Decline in wine output not a problem: Vinexpo chief
"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
Frequently Asked Questions about this Article…
Vinexpo, citing a study by International Wine and Spirit Research, says Australian wine production will fall by about 15% over the next five years. Vinexpo’s chair Xavier de Eizaguirre frames this as a normal production correction after two decades of rapid growth, not a sign that the industry is in crisis.
According to ABARE, winegrape production fell from about 1.8 million tonnes in 2007–08 to an estimated 1.58 million tonnes in 2011–12. ABARE forecasts a slight rise to just above 1.6 million tonnes for the current year and a small further increase in 2013–14.
The article points to a persistent glut of supply and a high Australian dollar as pressures pushing winemakers upmarket. Those factors have encouraged producers to focus on higher-value, premium labels rather than competing on volume alone.
Casella Wines, the company behind Yellow Tail, reported a $30 million loss last year as it tried to hold US market share despite a strong Australian dollar. The company has flagged a new strategy of producing premium wines aimed at the Asian market.
Between 2007 and 2011 Australian exports by volume fell 13.3%, from 89 million cases to 77 million. In monetary terms export value dropped 20.9% to $1.89 billion in 2011–12, down from a peak of $2.68 billion in 2007–08, according to ABARE.
Vinexpo’s view in the article is reassuring: the decline is a normal adjustment after strong growth and not a reason for alarm. The industry is expected to shift toward specialised, boutique labels, which Vinexpo says should lead to a more sustainable and profitable sector over time.
China’s demand has been a major factor: imported still-wine consumption grew more than 550% by volume in the five years to 2011 and was forecast to expand a further 62.7% by 2016. The article also notes that China’s growth in imports is expected to slow as local production fills more of the market, so investors should watch both opportunity and the risk of slower import growth.
The article suggests the correction will likely mean less volume but better quality and higher prices as producers pivot to premium and boutique labels. For investors, that implies opportunities in higher‑margin producers and premium brands rather than businesses that rely on large-volume, low-margin sales.
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