Wine club, China exports save Tahbilk's bottom line

Establishment winemaker Tahbilk has fingered the proliferation of private label wines and low-cost imported wine for swamping liquor store shelves and reducing the space once given to proprietary brands.

Establishment winemaker Tahbilk has fingered the proliferation of private label wines and low-cost imported wine for swamping liquor store shelves and reducing the space once given to proprietary brands.

Tahbilk chief executive Alister Purbrick said the growing presence of home-brand wines was not limited to the major liquor chains owned by Woolworths and Coles but was also becoming a feature of the large, independent banner and supermarket groups.

"Two factors are impacting on available shelf space for proprietary owned brands, one is their [supermarket] own-branded products ... and the other hidden impact, due to the strength of the Australian dollar, is that imports are becoming very competitive," Mr Purbrick said. "So you have got the 'double whammy' of own-brand and imports taking extra space away from us, up go our promotional slot costs and there is less opportunity for us in any case."

Mr Purbrick said Tahbilk, based in central Victoria, would abandon uneconomic promotional and discount deals with retailers.

Last year, Ross Brown, the former boss of 121-year-old winery Brown Brothers, used an industry function to launch a spray against the nation's leading retailers for flooding stores with private-label wines that he said were "hollow", "copycats" and "masquerading as real brands".

The retail squeeze affected Tahbilk's sales for the previous financial year, with domestic sales weaker for the 153-year-old winemaker. But the resilience of its popular Tahbilk wine club help bolster the bottom line and allow the family-owned company to post an improved full-year profit.

Revenue for 2011-12 was $13.187 million, down slightly from $13.675 million in the previous year, while pre-tax profit increased to $776,768 from $736,430.

However, after accounting for a dividend payment of $113,805, Tahbilk's full-year profit was $51,168 against $235,137 recorded in 2011-12.

"Our wine club result was very strong, it generates about 65 per cent of the total Tahbilk branded sales," Mr Purbrick said.

He said the wine club allowed the company to perform well in the face of the strong Australian dollar and collapsing margins.

Export markets were constricted by currency challenges, and Tahbilk would limit any new investment in developing its overseas sales at this time.

"There is not a lot of margin in exports, so I think the best way to describe our exports at the moment is that we have just got them in a holding pattern. We are not going out aggressively to grow because we can't make margin out of it but we still want to maintain our presence in those markets."

China was still a growth market, with the Chinese/Australian exchange rate more favourable to exporters such as Tahbilk.