De Bortoli suffers $24m profit slump

Winemaker De Bortoli, has suffered a $24.7m full-year profit loss, thanks to the high Australian dollar and the value of its equities investment portfolio taking a $50m hit.

According to BusinessDay, De Bortoli's stockmarket plays were previously a strong asset for the business, but "a series of poor investment decisions, including a huge exposure to collapsed North Queensland mining giant Kagara" have seen the brand slide into the red.

De Bortoli made $153.4m in revenue last year, a drop from $165.9m in the previous financial year. 2011's $16.6m profit slumped to a loss of $24.7m in 2012 with the company's annual report showing that the value of its equities was written down from $69.2m in 2011 to $20.8m in 2012.

However chief executive at De Bortoli, Darren De Bortoli, says it's not the Australian dollar or the supermarket duopoly which is causing his brand the most grief, it's the "rorting" of WET tax rebate.

The rebate scheme entitles wine producers with sales below $1.72m to a rebate of 29 percent of the wholesale value of domestic sales up to a maximum of $500,000 each financial year.

De Bortoli says small, uneconomical growers are flooding the market and offering retailers cheap, at-cost wine, then applying for the rebate.

"It's now become a rort and reaching a crisis point … We are getting a proliferation of people applying for [wine producers] licences and they can then go out and buy grapes, contract made, contract bottled and effectively sell it to the retail market at cost and claim a 29 percent rebate back from the government," he told BusinessDay.

De Bortoli believes only $100 million of the $250 million paid in rebates each year are legitimate.

Earlier this year, fellow winemaker, Casella Wines, which owns the Yellow Tail brand, suffered its first loss in two decades, attributing it to the high Australian dollar and high wages.


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