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Overcapacity, high costs make Australian wine-makers turn to India
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Wednesday, 09 June, 2010, 08 : 00 AM [IST]
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Overcapacity and high costs are driving Australian wine makers to explore strategic partnerships and distribution network with Indian liquor companies. All major Australian companies , including the top four, were looking at joint ventures and distribution of their wine brands in India, said John Griffith, president, Western Australian Wine Association, according to a report in Business Line from Perth. The top Australian wine makers include the Fosters, Constellation, Pernod Ricard and Cissallo.
Griffith says even though Australia exports $200 million worth of wine to China, it sees India as a major market. "India in the long-term is a learge opportunity for us," Griffith said. In India brought down tax barriers, it would be easier for the Australian wine producers to strike deals with Indian companies. He said the domestic production of grapes was about 1.8 million tonnes and his association was seeking the cooperation of member wine makers to reduce production by 20 per cent. "We need some people to go out of production if we have to remain viable," he said. The prices of wine in the domestic market had also gone down by 20 per cent because of the over-production.
Australian producers are moving to other countries as labour costs have become extremely high. For example, labourers in Australian vineyard are paid about $18 per hour whereas in Argentina the labourers are paid that amount for a day.
Another reason which is causing concern is the dent New Zealand producers are making in the domestic market as they have slowly increased their share to about 15 per cent and they also enjoy concessions from the Australian government.
The total wine industry in Australia is worth about A$5 billion and half of it comes through exports, making it the largest exporter of wines in the world.
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