Red winegrape growers are being urged to consider pulling out their grapes as the industry battles plummeting prices, a glut of wine and soaring farm input costs.
Warmer, inland regions are at the epicentre of what is shaping up to be a major downturn in the industry, with many growers being told wineries do not want their fruit as they struggle to sell their ballooning inventory.
For growers lucky enough to have a buyer, prices are down more than 30 per cent for Shiraz and Cabernet Sauvignon grapes for this year’s vintage, and the industry is bracing for even lower prices next year.
Growers in the Murray Valley and Swan Hill region are being urged to consider growing more valuable varieties, or ripping out their vines altogether and diversifying into other crops.
The region’s grower-owned association, Murray Valley Winegrowers, has received inquiries from growers already considering taking patches out of production, either temporarily or permanently.
“Growers should carefully examine this issue (and possibly seek financial advice) at the earliest opportunity, to consider some uncomfortable but necessary decisions,” MVW said in an industry newsletter.
“Now is the time to act before you incur too many costs and potentially lose more money.”
Inland Regions Wine chairman Jim Caddy said Australian red wine was in the worst downturn since the 1970s.
The Australian Grape and Wine Industry had previously warned the closure of the China market, freight shortages and a record 2.1 million tonne 2021 vintage had converged to create a concerning supply-demand imbalance.
Caddy said even for growers with contracts for their grapes, “don’t be too confident your winery will take them next year”.
He said China’s surprise tariffs in 2020 came at the worst time for the industry already battling COVID lockdowns, when wineries were unable to jump on a plane to find alternate markets.
But he said it was a tale of two colours, “red and white, and predominantly two varieties, Shiraz and Cabernet. Shiraz is the big problem. White wine grapes are OK. Their prices will hold and winemakers will want them”.
Riverina Winegrape Growers chairman Bruno Brombal said the organisation is hosting an expo today to give growers ideas for alternative crops such as olives, macadamias and even cod farming.
“We’re not telling growers to leave the industry. But if you want to do something different, this is your opportunity,” he said.
“Our situation is that wineries have kicked out growers, so I don’t know what they’ll do with their fruit.
“Some (wineries) are saying growers should be mothballing and this is because of the complete collapse of red wine going into China.”
Brombal warned of a mental health issue for growers who would be left without a destination for their fruit.
Major winery owner Darren de Bortoli said he had advised their growers to prepare for difficult times ahead.
“We don’t know how we’re going to play it. We’ve opted to pull out a lot of our own grapes, probably in the vicinity of 90ha, mainly in the Griffith region,” he said.