NEWS

WINE STOCKS

WINE STOCK LEVELS UP AFTER CHALLENGING GLOBAL CONDITIONS

Despite a drop in wine production in 2021-22, Australia has recorded an increase in its national wine inventory for the second consecutive year, Wine Australia’s Production, Sales and Inventory Report 2022 has revealed.

The report confirms the impact across the production chain of the significant headwinds the Australian wine sector has faced over the past two years, including high tariffs on bottled Australian wine imported to mainland China, the impact of the global freight challenges, and the aftermath of changing consumer habits during the COVID-19 pandemic, all coming at the same time as a record-sized vintage crush in 2021 and a near-average crush in 2022.

Peter Bailey, Wine Australia’s manager of market insights, said the report provided an indication of the sector’s position and was based on survey responses from some of Australia’s largest wine producers.

“Based on responses to the survey, total Australian wine production in 2021-22 is estimated to be just over 1.3 billion litres, which is a 12 per cent reduction compared with last year," Bailey said. "There was a greater reduction in the amount of red wine produced compared with white, which saw its share of overall production reduced to 55% compared with 58% last year.

“Total sales — domestic and export combined — were reported to be down by 9% to 1.06 billion litres. This has led to the national inventory rising for the second year in a row. just after the new vintage (before any of that vintage has been sold), then depleting over the next 12 months as wine is sold, to be at a minimum just before the next vintage. However, transportation challenges in getting wine to market is reported to have had a flow-on effect, with wine production capacity expected to be further constrained ahead of vintage 2023 as a result of the higher-thanaverage inventory,” Bailey said.

The Production, Sales and Inventory Report was developed from responses to an annual survey by Wine Australia and covered an estimated 77% of total wine production but it is not representative of smaller wine business models.

The full report can be downloaded at www. wineaustralia.com

INDUSTRY OUTLOOK

“Combining the figures from last year and the findings from this year’s survey, the national inventory is estimated to sit at 2.27 billion litres. While some of this is necessary to replace stocks drawn down over the previous years when we didn’t produce enough wine to fulfil demand, the national inventory is now estimated to be above its long-term average,” he said.

The Production, Sales and Inventory Report 2022 indicates that the national stocks-to-sales ratio for white wine has likely remained static compared with 2020-21 at 1.52, while for red wine it is estimated to have increased by 35% in 2021-22 to 2.77.

“Wine inventory levels fluctuate during the year, generally being at their maximum

SIGNIFICANT AND COMPLEX HEADWINDS CONTINUE TO TEST SA WINE INDUSTRY

An analysis of a recent annual survey of South Australian wine businesses has shown that business confidence is at its lowest point in the six years since the survey has been conducted.

The 2022 South Australian Wine Industry Snapshot, a collaboration between Bentleys SA and the South Australian Wine Industry Association (SAWIA), provides an overview of the state’s wine industry each year, including positive and negative impacts, business sentiment, business and staff wellbeing, innovation and evolution.

“Wine businesses identified significant and complex headwinds, including high yields and subsequent oversupply, partly due to the exceptional 2021 vintage; putting pressure on the 2022 and now 2023 vintage where lack of facilities and storage are both concerns,” said Tim Siebert, partner at Bentleys SA.

“A significant number of lost or ceased grape contracts represent a major market change and a considerable risk to the industry. We heard stories of grapes left on the vine this year and indeed fear that the issue is only just becoming clear.”

Other core contributors to the decline in business confidence included the rising costs of business and inflation, such as freight and energy and labour shortages. Another factor was the over-saturated domestic market due to the lingering effects of the punitive China wine duties that have continued to contribute to a surplus of red wine, only some of which has been placed in other markets; some is simply unsold.

Brian Smedley, chief executive of SAWIA, said a key challenge for the South Australian wine industry was attracting suitable or experienced staff to work in the industry.

“Labour availability remains challenging in almost all occupations in the wine value chain,” he said. “Location and housing are also limiting issues, but to attract and retain labour, businesses will need to assess their attractiveness as an employer and ensure they remain alert to the competition and changing market conditions."

Smedley said improving profitability while maintaining market share was a key issue for many wine businesses. With the loss of sales to China, a change in focus was required to look for sustainable growth in wine markets as part of an appropriate geographic expansion strategy using existing or new markets. Furthermore, working collaboratively with industry bodies and government in targeted trade activities was beneficial.

The full report can be found at www.bentleys.com.au or www.winesa.asn.au

CONTAINER DEPOSIT SCHEMES

WINE BOTTLES IN PROPOSED EXTENSION OF NSW CONTAINER DEPOSIT SCHEME

A planned expansion of New South Wales container deposit scheme (CDS) Return and Earn to include glass wine and spirits bottles has been described as “ill-informed” by the NSW Wine Industry Association (NSW Wine)

which it says would cost the state’s wine producers more than $30 million a year.

In October, NSW Minister for Environment James Griffin announced public consultation had begun on the proposed expansion, which he claimed would see up to an additional 400 million eligible bottles recycled each year, including 233 million glass bottles.

“We already accept beer, cider and a range of other beverage containers through Return and Earn, and now we are looking to include glass wine and spirits bottles and larger drink containers,” Minister Griffin said.

“The total lack of engagement from the NSW EPA and Minister Griffin is very disappointing,” said NSW Wine president Mark Bourne. “This ill-informed proposal, after zero consultation with industry, does not outline in any way how it will further drive a circular economy and has family-owned NSW wineries footing the bill to the tune of over $30m per year”.

He said the cost came on the back of four very difficult years, with the industry battling the effects of drought, bushfires and smoke, COVID-19 shutdowns, floods and crippling export tariffs into China.

“Make no mistake, jacking up costs for wine producers in the Hunter, Riverina, Southern Highlands, Orange, Mudgee and beyond — the majority of them small and medium sized family businesses — will send some of them to the wall,” Bourne said.

“To be clear, NSW Wine supports efforts to improve recycling, but expanding the scope of the CDS to include wine bottles just doesn’t stack up on any level. For example, why is the Government whacking one of our great export industries and regional employers with a giant tax when its own research tells them a fourth kerbside bin for glass, which is being rolled out in Victoria, delivers greater environmental benefits? And where is the data in the consultation papers outlining the true cost to NSW winemakers, which NSW Wine estimates to be over $30m per year,” he said.

The consultation period ended on 2 December 2022.

GRAPEVINE DISEASES

RED BLOTCH ARRIVES IN AUSTRALIA

Grapevine red blotch virus (GRBV) has been detected for the first time in Australia in grapevine germplasm collections in Victoria and Western Australia in one table grape variety and six winegrape variety/clone combinations.

Classed as a high priority plant pest for the viticulture industry, GRBV was also found in South Australia.

The detections, which were revealed by Australian Grape & Wine (AGW) in September, resulted from routine screening for a range of viruses and follow up tracing, not as a result of visual symptoms.

GRBV is not reported to cause vine death, nor does it pose a threat to grape or wine consumers.

However, it has caused significant economic impacts to the North American wine industry due to lower yields, delayed maturity and reduced quality.

Symptoms that may indicate the presence of GRBV include irregular red blotches across the leaves or reddening of veins, which generally start to appear in autumn.

AGW said it was working closely with state government biosecurity departments to understand where the virus is in Australia through tracing and testing and to determine the potential impact for industry including for the propagation sector.

A set of Q&As was made available through Vine Health Australia to help growers and winemakers understand the GRBV detections. The Q&As can be found on Vine Health Australia’s website: www.vinehealth.

com.au

A fact sheet on GRBV is available from Australian Wine Research Institute’s website which outlines the impact of the virus, symptoms, spread, management and diagnostics: www.awri.com.au