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Australia�s BBX Move Into Wine Propitious

In our June 13 issue we reported on Business Barter Exchange (BBX) expanding into the trading of wine, with a goal of moving $5 million the first year. Given the current conditions of Australia�s wine industry they may blow right past that figure.

Many of Australia�s 2,000 wineries and 8,000 grape growers are facing a French-like crisis: There are too many grapes chasing too few palates. The surplus is estimated as high as 900 million liters...large enough to serve every man, woman and child in the world a glass on the house.

Wineries aren�t cheering, because the huge surplus is shredding prices for bulk and other low-end wines. Growers in the main wine regions � the Riverina in New South Wales, and Riverland � are being offered as little as $75 a ton, well below the $225 it cost them to produce the fruit.

In 1993 the wine industry convinced the Australian government (in Canberra) to change depreciation rules, so growers could write off the cost of buying and planting vines over just four years...rather than over the lifetime of the vines, as with other agricultural assets.

From 1997 through 1999 growers planted 100,000 additional acres, a 40% increase in only three years. Now the  industry is pleading again for government aid, asking for a $45 million bailout that would pay growers not to pick 300,000 tons of grapes in each of the next two years. Not a chance, Aussie officials have said, adamant that market forces should decide which vineyards survive. 

Michael Touma, Managing Director of BBX, (and presumably other barter companies as well) should have their phone ringing off the hook, given the conditions of the vintners. Touma may well have some very interesting proposals in hand at the upcoming IRTA convention, for his fellow traders from around the globe.

A lot of people are very familiar with Australian wines. Especially given the fact that Australia�s finest wines have snatched trophies away from the French in international competitions, and wine exports have swelled from $305 million in 1995 to $2.1 billion last year.
 


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