Brief Overview of Wine and Olive Industries

Including some important connections

BVL and OGAL 2008

Paul Miller

Southern Australian Recent Climate

Two unexpected problems from 2006

Odd weather

Politics & Water (efficiency)

La Nina

Wine Industry Overview

• AWBC November 2007 Analysis

• View from my vineyard

World wine consumption

08

Source - AWBC Nov 2007

This estimate represents the third successive year that world wine production has declined.

Source - AWBC Nov 2007

Past and projected winegrape harvests Australia

Source - AWBC Nov 2007

Past and projected wine productionAustralia

Source - AWBC Nov 2007

Past and projected export, import and domestic – Australian wine

Source - AWBC Nov 2007

AWBC Nov 07 – selected comments

• Extended period of lower Australian harvests to come• Bottled sales growth is about red• Red not planted recently so behind white in ability to

recover• New plantings deterred by MDB water issues • Still some stock on hand – 465M l at June 07 (650M l

year before)

• Value building is the key – region, quality, price point

Australian Wine Industry 2008 – view from my vineyard

• 06/07 was a shock• 08 looking better• Grape prices on the way up - wine company responses

and actual supply hard to reconcile so far• Water trends – La Nina and politics• Still need scale more than ever in 5.5Billion industry• Need to promote regions• Adapt canopies and monitor temperatures – climate

warming?• Technology and use of observations critical

Scale in Barossa a significant advantage

BVL

07/08

Olive Industry Overview

Big Picture

• Strong global market growth

• Wealth, population, health

• Limited agricultural land

Australian responses, industry status and industry developments

Mistry, D., Sep/Oct 2007 – Bull market fats and oils next 7 to 10 years. The mother of all bull markets?

Factors affecting world olive oil prices

• Supply and demand – current EU crop ave.• Interaction/substitution between EVO and

ROO• Pressure from non olive EU countries • Competitors being used for fuel• Wide range of qualities within categories that

are not well defined or improperly defined• New markets expanding rapidly – USA,

China, Asia and India• Increasing wealth of population driving

demand for luxury and healthy products

The expert’s comment on Extra Virgin Olive Oil

• Good balance of fatty acids incl. monos, pufas• Antioxidants and minor components• Poly-phenols and phyto-sterols• Oleacanthin• Natural• Mechanical extraction• Extra Virgin Olive Oil – ‘the perfect oil’

Forecast to double by 2014

Lesson for Australia with its high quality, healthy products –

Product Differentiation

Industry Conditions - The Global Scene

Product Differentiation and Branding

• Olive Oil is a brand (Mack, AOF 2007)• Extra Virgin is a brand (Mack, AOF 2007)• Others are looking at both terms with regard

to their products (potentially good and bad for us)

Preliminary Brand Designs

Example 4 page DL flyer

Example Neck tags

• Point of sale

• Regional display

• Targeted and Measured Media Campaign

Product DifferentiationHow will our product be

different/better?

• Good brand• Code of Practice (ACCC standing behind it)• Promotion and good images• Simple but effective and advanced chemistry

and organoleptics e.g. oil life• Random testing• Continuous improvement – measure results• Initial focus on domestic market• Emulate wine industry

The Australian Olive Industry – 2007 & Future Oil Production

• Context - World annual - 3 million tonnes of oil increasing by about 3% p.a.

Australia – annual olive oil production metric tonnes

0

2000

4000

6000

8000

10000

12000

14000

2000 2001 2002 2003 2004 2005 2006 2007 2008?

In 2014 expect 25,000 metric tonnes+ (current domestic consumption 35,000 tonnes++)

Australian Olive Industry – Other physical data

• 2007 table olive production – about 1,000-2000 tonnes (mech harvest?)

• About 2,500 olive growers & about 87,000 acres of trees – 40 of these growers produce 90% of the olives and oil

• 40% of olive oil exported (USA, China, EU, Asia, Argentina)

Australian Olive IndustryGrove Locations

San Francisco

Laredo

El Paso

S Oregon

Equivalent latitudes

Summary Features of Australian Olive Oil Production

Climate

Soils and water

New plantations - Chile

Traditional Production Spain

Colossus

2005

2006

2007 - VOOP

Large scale olives Australia –well-drained soils + technology = some success – world’s best

like the past wine industry

Australian wine and olive oil in the world

Actually a lot

to develop