2. The Marketing Decade

3. The Marketing Decade is the beginning of the Marketing Decade and our mission to open new frontiers (markets). 2001

4. The Marketing Decade Creating a Destiny A rich heritage of the Australian wine industry investing in its future: R & D Institutions $1 billion export target (1992) Strategy 2025 (1996) Marketing Decade (2000)

5. The Marketing Decade Marketing Mission 2010 To grow the consumer franchise for Australian wine to achieve by 2010 annual sales of $5 billion at a higher average margin and with enhanced brand values.

6. The Marketing Decade More competitive and challenging business environment

7. The Marketing Decade Quality Segments in the Wine Industry

8. The Marketing Decade Wine Growth Drivers Demographics Income/wealth effect Lifestyle Globalisation of tastes Less growth impetus from global business cycle

9. The Marketing Decade Wine Growth Drivers Growth in premium and super premium market segments at the expense of the basic segment

10. The Marketing Decade Australian Wine Competitiveness New World product offer best suited Australian focus on growth segments Australian receptiveness to consumer Australian strong brand assortment Australia resource and technical competencies and cost structure

11. The Marketing Decade Australian Market Opportunity

12. The Marketing Decade Australian Market Opportunity Promotion initiative targeted to occasional segment Simplify wine speak Remove intimidation factor Everyday relevance

13. The Marketing Decade Australian Market Opportunity Wine Tourism Alternative distribution channel Brand values Higher margins International destination potential

14. The Marketing Decade International Market Opportunity Must have for the consumer Must stock for the retailer Must list for the distributor Must comment for the media Category status is the goal

15. The Marketing Decade International Market Opportunity Relative ranking of Growth Contributors

16. The Marketing Decade Sales Scenarios Australian Market

17. The Marketing Decade Sales Scenarios Australian Wine Export Growth 1985 - 2010

18. The Marketing Decade Sales Scenarios Total Markets

19. The Marketing Decade Sales Scenarios Share of Growth by Market Australia 15% UK 19% USA 14% Germany 15% Japan 8% Canada 4% Netherlands 8% Switzerland 5% Other 12%

20. The Marketing Decade Supply Outlook Supply shortfall reversed from 2001 vintage onwards 51% supply increase between 2000 and 2010

21. The Marketing Decade Supply Outlook Supply Availability of Red & White Wine

22. The Marketing Decade Supply-Demand Equation Sales of Australian Wine (Million litres) Do Nothing = 150 million litres oversupply

23. The Marketing Decade Supply-Demand Equation Degree to which oversupply is eliminated depends on Grape quality response Success in development of new markets Promotion effectiveness

24. The Marketing Decade Strategy Key Messages Marketing is the Priority –Brand franchise –Sales –Profitability Best growth prospects –International –Non category countries –Premium & super premium segments –Wine tourism

25. The Marketing Decade Strategy Key Messages 2 Quality, sustainability and reputation integrity Consumer responsiveness is the point of difference Shift brand assortment towards volume brands Grape quality upgrade

26. The Marketing Decade Strategy Key Messages 3 Contribution of collaborative promotion –Wine brand Australia –Priorities, effectiveness –Product brands the heroes

27. The Marketing Decade Performance Review Validity of original assumptions –Weaker global economy –Strengthening A$ –Premium, super premium growth –Industry consolidation trend –Vineyard yield reductions –Slowing vineyard plantings

28. The Marketing Decade Performance Review Collaborative promotion –Aust. Wine Export Council role strengthened –Wine Australia objectives realigned –No commitment yet to recc. program in Aust. market

29. The Marketing Decade Performance Review Brand and profitability indicators –Bottle share of exports (84%) down by 0.6% from all time high –Value per export litre ($4.76) up 1.2% –Growth in higher value ($5-$10L) exports 28%

30. The Marketing Decade Performance Review Sales (1) May 2001 MAT data

31. The Marketing Decade Performance Review Sales (1) May 2001 MAT data (2) 2000 value inflated by 3.4% volume growth factor

32. The Marketing Decade Performance Review Sales (1) May 2001 MAT data (2) 2000 value inflated by 3.4% volume growth factor

33. The Marketing Decade Performance Review Forward Indicators Non category markets share of total exports up 1% Growth in higher price segments 28% versus 18% total Sales exceeded target by 15ML leaving surplus of 25ML in 2001 Sales growth targets of 41ML in 2002, 56ML in 2003 requires 13.5% growth p.a. Low scenario supply growth is 69ML in 2002, 54ML in 2003.

34. The Marketing Decade Performance Summary Marketing Decade targets exceeded in first year »But Rate of growth slowing Supply increasing more rapidly Therefore targets for 2002 to2005 more daunting When competitors strengthening and our market access / promotion effort too low

35. The Marketing Decade Marketing is the priority – but are enough producers taking action?

36. The Marketing Decade Individual Producer Implications Change mindset to address new competitive environment Recast marketing strategy Increase investment in marketing

37. The Marketing Decade Conclusion

38. The Marketing Decade Conclusion More effort and sharper focus required at the category level (new markets) Medium / small producers will need to commit more to quality and marketing to secure the category growth benefits Too early in the journey to know whether we will reach escape velocity, but fuel status and vehicle weight are concerns “…the premium and super premium segments are both the growth markets as well as the battlefield…” Rabobank 1999

39. The Marketing Decade Conclusion The mission critical factors will be distribution brand management quality

40. The Marketing Decade To grow the consumer franchise for Australian wine to achieve by 2010 annual sales of $5 billion at a higher average margin and with enhanced brand values.