Annual Report 2013-14

2013/14 ANNUAL REPORT

WINE INDUSTRY ASSOCIATION OF WA (INC.)

22 September 2014

Contents 1.

Introduction ......................................................................................................................................................................... 3

2.

Presidents Report ................................................................................................................................................................ 4

5.

Treasurer’s Report ............................................................................................................................................................... 6

6.

Chief Executive Officer’s Report .......................................................................................................................................... 7

7.

Member Services Report ..................................................................................................................................................... 9

9. Technical Report .................................................................................................................................................................. 10 10. Financial Report ................................................................................................................................................................. 11

WINES OF WESTERN AUSTRALIA ANNUAL REPORT 2011/2012 __________________________________________________________________________________________

Introduction need to ensure our social license to operate is retained and strengthened.

We need to build strong partnerships with tourism, agriculture and fisheries by developing complimentary market

The Wine Industry Association of Western Australia (Inc.) (Wines of Western Australia), established in 1987, is the state’s primary organisation of wine producers.

It is our mission to provide a unified, strategically influential voice that creates opportunities for the fine wine regions of Western Australia.

development programs. We need to raise the stature of our industry so that West Australians are truly proud of their wine industry. 

Administration of technical and marketing program funding to provide Regional Associations and producers access to opportunities to improve business practises and market access.

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Communication to ensure wine industry participants are aware of the issues that affect their business enabling them to make informed decisions on the direction of the industry and their individual business.

Industry Overview Wine is a major value adding industry with significant regional economic and employment benefits. In 2012/13 the total value of the WA wine industry was estimated at $684 million with a grape value of $65 million. With regard to market channels, 48% of total value was sold in WA, 40% in eastern Australia and 12% in exports.

The Western Australian wine industry produces about 42 million litres of wine annually representing just 5% of the volume of Australia’s wine production but 12% of the value. Western Australia produces 25% of Australia’s fine wines (specialty and super-premium).

We look forward to working with industry to achieve these aims in 2014-15.

Unified, Influential, Focused and Efficient In 2013-14, Wines of WA completed a re-structure of operations. This included: 

Licensing operations of the Wine Education Centre to Full Bottle Wine Education

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Reducing staff to 1.5 FTE

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Aligning operations to reflect the structure outlined in the WA Wine Industry Strategic Plan 2014-24

There is now a clear understanding of the roles and responsibilities of the State body. Operationally, our focus will be on: 

Advocacy to enusre government, at all levels, understands our industry – the benefits we provide to the state economy, particularly in regional WA and the assistance and resourcing we require to further develop out industry.

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Representation to ensure the value of industry is clearly understood by government, the community and other

complimentary industry sectors. We Page | 3

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1. Presidents Report We are enthusiastic about our future. We have addressed many challenges within our organisation and I would like to thank Larry Jorgenson and Jodie Pannell for their hard work and can do attitude. We have fresh faces on the board and this new blood is bringing great thought leadership for us into the future. In particular Anthony Wilkes, Chris Furtado, Colin Bell and Bryan Saunders (as the executive committee) have been very supportive and keep this ship focused on what is best for the whole industry.

Wine quality in Western Australia has improved significantly over the past fifteen years. This improvement has come from maturing age of vineyards, the pedigree of our vignerons and winemakers, our pristine environment, improved site selection coupled with varietal and clonal choices, and the exceptional run of strong vintages from 2007.

Ultimately, this overall West Australian wine industry advancement has come from the small to medium younger entrants that are stepping up to the quality promise that was set by the pioneers.

This warm and fuzzy opening statement has a problem. The following is how I wish to explain it and its solutions.

I attended the Margaret River Wine Show awards dinner in 2012. Lisa Perrotti-Brown MW was the guest judge and speaker. Her words still ring loudly in my head. The message she gave at the dinner was to Margaret River producers, however the message can be applied to all fine wine regions of WA. In a nut shell, her message was “your wines are world class, but the world doesn’t know about them” She is correct in my view.

To address the advice Ms Perrotti-Brown gave industry, it requires strategic partnerships, industry investment and cooperation to achieve it. The goals and tactics we have set are: 1. Establishment of an Export Development human resource funded by DAFWA and levy payer funds via AGWA. 2. Pursuing greater engagement with AGWA and influencing their strategic direction to

have a greater focus on small winemakers and regionality.

3. All fine wine regions must have an industry developed marketing plan.

4. Continued engagement with Tourism WA. The Margaret River Gourmet Escape is a huge success and demonstrates what Tourism can deliver to fine wine regions.

5. Ensuring in-bound and out-bound activity continues to get funded with industry via the International Marketing Plan.

However the greatest challenge remains ensuring an industry developed secure funding model is introduced to create certainty in running this business and regional associations properly.

I look at our friends in the Barossa who invest over 3 times the amount into their regional body in comparison to Margaret River, and Adelaide Hills invests 13 times the amount when compared to the Great Southern.

If we change the way we look at things, the things we look at change. We export 15% of what we produce, the South Australians export nearly 50% of what they produce. New Zealand export two thirds! I believe they have a stronger mind-set that they have to export and export collectively.

If we are going to now triple exports to $100m, it’s going to take a change in the WA Wine Industry culture.

It’s not going to come from the heavy lifters alone, the trail blazers such as Accolade, Treasury, Leeuwin, Vasse Felix, Fogarty Wine Group, Howard Park, Plantagenet, Cape Mentelle, Ferngrove etc. It’s going to come from the colourful ones, the small to medium sized producers, from the Hawaiian shirts to the beige overalls and everyone in between. It’s the next 50 producers that will get this result.

Small winemakers compliment large winemakers and regions, and vice versa.

We have to export collectively as Fine Wine Regions of WA not WA Wines. A stronger emphasis on wines of provenance and personality is required. This collective of producers from small to Page | 4

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large are the ones to deliver the promise to export our unique, clean and green regions to the world.

We talk about Broome Pearls, Argyle Diamonds, Manjimup truffles and the same conversation applies eg: Margaret River Cabernet, Great Southern Riesling or Pemberton Chardonnay and the unique sites that exist amongst all our regions.

These are the stories that need to be told by an army of producers to the world.

Delivering stronger international demand for our regional categories will energise the curiosity of wine industry players that don’t have a piece of that pie, therefore stimulating wine investment again.

I would like to finish with a quote from Steve Jobs.

It’s a favourite of mine.

“Here’s to the crazy ones — the misfits, the rebels, the troublemakers, the round pegs in the square holes. The ones who see things differently — they’re not fond of rules. You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things. They push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.”

Redmond Sweeny President

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Treasurer’s Report Surplus In my first report as Treasurer of Wines of WA I would like to first acknowledge the excellent work of my predecessor and current Chairman Redmond Sweeney. In conjunction with the Board and management, Redmond’s efforts have seen the Association deliver a second successive surplus, over the past 5 years.

The ongoing efforts to refocus the activities of the Association to provide advocacy and representation on behalf of the fine wine regions and producers of Western Australia, is reflected in our changed revenue mix and cost base.

Revenues Membership revenue fell 13.9% to $183,845 this financial year. Producer Member fees which constituted 89% of our total Membership revenue fell 7.4% to $164,000 reflecting a reduction in processed tonnes over the prior year. Overall membership numbers were at the same level as the prior year

The Association is pleased to announce a surplus for a second consecutive year that, at $39,544, is in line with what was generated in the prior year.

Despite the current and prior year surpluses, Wines of WA continues to operate in a negative equity position and we will be required to continue to generate surpluses in following years to remedy this situation.

In conclusion, as I take on the new role as Treasurer of Wines of WA I would like to commend again the excellent work of board and current management in refocusing the activities of Wines of WA and rebalancing the organisation to achieve our long term objectives. The Association’s primary challenge and our key focus remains establishing a secure funding model to support our future plans and activities to the benefit of our members whilst attracting and retaining quality people to execute these plans.

The significant drop in revenue associated with the Wine Education Centre reflects the refocusing of Wines of WA functions and the resultant privatisation of this function.

Similarly, Events Management revenue has fallen by 78% to $15,620 as your State Association limited its focus to the facilitation and administration of State Government International Marketing funds.

Expenses

Chris Furtado Treasurer

Overall expenses for the full year were $193,182 being 52% down on the prior year, reflecting the reduction in full time employees from 3.0 to 1.5 FTEs as well as a concerted effort to minimise the Associations operating overheads.

The Association now operates with Larry Jorgensen (CEO) on a full time basis and Jodie Parnell providing administrative support on a casual basis (0.5 FTE). Redmond Sweeney has been providing voluntary bookkeeping support throughout the year.

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Chief Executive Officer’s Report

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While summarised in the introduction, it is worth reiterating the mandate of Wines of WA, as defined in the WA Wine Industry Strategic Review 201424.

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Advocacy Representation Administration Communication

These are the areas in which outcomes are now measured. The unit of measurement is now, “created opportunities for the fine wine regions and producers of Western Australia”.

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Advocacy In 2013-14, Wines of Western Australia advocated for the industry on the following issues: 

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National Industry Policy – Wines of WA submitted a response to the WFA’s first draft of the Actions for Industry Profitability 2014-16.

Engaged with AGWA to secure resources to support export market development for WA wine producers.

Attended meetings with the Minister for Racing Gaming and Liquor to discuss the recommendations for changes to the Liquor Licensing Act. In collaboration with the table grape industry and Regional Associations provided comment on the decision to allow importation of table grapes from California to WA. Submitted a supporting letter to the Minister for Finance on behalf of producers affected by changes in interpretation of the application of Land Tax on wine businesses.

Attended industry forums discussing water usage on behalf of the wine industry.

Representation In 2013-14, Wines of Western Australia engaged the following government and industry bodies on the following issues: 

Minister for Agriculture and the Department of Agriculture and Food, discussing an extension of the International Marketing Program for a further 3 years.

In addition, secured funding support for an Export Market Development Officer.

Tourism WA and Tourism Australia, participating in TWA Food and Wine Strategy Reference Group meetings with other industry representatives.

Facilitated WA’s participation as a Savour Australia 2013. See summary in appendices.

Facilitated a visit to WA by James Busby Travel. See summary in appendices.

Facilitated a visit to WA for the Wine Education Centre’s Singapore annexe Dux students.

Participated as an industry representative in the WA Agribusiness Alliance, an all of sector group working to address issues of common interest including: red tape/compliance obstacles for business; seasonal labour shortages; the image of agriculture as a business/career opportunity; and developing inter sector collaboration.

Administration In 2013-14, Wines of WA administered the following projects on behalf of the WA wine industry:      

Compliance requirements for the International Marketing Program funding partnership with DAFWA. Compliance requirements for the GWRDC Grass Roots program.

Management of the WA Wine Industry Technical Committee Management of the WA Wine Industry Strategic Plan development process Negotiated terms for the WA wine industry service agreement with Australia Post Negotiated terms for the WA wine industry co-membership arrangement with CCIWA

Communication In 2013-14, Wines of WA developed a communication strategy to ensure that all members of the industry have access to information required to add value to their business. While not complete or perfect as yet, this is summarised below: We will now use 4 mediums for communicating with industry. 

A ¼ e-newsletter which will provide non time sensitive information. It will consist largely of reports on what has happened with regard to advocacy and research activities. Also covered will be upcoming Page | 7

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events and opportunities that are of value to industry participants. We will also feature affiliate members, highlighting the services they offer to industry Social media which will provide day to day information. By following Wines of WA on facebook, twitter and linkedin, industry participants now receive live updates that are relevant to their business.

For urgent, critical information, you will receive an email or text message directly from me, sent from ceo@winewa.asn.au Eye to eye on a regular basis to share a coffee or a glass wine, depending on the time of day, discussing what you feel are the key issues affecting your business and region. I make a point of getting into the regions on a monthly basis and will continue to do so.

On behalf of industry, I would like to thank all who have contributed to the development of our industry over the past 12 months.

Larry Jorgensen Chief Executive Officer

Staff Movements During the 2013-14 financial year, Wines of WA appointed Jodie Pannel as Administration and Membership Manager in a .5 FTE capacity. In January 2014, the Board of Directors approved the appointment of Larry Jorgensen to a full time CEO role. This commenced on 20 January.

Association Representation Winemakers’ Federation of Australia (WFA) Western Australian Board representatives are Anthony Wilkes (Medium Winery Membership Committee), Alexandra Burt (Winemakers’ Federation Executive Council and Small Winery Membership Committee) and Redmond Sweeny (Small Winery Membership Committee).

Anthony is MD of Ferngrove and is the VicePresident of Wines of WA Alex is a former Board member and Treasurer of Wines of Western Australia and runs her family’s wine business, Voyager Estate.

Redmond is a partner in Snake and Herring, as well as being the President of Wines of Western Australia.

Wine Grape Growers Australia (WGGA) Colin Bell (Wines of WA Board member) continued as the WIAWA representative on WGGA during 2013/14. Colin is a viticulturist and principle AHA Viticulture has assumed the role.

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2. Member Services Report The Wine Industry Association currently has approximately 145 members, representing roughly of 85 percent of the State’s crush as well as a number of grape grower, distributor and affiliate members.

Current Member Benefit Schemes Current Membership Benefits are listed as follows:

Australia Post Membership entitles access to the Wines of WA alliance with Australia Post whereby members can take advantage of specialised wine handling and delivery services at significantly reduced prices in both the domestic and overseas markets.

Distributor Membership Benefits Distributor members receive the following benefits:  Advertising events and new products in the “Wine Scene” E-newsletter  Advertising page link, events and new products in social media  Invitation to the facebook members only group  Receive regular issues of the “Wine Scene” E-newsletter and keeping up to date with all the latest wine industry news  Access and notification to networking events and workshops with WOWA wine producers and growers

Chamber of Commerce and Industry, WA (CCIWA) Membership permits access to the dual Wines of WA / CCI membership agreement. This provides members with access to the full range of CCI member benefits including: advice and assistance on industrial relations, workplace agreements, workers compensation, occupational safety and health, industry training, trade, environmental compliance and more.

Wine Grape Growers’ Australia Wines of WA and Wine Grape Growers Australia have joined forces to offer WA wine grape growers a single membership. WA wine grape growers will pay a single fee to gain membership and representation at the state and national levels in these two key industry bodies.

Affiliate Membership Benefits Affiliate membership was revised in 2011 from four levels down to one, affiliate members receive the following benefits:     

Advertising events and new products in the “Wine Scene” E-newsletter Advertising page link, events and new products in social media Invitation to the facebook members only group Receive regular issues of the “Wine Scene” E-newsletter and keeping up to date with all the latest wine industry news Access and notification to networking events and workshops with WOWA wine producers and growers

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3. Technical Report WA wine industry technical committee, AGWA Regional’s program summary.

AGWA Regional’s program - 2013-14 The following activities where effectively delivered in line with the contract for the 2013-14 AGWA Regional’s program (WA) 1. Evaluating the use of composts and mulches as a means of improving nutrient and water use efficiencies. Extend research information from year two of trials 2. Improved understanding of soil and petiole sampling requirements and the interpretation of these results in relation to vineyard nutrition requirements.

3. Winery energy efficiency, winery waste water and post-harvest care of grapevines In addition, the Assessing soil quality and interpreting soil test results publication developed by Tony Proffitt and Keith Pekin has been very well received

by WA producers and now utilised by producers on the east coast.

AGWA program 2014-15 activities; 1. Managing vines for extreme heat and wind events: Extreme heat and wind events have an ongoing and increasing impact on fruit quality and yield throughout all of the regions. This issue is exacerbated in the Margaret River region where the vines are predominately planted in a North South direction with the Western face being overly exposed to the effects of the afternoon sun during heat spikes. Three of the last five vintages in the region have been significantly impacted by the heat spikes and extreme wind events. This project will trial the effectiveness of three commercially available sunscreen spray products to manage extreme heat events. The project will also trial (same site) the effectiveness of pull up screens to manage extreme heat and wind events. David Botting from Howard Park Wines will oversee the trials at one of their HPW Margaret River vineyards. A demonstration based workshops will be carried out on that site and a follow up workshop to be held in the Swan Valley.

2. Investigating the potential application of Unmanned Aerial Vehicle (UAV) imaging in vineyards: While it is doubtful that UAV's and their payloads could currently replace light aircraft in acquiring late season imagery cost-effectively, there may be certain situations (e.g. cloudy weather) where the use of UAV's might be the preferred (and possibly only) option. They therefore

provide a flexible alternative method for data acquisition. Of more importance, is the potential use of high resolution imagery, acquired in both a horizontal and vertical plane, for other vineyard applications. These include determining the onset of budburst and the number of inflorescences on vines early in the season, detecting the presence of disease symptoms on leaves and/or berries, assessing the degree of bunch exposure and monitoring vine water status by measuring leaf temperature.

3. Tempranillo management: The variety Tempranillo has gained prominence in Western Australian viticulture. The Geographe region has had success with it in local and national shows and the association has chosen it as a variety of prominence. It is also widely grown in other regions including The Great Southern, Margaret River, and the Perth Hills. It performs well under Western Australian conditions but has some management issues including very early bud-burst, excessive early vigor, and is a very heavy cropping variety. The project will help producers to determine the best viticultural management for different wine styles and help produce higher quality fruit in a more cost effective way.

Depending on outcomes from year one, this project would be carried over a four year time frame Development of the 2014-15 AGWA Regional Program The plan was developed through the West Australian wine industries technical committee and WoWA. In January, Larry Jorgenson (CEO of WoWA) emailed a copy of the AGWA Regional’s program guidelines to the regional associations with an explanatory note seeking their input into the 14/15 program. At the same time, technical committee members made direct contact with producers to seek their input into regional RD&E priorities.

A committee meeting was held at DAFWA's Bunbury office on the 31st of January to prioritise regional RD&E issues. This prioritisation process was based on feedback from the regional associations and direct contact with producers.

Though the wine producing regions throughout WA are diverse, the selected activities for 2014/15 program aim to be of benefit to all of the regions.

The committee and Wines of WA would like to acknowledge that there is scope to improve industry input into the program and are actively seeking greater industry representation and input to the planning process for future regional programs.

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