Australian Agribusiness Perspectives: 2011
Wright Robertson of Glencoe is a vineyard, winery, cellar door and contract winemaking business located 18km south of Glen Innes on the New England Highway. It was established by Scott Wright in 1999 as a family business producing and marketing niche wines based primarily on their classification as certified organic products. It has provided Scott with interesting opportunities and challenges. In November 2010 he made the decision to desist with the businesses’ organic-producer classification, informing his wholesale customers of this decision in an email sent 12 November 2010. As he stated in that correspondence: ‘This is a decision that I have not come to lightly and I guess is really several years in the making’. In this paper he discusses his experience as an organic producer and niche marketer. While he will continue to use farming practices which are organically derived, rather than being organically certifiable, he nevertheless presents a justification for stewardship as the basis of the business into the future. Thought of as incorporating both financial and environmental sustainability, stewardship is now the core value of the business after his experience as a certified organic producer.
Shaun Cassidy is Managing Director of
Merilba Estate wines and the Chair of the New England Australia Branding
Strategy Committee. Mr Cassidy participated in a Wine Business Research
Symposium convened by the School of Business, Economics and Public Policy,
University of New England on 13 August 2010. We asked Shaun to provide his
perspective on the wine industry in New England, in particular his experience in
developing his business from grape growing and winemaking to investing in a
cellar door facility, the development of the New England Australia wine region
as a wine tourism destination and the branding and marketing strategy which was
launched 26 October 2010. We also asked Shaun to discuss what he viewed to be the
opportunities and challenges to the wine industry in New England, including the
integration of wine and food branding, transportation issues and the potential
for developing suitable tertiary education for young employees in the industry.
The New England-North West region of NSW boasts a cluster of features which point to the opportunity of the development of a successful premium wine industry in the region. This has been recognised by State Government, which has assisted the facilitation of industry value-adding and expansion in the region throughout the past decade. The industry has developed to a point where it is now pursuing a regional-branding and marketing strategy for that portion of the region, “New England Australia”, which recently gained Geographical Indicator (GI) status in 2008. The State Government will continue to provide catalytic and supportive industry development assistance to the industry. It welcomes the examination by the University of New England and associated research organisations into ways in which they can interact with the industry through research, with the goal of providing further impetus to regional wine industry development activity.
The Australian grape-growing and wine
producing industry enjoyed meteoric growth from the early 1990s onwards, with
wine sales forming an increasingly important element of both national export
earnings and farm-sector income. Despite this success, a recent downward slump
in industry profitability and a dampening of demand for wine has resulted in a
call for government-assisted intervention, which would include a national
‘vine-pull’. This paper examines the ‘Wine Restructuring Action Agenda’ (WRAA)
proposed by a suite of industry bodies, and in particular the vine-pull policy
option, in light of its predecessor, the vine-pull scheme of 1985-87. We argue
that past experience suggests that both state and federal governments, and the
industry itself, ought to explore the other options contained in the WRAA more
fully, and indeed other emerging proposals for industry innovation and ‘light
touch’ regulation, when addressing the long-term sustainability of the
Australian wine industry.
Clearly the Australian wine industry is facing challenging times, burdened with an aggregate problem of oversupply. However, at the regional and individual business levels there are obvious disparities in the difficulties at hand and in the development and restructuring strategies to address them. For example, the New England Australia region, in undertaking a regional branding strategy, is still in its infancy in establishing its image. Other regions (e.g. Mudgee) have been quite successful in achieving this whereas others (such as the Riverina) have, up to this point, maintained regional anonymity. The intention of publishing these papers is to highlight some of the issues confronting grass roots producers and how they adapt their businesses in an environment of early regional development and economic uncertainty. It is hoped the papers provide useful insights for other regions and industry participants faced with similar circumstances.
A
lot of farmers that I talk to suspect that the grass is greener on the other side of the fence, and that perhaps they’d have been better off selling the farm and putting all their money into
shares. So
what I’ve endeavoured to do in
this analysis is look at whether this is true or a false perception. In working through my analysis I hope that it helps you to consider, on a more informed basis, whether you
should start diversifying your
investments by allocating more of your capital off farm or perhaps retiring
from farming altogether and allocating all of your capital to non-farm investments. At the very least it
will help you appreciate
the opportunity cost of the equity you
have invested in the farm.
To run a successful business in modern economies, entrepreneurs need to be very good at what they do: the race goes to the fittest, with the greatest will to win – and, at the same time, entrepreneurs need to be very good at co-operating with those they rely on for inputs or to buy their outputs – I win, you win, we win.
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