Market Drivel

AUSTRALIA’S wine industry appears set for a major shakeup amid growing pressure from leading winemakers to slash production and cut the total number of wineries. The push for industry reform involves calls for a 60 per cent cut to producer numbers and to trim actual wine production by 20 per cent within a decade. The reforms, outlined to last week’s Wine Industry Outlook Conference in Sydney, included a push to halve the number of wines sold in Australia. Under the plan, smaller vineyards and wineries would be replaced with bigger operations. Winemakers are concerned the average Australian harvest is now about 1.9 million tonnes while demand is running at less than 1.5 million tonnes. John Grant, president of Constellation Wines Australia, said this meant that this year’s surplus of 476 million litres of wine at June 30 — the equivalent of about 680,000 tonnes of grapes — would get “longer and longer”. That would put downward pressure on grape prices with margins squashed as increased non-grape production costs could not be reflected in the market place. “The industry needs to reduce its production by around 20 per cent or put another way, for every five rows in the vineyards one row needs to be removed,” Mr Grant said. Australia has about 170,000 ha of vines. The cuts had to be mainly in the warm, inland regions because the “game plan” in the two main export markets — the UK and the US — was high volume sales at low cost, a segment filled by wines from those regions and the segment falling “fastest and furthest”. Chief executive of Tahbilk Wines Alister Purbrick, said 1.75 million tonne crops could be sustainable in 10 to 15 years but it depended on the development of markets including China and Russia. He said a recent Deloitte study had indicated that most wine producers turning over less than $10 million annually — about 90 per cent of all producers — were losing money. In 10 to 15 years, to be sustainable, the industry should have between 1000 and 1500 producers. Vineyards should be more than 80 ha compared with the current average of 20 ha, with resources and management pooled and wine producers turning over less than $5 million should be forced to joint venture winemaking facilities. more

Lets start at the top.

‘The push for industry reform involves calls for a 60 per cent cut to producer numbers and to trim actual wine production by 20 per cent within a decade.’

The production cuts are fair advice. But the reduction in production numbers is ignorant. We have all heard the statistic that 5% of the wineries produce 95% of the wine. By eliminating 60% of the producers, you would knock out whole regions and discourage any sort of real diversity. No sign of Wine Australia’s Regional Heroes planning here.

“He said a recent Deloitte study had indicated that most wine producers turning over less than $10 million annually — about 90 per cent of all producers — were losing money.”

I’ve read a breakdown of that Deloitte’s study and the actual participation and sample size was so suspect that drawing a conclusion for Australia wide production is beyond stupid. 90% of Australian wineries losing money?? Bullshit.

“Vineyards should be more than 80 ha compared with the current average of 20 ha, with resources and management pooled and wine producers turning over less than $5 million should be forced to joint venture winemaking facilities.”

Why, so we can machine harvest everything, stick them in massive vats and pump out litre after litre of characterless, flavourless shit.
No. The wine industry doesn’t need more large, faceless companies, machine harvesting large vineyards tracts, producing spotless, boring ‘industrial’ wines? No. The future of the Australian wine industry lies in terroir – more ‘Regional Heroes’. More hand made, hand sorted, whole bunch fermented, wines of the earth. More passion. Less winemaking by the numbers.

Its interesting that this sort of short term focused plan has backing by the large winemakers isnt it? A very cosy vested interest in firstly driving down grape costs for themselves, whilst attempting to cast dispersions on the heart and soul, passion & dedication family run producers.

Australia needs reinvention, not less producers doing more of the same. Less quantity, more quality. Terroir not BOGOF.