Business view

WK Director Hamish Morrow, who works with several wine companies and growers, says in the wake of the low-yielding 2021 vintage, medium-sized wineries, with fewer opportunities to boost fruit intake than bigger players, are getting "more creative" in how they access product. That might mean increasing yield restrictions or buying in bulk wine instead of grapes "and we are starting to see a bit more of that of late".

Some growers, facing increased costs and an excellent price for bulk wine, are looking to "squeeze a bit more revenue out of their business model", he says. That's a good short-term gain but could present risks in the long term, if contracts fall through. "Chasing prices on a short-term basis can be a bit dangerous."

Limited supply has also seen some companies rationalise their customer base and drop off lower tier labels to prioritise higher priced wines, he says. "This is a good opportunity to move out some of the lower performing product lines on the back of focussing on the higher value marign." Meanwhile, buoyant global demand has seen price increases for some labels in some markets, he adds.

With inventory and logistics an ongoing challenge, Hamish says companies are talking to customers and explaining the need for a much longer lead-in time for ordering wine. "They are being as proactive as possible."

In general, companies have adapted "really well" over the past 18 months, says Hamish. "They have bedded in changes, with lower performing parts either mothballed or discontinued." Cellar doors, for example, may be hibernating while companies focus on parts of the business that offer more bang for buck.

"I think for the most part people are doing pretty well. They are going back and looking at processes within the winery and wider business." With less time and money invested in travel, companies are able to invest in the likes of software that increases efficiency, he says. "The profitability is still there, so they can still invest and be a bit more innovative."