Australian Vintage posts a $123.6m loss

Australian Vintage Ltd posted a $123.6 million annual loss after a tough year for Australian wine growers, saying the industry's golden age has gone.

But the wine maker, marketer and vineyard manager says its sales rose during the year, bucking the industry trend, and it is in great shape for when conditions improve.

Australian Vintage, formerly McGuigan Simeon Wines, made a 2007/08 net profit of $1.344 million but struggled in 2008/09 due to problems with water availability and costs, falls in demand for Australian wines and a glut of grapes.

Chief executive Dane Hudson said the annual loss also came after a $127 million impairment charge following changes made after the company decided the traditional wine company model was not sustainable.

"The bottom line is that the Australian wine industry is facing a new stark reality, the old golden age has well and truly gone," Mr Hudson said.

"Our company however is now in shape for the next chapter of the industry."

Sales revenue for the year ending 30 June, 2009 was $260,369 million compared to $233,420 in the prior financial year.

"Total sales for the year were up nine per cent, bucking the industry trend that saw Australian wine sales steady and export sales value down 10 per cent," Mr Hudson said.

Mr Hudson said it was clear that the industry's current operating model was unsuitable as there was an over supply of grapes.

"Our view is that grape supply and wine production capacity is at least 30 per cent higher than it needs to be," he said.

"On the supply side all major wine companies are reducing grape supply by exiting grower contracts and selling vineyards."

The company will not pay a dividend, its share price closed down two cents or 6.67 per cent at 28 cents.