Australian wine industry slashes surplus estimate

  • Thursday 23 November 2006

Australia’s wine industry surplus is only about half the 900m litres it was thought to be, decanter.com has learned.

Figures, due to be released by the Australian Wine and Brandy Corporation tomorrow, put the over-supply at around 450m litres. But it may be even less, as industry insiders believe the downward revision to be conservative.

The revised estimate is based on an amended forecasting model developed following talks between the AWBC, the Australian Bureau of Statistics and industry players.

The revision means that the industry surplus is now likely to be eliminated by the 2008 vintage, two to three years ahead of previous forecasts.

The drought, irrigation restrictions, frost damage and a cyclical reduction in yields following two bumper crops are already expected to cut the 2007 vintage by at least 25% to 1.5m tonnes. With continuing drought conditions and long-term damage caused by frosts, there is a strong possibility that 2008 will be meagre too.

However no major impact is expected on grape and wine prices. Leading bulk wine dealer, Jim Moularadellis, of Adelaide-based Austwine, said that the revision would mean an end to ‘rock bottom’ sales, where prices of AUS$0.35 a litre have been common, but little else.

Philip Laffer, director of winemaking at Orlando Wyndham, welcomed the end of cheap wine sales, saying that the forecast surplus had led to export sales of ‘less than attractive’ wine that had been ‘very very damaging’ to the Australian industry’s reputation.

The chief executive of the Winemakers’ Federation of Australia, Stephen Strachan, said he did not think there would be any increase in wine prices or any pressure on wineries to increase prices paid for grapes, except for a few varieties that were in short supply, because wineries still had plenty of stocks.

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