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Small vintage an opportunity for wine industry to change direction

The 2007 national grape vintage will probably yield up to 50% less than last year’s 2 million tonnes and represents an opportunity for the wine industry to change direction according to Wine Grape Council SA, the peak growers’ body in South Australia.

“This vintage is a disaster for growers, with low yields and low prices combining to compound an already depressed sector,” said WGCSA, chairman, Paul Clancy.

“In recent years growers were told that an over-supply of grapes was the cause of collapsed prices but this year, with a drastically reduced national crop, there has been little upward movement in grape prices, particularly from the major wineries which account for more than 80 percent of wine production.”

“The reality is that Australia has been in a race to the bottom of wine export markets for a number of years, with 80 percent of our wine selling at less than $A15 a bottle and the vast majority of that at much lower prices. Wine companies simply cannot afford to pay sustainable prices for grapes because they are selling wine at very, very low prices,” said Mr Clancy.

“Most growers understand the problem but it seems the wine producers don’t – or at least they seem not to want to acknowledge it. This week we have seen the Winemakers’ Federation of Australia suggesting the vintage is only 20 percent down on last year – oh and, the low prices being offered are the result of other market factors now, not over-supply,” he said.

“Growers are concerned by the industry’s inability or unwillingness to grasp the gravity of the decline in the wine industry. Last year, at a National summit called to discuss the industry’s challenges, the wine producers seemed satisfied with the summit’s do-nothing outcome and expressed the view that market forces should be allowed to ‘play out’”, said Mr Clancy.

“Well, drought, frost and other factors have wiped out a grape and wine surplus in one season and yet the core problems of the industry remain – low, unsustainable grape prices and low and probably unsustainable wine prices.”

“It is time for the captains of the wine industry ship to admit they have steered a bad course. Nature has provided the brakes and the ship will barely idle for the next two years. Wine Grape Council SA, says let’s use these next few years of low production to set a new course,” said Mr Clancy

“We don’t have to return to growing 2.3 million tonnes of fruit in 2009. Let us, as an industry, look at ways to reduce the over-all harvest to say 1.6 million tonnes for the medium term. Let’s lift our over-all quality and concentrate on producing wines at the top end of the popular premium sector rather than the bottom end.

“It is a cliché but if you keep on doing what you have always done, you’ll keep on getting what you have always got. The Australian wine industry cannot continue down the same old track – there is another 2.3 million tonne harvest looming in 2009 and we have a year and a bit to do something about that.

“What an opportunity the industry has been presented with to use less water, become more water efficient and grow fewer but higher quality grapes,” said Mr Clancy.

“Instead of spinning and fudging and trying to paint everything in a false rosy light, the industry should take this chance to re-structure and re-adjust. Set a new course for the ship so that it can deliver a sustainable industry for the hundreds of regional economies which support the wine industry and which rely upon it,” said Mr Clancy.

“Growers’ demands to consider all options to stop the collapse of the industry were all but ignored at last year’s National summit — this low vintage offers a second chance to grasp the nettle and we again call on industry leaders to face facts.”



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