National wine glut forecast for 2023

Speaking to the Stock Journal after the Australian Wine Industry Technical Conference, Australian Grape and Wine chief executive Tony Battaglene said the impact of COVID meant there was a structural oversupply, but it was not across the board.

Mr Battaglene said there was only an oversupply of red grapes, due to China traditionally taking the lion's share of Australia's red wine export at approximately 98 percent of the premium price point.

"We've probably recovered about 40pc of that market, but there's still quite a lot to go," he said.

"In the next couple of years, we're going to see a lot of pressure on red grape prices, particularly in warm inland regions where 70pc of our production is, but also some other regions where there isn't strong brands attached to those grapes.

"We're going into a difficult time for red grapes and wine."

On the flip side, Mr Battaglene said white grapes were not in such a dire position, with demand still high for chardonnay and sauvignon blanc.

There have also been other pressures on the supply chain.

"Freight has gone up to probably about five times what it was before COVID in price but also the availability," he said.

"It can take up to seven months from an order to get a shipment delivered and that's causing a lot of problems throughout the supply chain.

"When we go into vintage 2023, we're going to find there's a lot of red wine in tanks we haven't been able to sell because we can't get it offshore and the domestic market isn't big enough to take it on."

That will snowball into grapes being left on the ground, according to Mr Battaglene, with limited room for grapes to make it from the vine to a winery.

He advised all grapegrowers to be in communication with their winemakers to discuss what they needed, and warned even contracted fruit may not have a home in 2023.

"We're hoping people will be able to come to arrangements about maybe a longer term contract," he said.

"Discuss the possibility of taking less fruit next year, but have another contract year to keep viable.

"The key is talking between processers and producers and, unless that happens properly, there's going to be a lot more pain than there needs to be.

"The good news is we can't get much worse though.

"There is still demand for Australian wine, we're producing genuinely high quality wine so we know once we get through the supply problems, the input problems and the labour issues there'll be markets there again."

RELATED:

In response to the impending oversupply, one Riverland grapegrower is looking to the past to secure his future in the industry.

Rosy Ridge Farms' Brett Rosenzweig said the state of the industry was a headache but, instead of dwelling on the negatives, he would use past industry downturns to determine his path forward.

Coming from a family vineyard, Mr Rosenzweig returned home in the early 2000s to work closely with his father on 12 hectares of vines.

"I came home (to the Riverland) in 2002 and at that stage I had 4ha of vineyard myself," he said.

"I then bought another 10ha of land and replanted it to a single patch of chardonnay, but then the price of chardonnay crashed.

"That, coupled with the drought in the 2000s, meant I endured more or less 10 years of terrible prices.

"Knowing what I went through then, I don't want to produce grapes this year that will sell for below production cost again."

Fortuitously for Mr Rosenzweig, he also has a background in almonds, and swiftly decided a 4ha patch of shiraz he had been mulling over would be pulled out to make way for an almond patch. Although that patch will now be repurposed, Mr Rosenzweig said he still had decisions to make regarding other vineyards.

"I have a nine hectare patch of cabernet sauvignon which has always been questionable," he said.

"It's a relatively efficient producer, but the trellis needs major repair work.

"With the industry saying they don't want a lot of cabernet or shiraz, and certainly the price we're going to get is going to be lower, I have made a decision to abandon that patch this year.

"I've got another 6ha equal split of shiraz and cabernet and I already started cutting the vines back really hard to rejuvenate them.

"The vine will shoot out from new spots once we get rid of the dead wood and longer term that'll be good.

"That's going to remove a lot of buds that would be fruiting this year. At flowering time, if I see some buds in there then I might target with calcium nitrate spray to desiccate the bunches.

"The idea is the patch won't get any fertiliser because it's already had enough over the past couple of years and I'll effectively try to halve the amount of water that goes on."

He said water use would go from seven megalitres/ha to 3.5ML to keep the vine healthy but reduce the canopy.

"I just want to keep the canopy healthy so that if we're back into production in vintage 2024, that I haven't overly stressed the vine and it's not going to take an extra year for it to come back in production."

Riverland Wine contacted growers in the wake of Mr Battaglene's speech at the conference, with advice Mr Rosenzweig said was vital to growers.

Options some growers were taking, according to the body, included taking patches out of production, restricting water and inputs to avoid cropping either temporarily or ceasing production with a plan of removing the vineyard and replanting with different varieties.

"Once you get past the hurdle of 'I'm a grower, I want to grow stuff' and take a step back to look at it from a proper business perspective, you see inputs and prices are not going to cover overheads," Mr Rosenzweig said.