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The Five-Year Plan: 1997-2001
Into the Next Century
The Five-Year Plan: 1997-2001
Implications for Winegrape Supply and Demand
Between 1992-93 and 1994-95 almost 11,000 hectares were planted to vineyards, with 6,000 ha planted in 1994-95 alone. Preliminary estimates also suggest a substantial area planted to vineyards in 1995-96 (spring 1995).
With an approximately four year lag between planting and vineyards bearing, winegrape supply is set to grow substantially between now and the end of the century.
Based on forecast sales growth on domestic and international markets, winery grape requirements are projected to reach almost 1 million tonnes by 2001.
The period 1997 to 2001 will signal the end of the winegrape supply shortage that has been evident for most of this decade, and particularly since the low yielding 1993 and 1995 vintages.
Quality, consistency, region and variety will become increasingly important to wineries, as they attempt to match available winegrape supply with market demand.
The composition of winery grape requirements falls into three main categories: premium red grapes; premium white grapes; and non-premium and multipurpose varieties.
Premium red grapes
Strong market demand for Australian bottled red wine will ensure that wineries' requirements for premium red grapes remain strong throughout the five year period.
Premium white grapes
Exponential growth in premium white grape supply between 1996 and 2001 is likely to outpace sales growth (domestic and international markets) of existing premium white wine brands.
As a consequence, wineries will look beyond existing brands and existing markets for additional premium white wine sales. The available options include:
- expanding existing markets
- developing new markets for premium white wine
- resuming bulk wine sales (mainly offshore) at low margin and low unit values
- developing the fresh grape juice concentrate market (domestic and international)
- substituting premium grapes for non premium and multi-purpose varieties in the lower priced bottle segment, and in some cask segments
- relocating multipurpose varieties back into the dried vine fruit industry
- rejecting poorer quality grapes for winemaking purposes.
A substantial proportion of the increased available white winegrapes will need to be sourced at lower prices in order to:
- enable wineries to expand international market penetration beyond projected levels
- compete on the international bulk wine market at price parity with low-cost competitors such as Chile and South Africa
- ensure that low priced bottle and cask wine retain their price competitiveness.
Non-premium and multipurpose varieties
The increase in available supply of premium red and white varieties will reduce wineries' requirements for non premium and multipurpose varieties. It is likely that a significant proportion of these varieties will be redirected to the dried vine fruit industry (mainly sultana) or grubbed for replacement with premium varietals.