In accordance with the income statement of Australian Vintage; significant losses in the financial year of 2016 can be noticed. The primary reason of loss is termination payment on the exit of vineyard lease and Brexit (Winemakers’ Federation of Australia, 2017). In order to compensate with the losses company had to comply with following action plan covering of strategic and operational aspects:

Management of exchange rates:

Australian Vintage is a major exporter of the vine to the UK but due to the unfavourable measure in the pound because of Brexit had negatively impacted profit. For the improvement of margin from this market, company is required to various strategies which must become effective in January 2017 (Visscher, 2014). Strategies include the development of foreign currency policy by applying the bottom-up approach in order to identify exposures of consolidated foreign currency. This strategy will be supported by approval of external auditors and will be monitored on a regular basis.

Supply chain management

The profits of AVL declined due to poor performance in supply chain management, especially in the Asian market, as orders were not distributed timely. The major distributor was not able to deliver orders on time, due to disruptions in the supply chain.  It leads to huge costs as compared to new world producers; however, the issue is occurred due to reliance on supplying on few supermarkets for raw material (Christopher, 2016).

The improvements in supply chain management are essential for optimisation business processes, however, it will enable coordination of operations from the production process to final supply. The company must reduce its reliance on supplying a few large supermarkets or chains (Visscher, 2014).

 The organisation should focus on maintaining good relations with the filler/packer. Furthermore, the company can remove extra intermediaries that will significantly reduce costs. The company should narrow its local market operations as per market conditions, along with this internationalization of supply chain operations is necessary (Winemakers’ Federation of Australia, 2017). The products need to be distributed in accordance with distribution strategy and production capacity of the firm. The organisation furthermore, selects the appropriate distribution channel for the product as based on market environment. It should make a plan for distributing products to overcome the challenges for the wine sector.

Policies in support to legislation

The sales in New Zealand market is declined due to new legislation related to liquor market are employed by the government. The promotional activities are restricted. Therefore, profits and sales are seriously affected, and company’s profits were declined in the part years.  However, the issue can be resolved by portraying a branded image of AVL in the eyes of market consumers (Reynolds, 2016). The main brands of AVL namely McGuigan, Tempus Two and Nepenthe, are offering a profitable business to AVL, instead of some market conditions.  The company should go for focusing on increasing sales in three key brands that are mentioned above. Along with this, business has to focus on growing exports in new markets as well as controlling costs of operations. The organisation needs to come up with appropriate communications campaign related to health and social benefits of moderate wine consumption.

Table 1: Action plan for Australian Vintage

Managerial authorities of the company are required to cope up with the cited strategies in the developed action plan in order to mitigate their losses and to attain opportunities for better profit.

References

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Reynolds, E. (2016). Australian vintage report: Short and sweet. Australian and New Zealand Grapegrower and Winemaker, (628), 14.

Rowley, M. (2017). Supply and demand: Supply and demand dynamics for Australian wine following vintage 2016. Wine & Viticulture Journal, 32(3), 58.

Visscher, P. M. (2014). Statistical analysis of the price and subjective quality ratings on Australian wines. arXiv preprint arXiv:1402.3646.

Winemakers’ Federation of Australia (2017), Actions for Industry Profitability 2014 – 201. Retrieved on 23^rd October 2017, from < https://wfa.org.au/assets/noticeboard/Actions-for-Industry-Profitability-2014-2016-Dec-13.pdf>