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

2. 2001 is the beginning of the Marketing Decade and our mission to open new frontiers (markets).

3. 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)

4. 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.

5. More competitive and challenging business environment

6. Quality Segments in the Wine Industry

7. Wine Growth Drivers • Demographics • Income/wealth effect • Lifestyle • Globalisation of tastes • Less growth impetus from global business cycle

8. Wine Growth Drivers • Growth in premium and super premium market segments at the expense of the basic segment

9. 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

10. Australian Market Opportunity

11. Australian Market Opportunity Promotion initiative targeted to occasional segment • Simplify wine speak • Remove intimidation factor • Everyday relevance

12. Australian Market Opportunity Wine Tourism • Alternative distribution channel • Brand values • Higher margins • International destination potential

13. 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

14. International Market Opportunity Relative ranking of Growth Contributors

15. Sales Scenarios Australian Market

16. Sales Scenarios Australian Wine Export Growth 1985 - 2010

17. Sales Scenarios Total Markets

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

19. Supply Outlook Supply shortfall reversed from 2001 vintage onwards 51% supply increase between 2000 and 2010

20. Supply Outlook Supply Availability of Red & White Wine

21. Supply-Demand Equation Sales of Australian Wine (Million litres) Do Nothing = 150 million litres oversupply

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

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

24. 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

25. Strategy Key Messages 3 • Contribution of collaborative promotion • Wine brand Australia • Priorities, effectiveness • Product brands the heroes

26. Performance Review • Validity of original assumptions • Weaker global economy • Strengthening A$ • Premium, super premium growth • Industry consolidation trend • Vineyard yield reductions • Slowing vineyard plantings

27. Performance Review • Collaborative promotion • Aust. Wine Export Council role strengthened • Wine Australia objectives realigned • No commitment yet to recc. program in Aust. market

28. 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%

29. Performance Review Sales (1) May 2001 MAT data

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

31. Performance ReviewSales (1) May 2001 MAT data (2) 2000 value inflated by 3.4% volume growth factor

32. 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.

33. 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

34. Marketing is the priority – but are enough producers taking action?

35. Individual Producer Implications • Change mindset to address new competitive environment • Recast marketing strategy • Increase investment in marketing

36. Conclusion

37. Conclusion “…the premium and super premium segments are both the growth markets as well as the battlefield…” Rabobank 1999 • 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

38. Conclusion The mission critical factors will be distribution brand management quality

39. 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.