initiatives and innovations education and promotion of WA wines direct to Asian included: premium quality assurance program and fruit Genetic resources were also an important weakness. consumers; actively engage with sommeliers interstate production standards; focus on high quality wine with Respondents indicated the industry needed better to develop WA wine ambassadors. lower alcohol; planting grape varieties and clones suited access to improved clones, varieties and rootstocks, and to climate; product differentiation for low yielding, higher reduce the production of varieties in unsuitable areas. 56 quality fruit. The survey identified a major opportunity in improving The two major threats to the WA Wine Industry, identified Possible amendments to, or removal of, the WET rebate the genetic resources available to industry. This included: by survey, were biosecurity and retail consolidation. was potentially a major threat to the profitability of WA’s improved planting material of new varieties; improving smaller producers. Other issues identified included the Biosecurity to protect the industry’s grape production access and availability of imported and locally-selected unfair competition for New Zealand producers who are base from the incursion of exotic pests and diseases was clonal material. able to claim the WET rebate, and potential adverse the main issue. The perceived relaxation of quarantine effects from any future changes to the taxation regime. Threats barriers to importation of fresh table grapes and grapevine planting material was identified. Disease Competition from imported wines was a major threat. Key threats in order of importance were: risk associated with abandoned vineyards was another This included cheaper commodity wines as well as • Biosecurity important issue. quality wines from South America. The threat was • Retail power exacerbated by wine writers promoting imported wines The consolidation of retail power in the hands of the two and the high Australian dollar. • WET rebate main retail chains was considered a major threat. This • Imports was adversely affecting avenues to market for smaller • Environment and sustainability producers and providing unfair competition from house • Oversupply brands and imports. • Health and alcohol Figure 29. Threats ranked in order of percentage responses Figure 30. Threats ranked in order of priority 18% 30% Threats 1 16% 25% Threats 2 14% Threats 3 12% 20% 10% 15% 8% 6% 10% 4% 5% 2% 0% s

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57 Wines of Western Australia Claremont Showgrounds Lou Giglia Pavilion Gate 1 Graylands Road Claremont WA 6010 (08) 9284 3355 [email protected] www.winewa.asn.au