Australian wine grape prices are likely to remain in the doldrums for at least another three years. Recent analysis by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is potentially likely to cause even more grape growers to quit the sector, confirming that over the last decade wine grape prices have free-fallen by between 33-50%. The Wine Grape Council of South Australia (WGCSA) has said that up to 10% of its growers would sell their vineyards if they could find a buyer. It also reckons that only a third of South Australian grape growers are turning a profit and that 40% have been losing money since 2007. The group is critical that there has not been enough action around the industry’s plan to remove 20,000 ha from production.A toxic combination of the ongoing oversupply, the high Australian dollar and the difficulties surrounding the image of Australian wine in a very competitive export environment is making it extremely tough for Australian producers to maintain satisfactory margins in both export and domestic markets. The most obvious outcome is the increase in bulk wine exports from 13% a decade ago to 40% today, especially to the Chinese market Ð itself a practice fraught with danger in terms of Australia’s wine image. The value of Australia’s wine exports fell by 9% in 2010, but volumes are up slightly.Interestingly, despite the removal of vineyards in recent years, ABARES predicts that after a 2% decline in the 2011 national vintage to 1.5 m tonnes (reduced in major part by the cool, moist weather associated with the season), reasonable weather will see it rebound back to around 1.7 million tonnes in 2012 and 2013, back to 2009 levels. This will make it tough to eat into the imbalance between production and sales and suggests we had better devise a strategy to protect the image of Australian wine from our increasing dependence on bulk sales.
