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Australia crop size defies expectations
June 13, 2008
Chris Snow in Adelaide
Australia has posted a vastly bigger than predicted grape crop of 1.83m tonnes for 2008.
This is twice the sizes of the pre-vintage estimates of about 900,000 tonnes.
It compares with a drought, water shortage and frost-ravaged 2007 vintage of 1.4m tonnes and is not far short of the 1.9m, 1.93m and 1.92m tonne crops of 2006, 2005 and 2004, respectively.
The result counters recent claims of supply problems because of the continuing drought and increasingly severe irrigation water restrictions.
'Droughts devastated the 2008 crop, with spot prices of bulk Australian wine rising from AUS$0.40 in 2006 to over AUS$1 a litre in 2007,' UK retailer Berry Bros and Rudd said in a recent report.
'If this trend continues, supplies of inexpensive Australian wine may soon be a thing of the past.'
Winemakers Federation of Australia CEO, Steven Strachan, said, however, that the crop size 'represents a resounding success in a challenging year and is testament to the resilience and adaptive nature of our regional growers and wineries.'
He said that it should dispel any fears that Australia was unable to supply its domestic and international markets with the volume of quality Australian wine required.
But he did predict a crisis for hundreds of small wine producers in the premium regions.
A surplus two to three years ago had had led to the major producers, especially the top 20, taking strong steps to balance their grape intakes.
This meant that surplus from the 2008 vintage would be carried partly by smaller producers in the premium wine producing regions where production had been well above expectations.
'Sustainable production is about 1.5m tonnes so there's a far chance that a lot of wine will sit in the tanks of smaller producers,' Strachan said.
Higher costs of production, mainly in water costs, the strengthening Australian dollar, and stiffer competition from other countries' producers, meant that their grapes, used to produce bulk wine that is mainly exported for blending and use in buyers-own-brand wines, were becoming unsustainable to grow.
'Australia is no longer a low-cost producer,' Mr Strachan said.
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