Australia Wine Industry - June 2008
PROFILE - AUSTRALIA'S WINE INDUSTRY (JUNE 2008)
Source: Aug 12, 2008 (AsiaPulse) --
By Martin Andrew Zavan
A PROFILE OF AUSTRALIA'S WINE INDUSTRY PREPARED BY ASIA PULSE
ANALYSTS (UPDATED JUNE 2008)
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OVERVIEW:
In 2007 the Australian wine industry continued to suffer one of its most difficult periods in recent history due to a seemingly never-ending drought which has seen production levels of winegrapes and consequently wine diminish sharply, according to the Australian Bureau of Statistic's Vineyards Estimates, Australia, 2006-07 report.
Estimated total grape production in 2007 witnessed a notable drop from levels recorded in 2006 to stand at 1.5 million tonnes. Australia's largest winegrape producing state, South Australia, reported a production decrease of 34 per cent to 586,000 tonnes. New South Wales held on to its positions as Australia's second largest wine producer over rival Victoria with a decrease in production to 429,000 tonnes while Victorian production fell to 419,000 tonnes.
Production of white grapes at 817,000 tonnes was higher than red grape production at 714,000 tonnes. Overall grape production for winemaking declined significantly by 23 per cent, to 1.4 million tonnes. The production of grapes for drying fell by 31 per cent to 81,000 tonnes.
South Australia continues to be the highest red grape-producing state accounting for 47 per cent of total red grape production with 333,000 tonnes. Surprisingly drought ravaged Victoria replaced South Australia as the largest white grape producer with 263,000 tonnes representing 32 per cent of total white grape production.
The Australian wine industry remains a success story despite the debilitating effects of drought as export figures illustrate. In the face of drastically decreased production Australian wine exports grew by 6 per cent to 795 million litres in the year ended November 2007, the Australian Wine and Brandy Corporation's (AWBC) Wine Export Approval, November 2007 report says. In the same period the average price rose to A$3.80 (US$3.64) per litre, a 2 per cent increase. As a result export value rose 8 per cent to A$3.02 billion.
While the year ended November results represent a slowing in volume growth, it was the smallest volume increment in nine years at 44 million litres, the value growth was the biggest in three years, at an increment of A$227 million. It was attributable to winemakers' efforts to shift their focus to quality over quantity.
The result evidenced more exports of higher priced bottled wines, particularly reds, and less of lower priced soft pack wines, the report said.
The United Kingdom (289 million litres valued at A$980 million [US$858.53 million]) remained the largest export market, followed by the United States (211 million litres valued at A$938 million) and Canada (50 million litres valued at A$289 million).
Domestic wine sales also increased, with total volume at 449.2 million litres,up 3.9 per cent.
Reduced production and higher sales had the obvious effect of shrinking stockpiles with table wine inventories plunging 15 per cent from last year's impressive total of 2.1 billion litres to 1.8 billion litres.
Thirteen major winemakers crushed more than 20,000 tonnes of grapes each, accounting for a total of 1.03 million tonnes of grapes or nearly three-quarters (74 per cent) of the national crush. At the other end of the scale, there were 199 small winemakers with a crush between 50 and 400 tonnes.
South Australia held on to its title as Australia's leading wine state with over 30 per cent of all winemaking locations situated there. South Australian vineyards represented 43 per cent of the national wine grape crush.
The area of vines under cultivation increased once again to reach 173,776 hectares. While an increase of 3 per cent may seem insignificant it can be considered a remarkable accomplishment, taking into account the devastation that drought and frost have wrought on all sub-sectors of Australian agriculture, and particularly wine.
In 2007 there were 8,041 vineyards in Australia, 84 per cent of which were irrigated. The most common watering method continues to be drip or micro spray irrigation and the national average usage of irrigated water was 3.4 megalitres per hectare.
OUTLOOK:
In an effort to maintain its international competitiveness the sector has shifted its emphasis from volume of wine production to quality, a seemingly inevitable result in the face of reduced winegrape production, attributable to drought and frost.
The Australian Wine and Brandy Corporation predicts the national grape harvest will be 1.22 million tonnes in 2008. The figure represents a significant decrease from the 2007 total of 1.5 million tonnes and the corporation forecasts that the 2009 harvest will drop even further to 1.16 million tonnes. Yet the corporation maintains that winemakers are still looking towards the future with optimism as current market conditions are conducive to higher wine prices.
"The opportunity out of the predicted harvest is for the Australian wine sector to shift its focus from volume to value," Australian Wine and Brandy Corporation chief executive Sam Tolley said.
"It is incumbent on us, as an industry, to use this period as a strategic stepping stone. "The currency of our success must be measured by value and not volume alone," he said
The remainder of 2008 and 2009 will be further years characterised by severe drought and reduced wine yields. The AWBC's Australian Wine Sector: Supply & Demand Assessment 2007 estimates that wine grape harvests will continue to decrease gradually for the next five years and as early as 2008 supply may be unable to meet demand from the export market.
KEY INDICATORS:
WINE GRAPE PRODUCTION - AUSTRALIA
2006-07 2007-08 2008-09 2009-10
Premium Red Cabernet Franc 2,566 3,517 3,733 3,762
Cabernet Sauvignon 185,634 254,784 247,304 286,232
Malbec 2,121 2,663 2,751 2,996
Merlot 95,288 113,668 125,273 138,216
Petit Verdot 15,223 17,346 18,125 20,465
Pinot Noir 28,119 35,653 36,931 39,171
Ruby Cabernet 15,364 16,406 17,243 18,202
Shiraz 286,312 387,753 433,960 467,438
Total 630,731 831,793 912,325 976,486
White Chardonnay 381,110 412,844 418,651 477,104
Chenin Blanc 7,976 8,909 9,096 10,245
Colombard 57,039 50,715 51,859 72,306
Muscadelle (Tokay) 847 1,149 1,191 1,300
Pinot Gris 13,990 20,748 26,531 34,084
Riesling 32,340 38,502 39,037 42,283
Sauvignon Blanc 39,704 49,445 51,138 63,375
Semillion 76,956 88,480 94,336 102,914
Traminer 8,551 9,765 10,090 10,828
Verdelho 14,699 16,945 17,477 18,411
Total 633,242 697,507 719,590 832,854
Non-Premium
Red Grenache 15,500 19,169 19,760 21,611
Mataro (Mourvedre) 6,689 7,508 7,669 8,338
Total 22,190 26,768 27,430 29,950
White Crouchen 2,062 1,702 1,702 2,325
Doradillo 2,007 1,894 1,889 2,319
Palomino 501 534 539 599
Trebbiano 2,589 2,888 3,059 3,167
Total 7,161 7,020 7,191 8,411
Multi-purpose
White Total 65,209 58,055 60,019 87,287
Minor Varieties
Red Total 21,233 25,732 28,115 34,027
White Total 17,580 21,572 24,871 29,399
All Red Total 674,155 884,203 967,871 1,040,463
wine White Total 723,194 784,155 811,672 957,953
grapes
Total 1,397,350 1,668,358 1,779,543 1,998,417
WINE AND GRAPE INDUSTRY - 2006-07
Value pct change from 2005-06
Area of bearing vines (ha) 163 951 3.7
Total grape production (t) 1 530 439 -22.8
Fresh grapes crushed (t) 1 397 350 -26.5
Beverage wine production (million L) 978.5 -31.8
Beverage wine inventories (million L) 1 783.6 -15.3
Domestic sales of Australian wine (million L) 449.2 3.9
Domestic sales value of Australian wine ($m) 2 004.9 5.5
Exports of Australian wine (million L) 787.2 9.0
Exports of Australian wine ($m) 2 878.6 4.4
Imports of wine (million L) 34.3 40.6
Imports of wine ($m) 307.0 45.3
Sales of Australian Wine and Brandy by Winemakers (cat. no. 8504.0),
ABS data available on request, Wine Statistics Survey, Wine and Spirit
Production Survey, Inventories of Australian Wine and Brandy , Vineyards Survey.
GOVERNMENT POLICY:
Outlined in its annual budget report, the federal
government, in addition to a new A$8 million research and
development grant, has provided further tax relief for the wine
industry in the 2005-06 Budget, following on from the previous
year's extension of the Wine Equalisation Tax (WET) exemption.
The WET producer rebate scheme, which was broadened to provide
a WET rebate of up to A$290,000 to each wine producer (or group
of producers) each financial year in the 2004/05 budget, was
extended further in 2006 so that each wine producer is able to
claim an increased maximum rebate amount of A$500,000 each
financial year.
The Federal Treasury says the enhanced assistance will
effectively exempt up to around A$1.7 million of domestic
wholesale wine sales from WET each year per wine producer,
compared to A$1 million a year under the previous scheme.
MAJOR PLAYERS:
Foster's Group Limited
77 Southbank Boulevard
Southbank, Victoria 3006
Australia
Tel: +61 03 9633 2000\
Fax: 61 03 9633 2002
www.fosters.com.au
Constellation Wines Australia
Reynell Road,
REYNELLA, SA 5161
Tel: +61 08 8392 2222
Fax: 61 08 8392 2202
Email: corporate@cwines.com.au
www.cwines.com.au
Australian Vintage Ltd
Level 2 170 Greenhill Road Parkside
SA 5063
Tel: +61 08 8172 8333
Fax: 61 08 8357 8544
Email: info@simeon.com.au
Web: www.simeon.com.au
Rosemount Estate Pty Ltd
GPO Box 753F
Melbourne VIC 3001 Australia
Tel: +61 03 9633 2000
Fax: 61 03 9633 2002
www.rosemountestate.com
INDUSTRY CONTACTS:
The Australian Wine and Brandy Corporation
Cnr Hackney & Botanic Roads
Adelaide SA 5000
PO Box 2733
Kent Town Business Centre
Kent Town, SA 5071
Telephone: +61 8 8228 2000
Facsimile: +61 8 8228 2022
E-mail: awbc@awbc.com.au
Winemakers' Federation of Australia
Wine Industry House
PO Box 2414
Kent Town SA 5071
Telephone: +61 8 8222 9255
Facsimile: +61 8 8222 9250
E-mail: stephen@wfa.org.au
(SOURCES: The Australian Wine and Brandy Corporation,
Australian Wine Online, Australian Grape and Wine Research and
Development Corporation, Winegrape Grower's Council of
Australia).
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