Understanding viticultural financial returns: A case study from the Riverland, South Australia

Abstract

Viticultural regions around the world have faced considerable challenges in the past two decades. This is particularly the case in Australia where climate change, labour shortage and tariff fluctuations are pronounced. This study explores the viticultural industry's financial returns in Australia over time, and in particular focusses upon a case study of a key irrigated viticultural region (the Riverland in South Australia) that faces additional challenges of water scarcity, high irrigation costs, but lower output prices. Using two decades of wine industry tax financial data (n = 13,600+), the study examines small, medium, and large viticultural businesses defined by gross financial turnover in the Riverland. Results find businesses of all sizes have experienced falling net income, and – while smaller farms accounted for this through reducing total expenses – larger farms implemented strategies to increase gross turnover. Through further in-depth interviews with 25 growers in the Riverland, accounting and business strategies are identified to help irrigators to respond to risks. These strategies include product and process diversification, innovative business models, technology, and collaboration that allow businesses to remain financially viable whilst adapting to change. However, the increasing advent of climate change and lower prices means farm exit will probably be an increasing option for many small grape growers in the future.