It’s not just the volume end, but the fine wine market too
You’ve seen the sad stories on the news of Riverland grape growers forced to sell their grapes for less than the cost of production. What you haven’t seen is companies making fine wine conceding that they’re having a tough time too.
Australia produces well over a billion litres of wine a year, and is the world’s fourth largest wine exporter yet only 12th in per capita consumption (just 4 litres a year per capita).
Wine is about to overtake beer consumption, which has hit a 66-year low. So has overall consumption of alcohol in Australia. In 2013-14, we drank more white wine than red: 270 million litres of white wine vs 190 million litres of red, but red wine consumption is growing.
The crash in Australia’s wine exports
A 2010 article in Florida’s Palm Beach Illustrated reported that ‘there are now 100 million unsold cases sitting in winery cellars Down Under. Exports have fallen by 20% over the past several years. To make matters worse, 2009 was a bumper crop. Unless significant portions of the Australian vineyard are pulled up, the surplus should double in two years.’
Back in 2009, key industry bodies in Australia declared that generous government incentives over a decade and a half had led to excessive vineyard plantings and wine production. The result- was ‘a wine glut of such a scale that it was causing serious damage to the industry.’ The industry bodies announced the Wine Restructuring Action Agenda with the declared aim of ‘reducing wine inventories and production capacity in order to rebalance supply and demand.’
6 years on, we’ve seen no difference. We’ve also seen no difference in the oversupply of Kiwi Sauvignon Blanc. Plantings in New Zealand have quadrupled in the last decade, and close to 40% of the white wine consumed in Australia is cheap savvy from the Shaky Isles.
Cheap but good wines from Chile and Argentina are putting more pressure on our wineries, as are cheap wines from Italy and Spain where the quality has improved dramatically.
The glut is a boon for consumers
That’s the silver lining is this dark cloud. I taste a lot of wine at the low end of the price range, and the quality down there can surprise you. Not too many years ago, cleanskins were cheap plonk. Now they’re winning gold medals. Dan Murphy sells a quality Clare Riesling for $8.50, Kemenys sells an excellent Margaret River Cabernet for $10 and throws in a case of Becks beer if you buy 12.
The standard wines of our bigger makers are on more or less permanent discount: Penfolds, Wynns Coonawarra, Annie’s Lane, Pepperjack, Taylors, Evans & Tate and the rest. It’s not just the bigger wine companies that feel the pressure either; smaller ones do as well, including some of our best boutiques.
The quality of Kemenys’ Hidden Label range has benefitted from this trend, and we’ve seen seriously good wines heavily discounted under the plain wrapper: whites from West Cape Howe and Bellarmine in the Great Southern, reds from Leconfield and Moppity. Every week, we find similar bargains for our subscribers in our Best Buys Weekly Mailer.
We may not be drinking more wine, but we’re drinking better wine.
Kim