Last Friday Australia’s biggest winemaker Fosters Wine Estates gave a trading update with advice that earnings would slip from the firming of the exchange rate. The Aussie dollar is eroding Australia’s declining export earnings as Christmas closes in. Meanwhile, any Aussies travelling at this time of the year will be delighted – except wine exporters.

“Unfavourable exchange rate movements are expected to negatively impact first-half wine earnings by between AUD 80 to 90 million,” the company said in a statement. “The major currency impacts are expected to be an approximate 9 cent increase in the average USD dollar and an 8 pence increase in the average pound sterling exchange rates compared to the prior period.”

Foster’s added that they believed many analyst forecasts were out of step with reality given the current prevailing exchange rates. Despite this, they remain confident in the future of the wine business.

Beer revenues have been propping up the wine side which has made substantial divestments and continues to offer vineyards for sale.

As Australia heads into the 2010 vintage in less than a month the trading position for the country does not look good as few producers have addressed the chronic oversupply situation.

The Big Four – Fosters, Constellation, Pernod Pacific and Australian Vintage (AV) have addressed the structural nightmare with downsizing, divestment and relentless cost cutting in progress.

To an extent Constellation and AV are progressing a collective which will see the US listed Constellation take a shareholding in AV to consolidate both Groups’ commercial wine businesses.

Winemakers and grapegrowers alike planted grapes in all Australian regions over the past decade and now need to take responsibility for the over-supply; not just a few. That means ripping some out as many Sunraysia growers have now done.

However, struggling growers in southern New South Wales are expected to hang on to their vines for another 12 months, despite the continuing glut. The Riverina Wine Grapes Marketing Board says some varieties have been pulled out, but not to the same extent as vineyards in the South Australia.

Chief executive Brian Simpson told ABC radio last Thursday that the industry is likely to experience another difficult season. “Here the difference from 2008 to 2009 vintage was $40 million farmgate decline in returns to growers.”

“If we see that occurring again in 2010 and indications are that is expected, that a further decline in prices will occur, we will see growers looking to mothball perhaps in the first instance,” he says. “But taking the drastic step of removing large areas of vineyards, I think they’ll probably put that off for a further 12 months.”

Unlike the European Union where a free market does not exist, Australian production will need to continue to slide downwards to receive some balance and profitability.

There is a stirsh emerging this week in the Barossa Valley as the kings of obesity promotion McDonalds wish to open in Nurioopta.

On one side of the argument course is the fine food promoters who have done so much to profile it as a regional food hub.

Television food presenter and Barossa food brand Maggie Beer told AdelaideNow, “We need to protect the culture of the Valley that brings us so many tourists.”

And she finds it hard to see the region promoted as a serious foodie destination with the golden arches protruding so prominently.

Another creator of the great cooking culture in the Valley is the Lehmann family. I can recall one occasion when telephoning the Lehmann household Peter Lehmann had a monster 40 kilogram Murray cod on the kitchen table under serious preparation.

Margaret Lehmann says, “it’s out of place here, and it’s sad. We have a wonderful, unique food culture but McDonalds is exactly the same everywhere in the world; it irons out the differences that regions produce.”

Of course this fast food organisation is the opposite to the wine and food tourism fabric of the Valley where Food Barossa put local, carefully grown produce on a pedestal of being low-input, flavoursome and unique.

Jan Angus of Food Barossa goes on to say that 10 years of profiling the region has now been threatened; with McDonalds being seen as the high point and visible icon of globalisation of a once fragile, local food economy. In the Barossa that has all changed with great efforts.

On the other side are the young palates who could not give a toss about regional food, and who have to drive further than they need to find a BigMac. There is a 763 member Facebook group wishing McDonalds to come to town, and no doubt it will grow.

Meanwhile the eco-gastronome group Slow Food has successfully campaigned against an application for McDonalds to establish an outlet in the western Sydney suburb of Haberfield on December 8.

The Ashfield council has quashed this application after given more negative support when SlowFood creator Carlo Petrini visited the site last October.

Petrini is notorious for his antipathy towards McDonalds and this globalisation target was the reason for his founding this non fast food society 20 years ago. www.slowfoodaustralia.com.au

Meanwhile we wait to see if the same rejection comes from the Barossa Valley Council.

The annual AC Nielsen release of wine market data last week by brand and wine company has some telling results, and probably is what drinkers wish to hear.

There has been a slide in the market share of Australia’s big three – Fosters (28.5% down to 21.2%), Constellation (22% down to 13.5%) and Pernod Pacific (down to 10.2%).

The winners indirectly are Australian drinkers as the landscape of sales changes. However, it is not encouraging for the very small producers who are being squeezed out further but it is a heartening sign for family-owned companies, which have gained in market share.

This is Yalumba (4.6%), De Bortoli (4.6%), McWilliams (3.8%) and Brown Brothers (3.8%) who have gained ; even though De Bortoli’s recent report of recording a 1.6 million loss last financial year tells more than a slice of the market story.

However, it has been clear for several years that the listed wine companies simply cannot make double-digit returns every year and yet stay in the game through growth. Most have managed to wreck their investment instead and we have seen the progression of listed brands reporting losses and write-downs, and many moving on from the ASX register.

Of the few remaining, Fosters and Lion Nathan are propped up by beer manufacture while those pure wine companies, such as Australian Vintage and Cockatoo Ridge still report losses. Australian Vintage is currently in discussions with Constellation regarding sharing assets and bottling production facilities in their major market, the UK.

Hopefully we are going to see a rise of family wine companies which keep balance in the wine business by thinking long term and not wrecking asset values by trying to turn large unsustainable businesses into immediate cash cows.

That both Yalumba and Tyrrells have recorded and celebrated 150 years in the drinks and wine business recently is testament to more industry stability on the horizon.

Last August 12 family wine companies — Brown Brothers (Victoria), Campbells (Victoria), d’Arenberg (South Australia), De Bortoli (NSW), Henschke (South Australia), Howard Park (Western Australia), Jim Barry (South Australia), McWilliam’s (NSW), Tahbilk (Victoria), Taylors (South Australia), Tyrrell’s (NSW) and Yalumba (South Australia) — came together to form the First Families of Wine (www.firstfamiliesofwine.com.au).

This group has pledged to raise the image of Australian wine both here and internationally, spending AUD 600,000 during the first year.

There are reports that Barossa-based winemaker Grant Burge has grown his annual sales by 50% to AUD 50 million.

According to AdelaideNow, Burge said, “I’m grumpy because wine has traditionally been a family-based industry. Now the public wine companies are blaming the harsh economic conditions for the wine industry’s problems. You have to take a long term view, the wine industry is no place for public companies with fast buck approaches, because you need to constantly reinvest.”

The current head of the Casella family from Yenda near Griffith, John Casella has been secretly paying a blackmailer, it was revealed this week.

A man has faced court in the New South Wales town of Griffith last Thursday over the alleged blackmail of the family which produces the internationally famous Yellow Tail wine label.

Matteo De Dominicis, aged 67, has been accused of blackmailing Giovanni “John” Casella, for the past two years.

John Casella is the managing director of Casella Wines, which was founded by his parents Filippo and Maria Casella, who immigrated to Australia from Sicily in 1957. The family, which accounts for 19 percent of Australia’s total bottled wine exports, was valued at $665 million in this year’s BRW Rich 200.

The Griffith Local Court was told that John Casella paid a AUD675,000 to De Dominicis, who allegedly started making demands for cash payments in February 28 2008.

According to media reports, Casella went to the police on December 6 after allegedly receiving a fourth demand for $5 million.

According to a statement from New South Wales police, De Dominicis was arrested on December 9 after Casella reported the matter. He was charged with four counts of blackmail.

Yesterday in court he was remanded in custody. The case was adjourned until February 2.