Services & solutions

Over the past decade, the Australian wine industry has continued to achieve strong growth and consolidate its reputation as a producer of consistently high quality wine in both domestic and international markets. In this time, tonnage of grapes crushed and volume of wine produced has almost tripled, while the volume of wine exported increased six-fold in an industry favoured by an excellent climate for grape growing and strong competitive market conditions that have driven innovation and product development.

The Winemakers' Federation of Australia estimates that in the 2005-06 financial year, the sales of Australian wine from wineries, including domestic sales, exceeded $11 billion at the retail level. While domestic sales of Australian wines remained similar to the 2004-05 year, export volumes rose to 722 million litres, up 8%. The value of exports was $2.8 billion, an increase of 2% on the previous year. Over this time however the average price per litre fell from $4.05 in 2004-05 to $3.82 in 2005-06. The two largest export markets for Australian wine were the United Kingdom (36%) and United States of America (28%), together worth a combined $1.81 billion.

Despite this succcess, there are a number of challenges to sustaining a highly profitable wine organisation. Beyond a passion for your craft, running a successful wine business requires vision, planning and careful attention to the needs of the business. With more than 100 clients active in the wine industry, BDO has all the tools, expertise and experience you need to extend the shelf-life of your business.

Challenges you may be facing

Adverse weather conditions, operational pressures, access to capital, global competition and increasing regulatory requirements are just some of the challenges faced by wine industry participants.

Managing cashflow
Winemaking is a capital intensive business; the industry is littered with examples of spectacular failures caused by poor management of cash during times of growth. When the mismatch between expense and relating income exceeds two years, the ability to accurately project cash flow requirements is a survival technique rarely mastered.

BDO Kendalls wine industry specialists can help you to review your cash flow situation and recommend effective strategies to let you regain control. The BDO Kendalls Virtual Winery System is one option to help improve budgeting and planning processes.

Access to capital for the growing business
In addition to investing in wine quality, wineries are now forced to spend big on indirect activities such as brand development, distribution arrangements and research and development. Opportunities are available which can enable wineries to free up capital and re-position themselves by focussing on production or on distribution.

BDO Kendalls understand that some of the greatest challenges to a growing business are those 'either or' decisions with significant strategic and operational flow on effects. Because BDO Kendalls understand the needs of wine businesses, we can act as a sounding board for you and your team as you work through some of your greatest decisions and help stimulate your next round of thinking.

The challenges of running a Family Business
Many wine businesses are family businesses and family businesses are different. Developed from the vision and hard work of the founder, they take on their unique character as other members of the family enter the business. At best, the environment can be inspiring and motivating. At worst, it can result in routine business decisions becoming clouded with emotional issues.

BDO Kendalls' accredited family business advisers know that a successful family business is one that reconciles both the short and long-term needs of the business with those of the family. So whether you are ready to consider the next generation of ownership, want to ensure the views of all family members are heard or looking for advice on balancing the expectations of family and non-family employees, BDO Kendalls can help.

How BDO Kendalls can help...

BDO Kendalls is recognised for our extensive experience in the sector. Our people advise over 100 wineries and wine industry businesses in Australia, France and the US, including some of the most recognised names in the industry. We are particularly experienced working with growing and family businesses.

BDO Kendalls is committed to contributing to the success of the Australian wine industry and has developed services, tools and resources to help educate, stimulate and innovate.

Our extensive understanding of the wine industry has lead us to develop a range of pro-active and innovative services ranging from accounting, taxation and corporate finance to special assignments such as independent expert reports and due diligence.

Whatever the needs of your wine industry business, BDO Kendalls can help you keep up to date with changes in the market and maximise your emerging opportunities, including:

• Income tax
  Preparation of annual income tax returns including review of concessions and government assistance available to primary producers and wine makers.
  
• GST and WET
  Value added tax advice including impact of GST, WET and the Producer Rebate on a wide range of transactions
• Inventory costing and valuation
  Product-by-product review of inventory to maximise tax saving opportunities and identify the true cost of each product made.
  
• Audit, assurance and AIFRS
  Providing assurance to the Board and shareholders as to the credibility of financial information including compliance with the relevant AASB standards
• Research & development
  Recognition of types of activities and associated costs eligible for preferential tax treatment
• Profitability, organisational and performance reviews
  Tailored reviews and expert advice on creating and sustaining a healthy wine business