Decline in wine output not a problem: Vinexpo chief

AUSTRALIAN wine production will drop by about 15 per cent over the next five years, but there is no reason for alarm, said Vinexpo, which commissioned a report by International Wine and Spirit Research.

AUSTRALIAN wine production will drop by about 15 per cent over the next five years, but there is no reason for alarm, said Vinexpo, which commissioned a report by International Wine and Spirit Research.

"Australia for two decades has shown incredible growth around the world but is plateauing now and there's an adjustment on the production side which is totally normal," said Xavier de Eizaguirre, chairman of wine fair Vinexpo, which is being held in Bordeaux in June.

"It doesn't mean Australia is in trouble in terms of exporting, it just means there's a correction after years and years of spectacular growth."

The Australian Bureau of Agricultural and Resource Economics said winegrape production declined from about 1.8 million tonnes in 2007-08 to an estimated 1.58 million tonnes in 2011-12.

This year, ABARE forecast winegrape production in Australia will rise slightly to just above 1.6 million tonnes and be slightly higher again in 2013-14.

Australian winemakers are still coming to grips with a persistent glut and a high Australian dollar that are forcing them upmarket.

The company behind export success story Yellow Tail - Casella Wines - plunged to a $30 million loss last year as it tried to maintain market share in the US despite the high Australian dollar. It has flagged a new strategy of producing premium wines targeted at the Asian market.

The new study does not include export forecasts but does reveal that between 2007 and 2011 Australian exports declined 13.3 per cent, from 89 million cases to 77 million. In monetary terms the value of Aussie wine exports fell 20.9 per cent to $1.89 billion in 2011-12. This is down from a peak of $2.68 billion in 2007-08, according to ABARE.

Nevertheless, Mr de Eizaguirre insists the picture is positive.

Australian winemakers would move to more specialised or boutique labels, which would eventually lead to a more sustainable and profitable sector, he said.

"It will take a while for the Australian industry to adjust to the new trends but it will translate into less volume, better qualities and higher prices," he said.

The study reveals Chinese consumption of imported still wines grew by more than 550 per cent in the five years to 2011 by volume. It is forecast to expand a further 62.7 per cent by 2016.

But the growth in China's wine imports is expected to slow in coming years despite expectations it will be the second-biggest consumer of wine by 2016. Local wine production is expected to fill the gap.

with AAP

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles