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From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies

From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies. James Lovell, Vice-President Global Supply Chain Planning 2006 ABARE Conference 2 March 2006. Cottage – Global…. 1993 2005 Number of Wineries 802 1,900 Major Wineries (>100k ton) 3 6

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From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies

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  1. From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies James Lovell, Vice-President Global Supply Chain Planning 2006 ABARE Conference 2 March 2006

  2. Cottage – Global… 1993 2005 Number of Wineries 802 1,900 Major Wineries (>100k ton) 3 6 Annual Crush (tonnes) 621,000 1.86 mil Area Under Vine (hectares) 69,500 160,600 Domestic Sales (ML) 311.6ML 417.4ML Export Sales (ML) 103.2ML 643.2ML Source: The Australian Wine Industry Directory 1993, 2005

  3. Area Under Vine Source: Vintage: The Australian Wine Industry Statistical Yearbook 2002 Hectares

  4. Beverage Wine Production Source: Vintage: The Australian Wine Industry Statistical Yearbook 2002

  5. Varietal Mix 1982 Share of Production 2004 Share of Production Chardonnay Chardonnay Other White 1% Shiraz 18% 25% 13% Cabernet Sauvignon Other White 6% 40% Other Red Shiraz 12% 24% Multipurpose 24% Multipurpose 4% Other Red Cabernet 16% Sauvignon 17% Source: Vintage: Australian Wine & Brandy Corporation

  6. Introduction Leadership Drives Change Evolution Takes Time Opportunities and Challenges SUCCESS! Then… Now…

  7. A Global Wine Business 1985 2005 Domestic Market Growth Oversupply Export market growth Oversupply Future opportunity Australian Production Growth Advantages Realised Scale economics in wine manufacturing and packaging Scale economies in component purchase Specialist and technical expertise Challenges Overcome Manufacturing facility consolidation Organisational complexity and process – from generalists to specialists Systems and Technology implementation (Acquisition integration)

  8. A Global Wine Business 1985 2005 Domestic Market Growth Oversupply Export market growth Oversupply Future opportunity Australian Production Growth Export Sales and Marketing Functions • Advantages Realised • Scale economies to support in-market sales and marketing teams and away from agency and distributor relationships • Direct control over the relationship with customers • Marketing teams in the market • Increasing share of business with powerful customers Challenges Overcome Establishing self contained businesses (team, systems ect) Australian team – Market team coordination and cultural challenges Cross-geography communication and process

  9. A Global Wine Business 1985 2005 Domestic Market Growth Oversupply Export market growth Oversupply Future opportunity Australian Production Growth Export Sales and Marketing Department Global Supply Chain Advantages Realised Increasing segment portfolio breadth and increased customer relevance Reduced business risk of a diverse, multi-country sourcing platform Further scale to support in-market sales and marketing functions Globally leveraged supply chain expertise and economics Challenges Overcome Cultural barriers and organisational integration Complexity, complexity, complexity – and the planning systems and operational structures to manage Global supply chain implementation

  10. A Global Wine Business 1985 2005 Domestic Market Growth Oversupply Export market growth Oversupply Future opportunity Australian Production Growth Export Sales and Marketing Department Global Supply Chain The Future – Winning the Wine Game Advantages Realised Multi-beverage route to market – sales/marketing scale and market power Back-end integration with customers – VMI, service effectiveness and business insight Bolt-on routes to market and further production sourcing options Challenges Overcome Cultural barriers and organisational integration, again Standardising systems and process to benchmark FMCG Retaining flexibility and responsiveness (Acquisition Integration)

  11. In market scale, reach Common Global system Multi-country sourcing Foster’s Australia Foster’s NZ FWE Asia FGL Wine Estates EMEA Foster’s Wine Estates Americas 1 2 Branding Supply Chain Innovation 3 California Chile Italy France Australia New Zealand Our Business Model Global Wine Business Network Supply Chain/Marketing/Innovation Flexibility and the discipline to manage a complex global network will enable us to reach our scale goals

  12. From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies James Lovell, Vice-President Global Supply Chain Planning 2006 ABARE Conference 2 March 2006

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