YEARS of leftover stock clogging Riverland wineries is poised to slash local growers’ incomes by up to 40 per cent for certain grape varieties at the upcoming vintage.
Early indicative 2022 prices for wine grapes have begun to be released, with decreases of more than $200 expected for several key red and white varieties.
A Berri-based wine industry figure – speaking with the Murray Pioneer on the condition of anonymity – said June data indicated more than two years of wine stock remained in storage across some areas of the region.
“This number is (now) far worse considering the decline in the last six months,” they said.
“We have lost China as a market – a market which has essentially driven the increase in production and high prices during the last five years.
“Essentially we are producing a lot more that we can sell. If we can sell it the other issue is we are not able to get shipping space to move it out.
“Shipping issues will be around for the next 12 months, and will also never see the shipping prices we had 12 months ago. It is now all three to four times the amount and will increase even further.”
Early 2022 indicative pricing shows between $340 and $410 will be paid for shiraz grapes, depending on the winery, with cabernet sauvignon selling for between $340 and $370, and chardonnay between $400 and $450.
The figure said a decline in global and domestic wine consumption – caused by the Covid-19 pandemic – would also limit the capacity of Riverland wineries for the 2022 vintage.
“Production increased in 2021 by 21 per cent (and that) increase is a huge amount when sales are declining,” they said,
“Wineries are still holding large volumes of 2019 and 2020 red stock that was allocated for China.
“Production now needs to be a calculation of what we can sell and what we will get shipping for, but also needs to factor in the stock we are holding (that) needs to be sold. It’s not a case of ‘there is space in the winery, so bring the fruit in’.
“Wineries are now required to make a huge stock write-down in value in order to sell the past vintage stock. This will equate to millions and millions of dollars.”
Riverland Wine interim executive officer Andrew Weeks said co-operation between wineries and growers would be crucial during the next vintage.
“Growers should be talking constantly, and as early as possible, with their intended grape purchaser,” Mr Weeks said.
“Make sure there’s a very clear understanding about what the requirements are, so they can plan their business and the coming vintage.
“Things are still very fluid in the wine industry… what we see reflected in grape prices is a result of what’s happening in the large-volume bulk-wine market.
“If wine grapes are in demand because winemakers are making lots of money, they’ll be able to pay more for fruit. When it’s in low demand and you’ve got a heap of fruit lying around, grape prices drop.”
However in positive news for the industry, a free trade agreement signed this week with the UK is expected to open up more export opportunities for Australian wine grape growers.
Barker MP Tony Pasin said Australian wine producers would have “immediately improved access to the UK market at lower or zero duties”.
“Australian farmers will benefit from the historic deal by having better access to a market of more than 65 million UK consumers who value safe, sustainably produced foods and beverages with the strong provenance Australia offers.” Mr Pasin said.