And now for some good news for the medical profession. Australian wine is about to become cheaper. Well, most of it anyway. Grange won’t, strong and exclusive brands like Cape Mentelle, Petaluma and Tarrawarra won’t, but there’s a lot that will, including many brands that haven’t even come to your attention yet. The reason? Following its traditionally boom-bust cycle, Australian wine is about to go into another self-induced backflip over grape and wine prices, which should lower the prices of cheap and mid-market wines from the turn of this year to just past the turn of the century. By then things should be picking up for the trade again, which will in turn initiate another tug on the consumer purse strings. Australian wine wants to expand from 1.5% to 5% of a massive world market by 2025, so it has planted a lot of grapes of late. Trouble is, industry observers and participants like Petaluma’s Executive Chairman, Brian Croser, reckon its plantings were too much too late. ‘Instead of planting more vineyards in 1991 and 1992, while exports of Australian wine were growing at 40% per year, we waited until the present high grape prices and grape shortage’, he says. The trade began planting again in 1993 and, according to Croser, short supply was inevitable after the industry refused to accept it would run out of premium grapes in 1991/92. Any decent wine drinking medico doesn’t need reminding that prices have escalated by around 30% over the last eighteen months. Around 300,000 tonnes of premium Australian grapes presently get sold as bottled wine in our export and domestic markets. A poor crop last year created a premium crop of 315,000 tonnes, but in 1996 Croser says that figure could easily rise to 460,000 tonnes, even to 650, 000 within a few years. With annual sales increases of only 7 million litres (5 million overseas, 2 million domestic) the extra 250,000-300,000 tonnes of premium grapes coming on stream will equates to an extra 18-20 million litres of Australian wine from premium grape varieties that somebody is going to have to drink. Nobody’s going to do that at present prices, so down they will have to fall. Australian wine will again be discounted, becoming again the world’s most attractive source of cheaper wine. This will expand new and existing export markets such as Germany and the US. But next time there is another quality wine shortage, anticipated around 2001, the industry will be established at a far greater scale. Given the forecasted surplus of cheaper Australian wine, it’s also a fair bet that the blending of Chilean and Italian wine into Australian wine casks will shortly cease. It’s also reasonable to suggest that the cheap bottled wine from Chile, South Africa, Italy, Argentina and France will not make any real market impact here over the next five years. Chief Executive of the Winemaker’s Federation of Australia (WFA), Ian Sutton, says that although poor vintages have prevented the industry from reaching its billion dollar export target by 2000, the fact that the industry’s export ambitions have been so well publicised has probably attracted more investment than anything else before. ‘We’ll probably reach that target by 2002 or 2003. Sure there are fluctuations in the short term, but we’re not a short term industry’, he says. The WFA estimates that it will require around $3 billion of additional investment to reach 5% of world market share by 2025. Sutton views the possible forthcoming availability of more premium varietal wines than ever before and their likely affordability as an opportunity for wine producers to readdress some of the more difficult markets for Australian wine such as Japan and South-East Asia with a ‘wine supply-led drive’ there. But the UK, the USA and Germany still represent the most important opportunities for Australian wine exports. Sutton hopes Australia will increase its share of the UK market from 8% to 10% by 2000 and says it wouldn’t take much of an increase in market share in Germany, the world’s largest wine importer, to sell a significant volume of wine there. We’re currently a tiny percentage of Germany’s wine imports, but this market has more potential for us as any other’, he says. The Australian wine industry has agreed to initiate an FOB levy on all wine exported to fund its extensive export development programmes. Much of this expenditure, according to Ian Sutton, will address the next crucial step in the development of the profile of Australian wine overseas – the generation of awareness of the qualities and characteristics of the different Australian regions and their wines, and the differences between them. ‘It’s no accident that Wine Australia (the industry’s massive expo at Darling Harbour, Sydney, from June 15-18) is an aggregation of regional displays, highlighting their unique qualities and links with food, lifestyle and culture’, says Sutton. ‘Our strategy is to keep consumers with Australian wine, but to offer them a wider range and variety to sample.’ Is there a danger the Australian wine industry is taking too great a punt on export? Harvey Steiman is the Editor at Large for one of the world’s leading wine publications, the New York-based Wine Spectator. His job is to travel, taste, eat and write and he has spent enough time in Australia over the last two years to know what’s going on here. ‘It’s always something of a risk to count on export’, he says. ‘Australian wines are simply too tasty for the industry here to be excessively concerned. Publics are fickle, but not so fickle to give up on Australian wine. Australia really does make wines that taste good. That’s rare in the international market, unless you’re paying good money. Even a worldwide depression wouldn’t hurt Australia any more than anyone else.’ There’s little doubt that Australian wine has stepped onto a big-time treadmill of its own making, a bigger game than it’s ever entered before. The investment needed is enormous, the stakes are high and the risks are greater than anyone involved with wine has ever experienced. But, in the cold, hard, sober light of day, I have a confident feeling inside that the Australian wine industry might just achieve the very high targets it has set itself.
