Lehmann Urges Vineyard Cull

By Andrew Starke

Peter Lehmann Wines managing director, Doug Lehmann, says the Australian wine industry must remove about 35,000 hectares of vineyard to balance supply with consumer demand.

Lehmann said the past year had seen the company experience its most difficult trading conditions since 1994 and one of the worst in its thirty year history.

Peter Lehmann Wines recorded total revenue of $52.6 million (down from $61.8 million in 2008) and an after tax profit of $5.7 million (down 40.3 percent from $9.6 million in 2008) for the year ended 30 June 2009.

“The industry remains massively oversupplied with a national production potential in excess of two million tonnes and a current sales requirement of around 1.5 million tonnes,” wrote Doug Lehmann in his managing director’s report. “To bring the supply-to-sales ratio into some form of balance, approximately 35,000 hectares of vineyard needs to be removed.”

Further compounding the oversupply situation is a huge increase in imports of New Zealand sauvignon blanc.

“These imports are having an extremely detrimental effect on the volume and value of all Australian produced white wines,” said Lehmann. “The national oversupply situation is expected to put further downward pressure on grape prices, particularly white varieties, in most districts for the 2010 vintage.”

The global financial crisis created great uncertainty for trading as distributors and retailers sought to minimise stock levels whilst consumers reduced spending.

Lehmann said trading had been tough in Australian market with Peter Lehmann branded domestic sales down 20 percent by volume and 16 percent by value compared with the previous year. 

The decline in sales has been attributed to lower sales of the Peter Lehmann Semillon.

While the various countries in continental Europe have collectively become the company’s largest export market - with sales volumes mirroring domestic sales volume – these were also affected by the global downturn.

Germany and Switzerland were the strongest markets, with Sweden and the Netherlands also performing creditably.