Viticulture

Viticultural Information

Statistics information from The Australian and New Zealand Wine Industry Directory
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Vintage 2019

Australian producers reported a total of 1.73 million tonnes of winegrapes crushed in 2019 from 146,244 hectares of land (Table 4). This represents a decrease of 50,725 tonnes or 2.9% from the final crush reported in 2018 (Table 3). Despite difficult weather conditions prior to the 2019 harvest, the strength and resilience of the industry is evident by the overall winegrape harvest. The
year’s crush was comparable to the long-term average of 1.75 million tonnes (2009-2018), reinforcing Australia’s ability to deliver consistent harvests through tough conditions.

The 2019 growing season was not only hotter, but also shorter, with growers scrambling to harvest within a tight timeframe due to the extended high temperatures during the first quarter of the year. The total winegrape intake is smaller by 3% when compared to 2018, totalling 1,728,454 tonnes (Table 1). However, the average price continues on an upward trend rising by 9% in 2019
(Table 1) to an average of $644 per tonne, which is the highest price since 2008 (Snapshot).

The crush for red varieties increased modestly by 2% to reach an estimated 941,583 tonnes, while the crush for white varieties decreased by 8% for a final estimated 786,871 tonnes in 2019 (Table 1).

The top three red varieties by volume in 2019 were Shiraz, Cabernet Sauvignon and Merlot, together accounting for 84% of the total red crush. Shiraz continues to dominate with 44% of the total red crush at an estimated 418,364 tonnes, a contraction of 2% compared to 2018 (Table 1). Cabernet Sauvignon increased slightly in 2019 to represent 27% of the total red crush, an increase of 3% from the total volume in 2018. The tonnage of Merlot harvested increased by 13% to 118,117 tonnes (Table 1). The price for Merlot also rose by 20%, compared to an average price increase of 9% within the overall red grape crush. The demand for Merlot is expected to remain strong in coming seasons.

Among white varieties, Chardonnay remained the most produced winegrape, with an estimated 356,350 tonnes crushed (Table 1). While the overall volume of Chardonnay grapes decreased by 12% in 2019, the variety still made up 45% of the total white crush. Sauvignon Blanc remained the second most popular white grape although the tonnage crushed in 2019 dropped by 1% to 90,474
tonnes (11% of overall white crush). This was closely followed by Pinot Gris/Pinot Grigio, representing 9% of the overall white crush in 2019. The Prosecco crush increased by 42% to 9,936 tonnes in 2019 accompanied by a 10% increase in price (Table 1). The average 2019 purchase price for Prosecco was $835 per tonne, approximately 80% above the national average for all white winegrapes which was at $462 per tonne (Table 5).

The crush in warmer inland regions (Riverina, Murray Darling, Swan Hill and the Riverland) weakened by 2% from 2018, to a total of 1.26 million tonnes in 2019. In volume, this represented 73% of the total 2019 Australian wine grape harvest (Table 2). In contrast, the cool and temperate winegrape intake fell by 5% to a total of 470,000 tonnes in 2019 (27% of the total crushed in 2019).

At the state level, South Australia continued to dominate with 50% of the national crush. Regions in SA experienced a roller coaster ride with the Riverland remaining healthy with a slight increase of 2% in the volume crushed, while Padthaway and Wrattonbully saw significant rises of 68% and 79% respectively. However, the Barossa Valley’s crush slumped by 31% with little change in the grape price. Other SA regions such as the Adelaide Hills (down 44%), Clare Valley (down 36%) and Eden Valley (down 55%) experienced a difficult year, with harvests significantly lower in 2019. The small change in price (up by an average 4% across SA) was unlikely to have compensated for lower crop yields.

In New South Wales, the overall crush was down by 3% for the year, with regions such as Gundagai, Cowra and Tumbarumba experiencing larger declines. In Victoria, the total crush dropped by 7%, although a number of regions in the state recorded increased yields. Western Australia’s total also decreased by 7%, while, in contrast, Tasmania was up by 9% and Queensland rose by 27%, although the latter two states represent only a small proportion of the national crush. The smaller winegrape crush in 2019 was partly responsible for an overall increase in grape price, by 9%.

Australian Grape and Wine (AGW) reported that the total purchase value of fruit across all grape varieties grew by $644 per tonne in 2019 (Snapshot). This is the fifth consecutive vintage with an increase in price. The national average purchase price has seen an average growth rate of 6% per year since the record low of $413 per tonne in 2011. However, the average is still roughly two-thirds of its peak in 2001 ($933 per tonne).

The weighted average price for cool climate regions was $1394 per tonne, while warm inland regions received $473 per tonne (Table 4). The overall weighted average price for red grapes increased by 9% to $845 per tonne, while the average price for white varieties increased by 4% to $462 per tonne in 2019 (Table 5). Since 2011, the industry has observed an increasing disparity between the average price of red and white grapes, due largely to stronger demand for Australian red wine within export markets.

Table 5 reveals further insights into winegrape prices for some of the most popular varieties grown in Australia. Among red grape varieties, Nero d’Avola from cooler climates fetched the highest price of $1974 per tonne. The same variety grown in warmer inland climates commanded a respectable $869 per tonne in 2019 (Table 5). Shiraz was the most commonly grown red variety (Table
7) and was sold for $1637 per tonne for fruit from cooler regions, or $611 per tonne from warmer inland areas. The price for Shiraz is sitting above the weighted average price of $1530 per tonne for red grapes from cooler climates, and above the $592 per tonne achieved for fruit from warmer regions (Table 5).

Among white grape varieties, Fiano received the best average price for growers from both climates. Fruit grown in cooler regions sold for an average of $1540 per tonne, while warmer crops were sold for $455 per tonne (Table 5). White grapes were typically sold at $1394 per tonne (cool) and $361 per tonne (warm). Chardonnay remained the most popular white variety for Australian growers, earning a weighted average of $1096 per tonne (cool) or $367 per tonne (warm) (Table 5).

Further analysis of price dispersion is included in Table 6 for the most commonly grown grapes in Australia. Approximately 71% of Shiraz was sold between the $600-$1499 price bracket. The price dispersion of Cabernet Sauvignon was similar to Shiraz.

In contrast, the price dispersion of white grape varieties tells a different story. Approximately 88% of Chardonnay grapes were traded between $300-$599; 9% was sold between $600-$1499, and the remaining 3% for more than $1500. About 78% of Sauvignon Blanc was purchased between $300-$599; with 18% between $600-$1499, and the remaining 4% of fruit were sold for more than $1500 (Table 6).

Grape varieties

Australian wine producers reported that they grew a total of 127 winegrape varieties to produce straight varietal or blended wines over the course of 2019 (Table 7). This number remained largely unchanged from the previous year.

Shiraz remained the most common variety used to make a straight varietal or blended wine, with 1101 producers listing it in 2019. Chardonnay (875) overtook Cabernet Sauvignon (860) as the next most popular variety, with Merlot (562) and Pinot Noir (550) rounding out the top five varieties.

Red varieties are favored by wine producers for making straight varietal wine, with Chardonnay being the only white variety on the list of the top 5 in 2019.

Vintage 2020 and industry outlook

Bushfires caused extensive damage in a number of wine regions in south-eastern Australia. Around 1100 hectares of vines were burnt in the Adelaide Hills, affecting around 60 growers and winemakers. There were also concerns over damage to infrastructure such as vineyard posts, trellising and irrigation systems, which could hinder a quick recovery. A number of producers in the Tumbarumba region of NSW were directly affected by bushfires, with the loss of vines, equipment, buildings and wine storage facilities.

Producers in other areas also faced the indirect impact of smoke taint after plumes from the fire fronts blanketed regions including the Hunter Valley (NSW), Orange (NSW), Canberra (ACT/NSW), Kangaroo Island (SA), East Gippsland (VIC) and much of north-east Victoria. Smoke taint occurs when smoke permeates the skin of ripening grapes, causing wine to have an unpleasant, smoky taste, usually rendering crops unusable for wine production.

Family-owned Tyrrell’s Wines, one of the Hunter Valley region’s largest producers, revealed that it would not harvest in 2020 due to smoke taint significantly reducing the region’s vintage. A number of smaller producers in the Hunter Valley followed this difficult decision to not pick bushfire affected fruit.

Meanwhile, harvest in South Australia’s Riverland region started early in 2020. It was expected that demand for fruit from the region would outstrip supply for vintage ’20. Early prices released showed a promising start to the vintage, with a 10% price increase from the previous year.

In addition, the outbreak of coronavirus in China could have wide-ranging effects on the Australian wine industry, with quarantine orders likely to cause a decline in customers at restaurants and bars, with the potential to impact consumer demand for imported Australian wine. Travel restrictions could also dampen tourist numbers from China in Australian wine regions.

In early 2020, Australia’s largest winemaker Treasury Wine Estate, cautiously monitored the reduction in Chinese consumption of its products, with the Chinese market making up approximately 15% of the company’s earnings.

In 2019, total Australian wine exports to China, which remains Australia’s largest overseas market by value, rose 12% to $1.3 billion. In early 2020 Wine Australia was closely monitoring the situation in China, although at that stage, the likely impact was difficult to predict.

Wine tourism in Australia had already been feeling the effects of the summer bushfires, with sales at cellar doors in Victoria, New South Wales and South Australia lower as both domestic and overseas visitor numbers to affected regions declined.

After several years of continuing drought conditions in the eastern states, an overall tough trading environment was made evident by the move to place McWilliam’s Wines, the country’s sixth largest wine company, into voluntary administration after 141 years of family ownership. Although, the company had reported $87.4 million in sales revenue for the 2017-18 financial year, this
had been a drop of 13% following a period of heavy losses. The decline was attributed to, among other factors, evolving structural market dynamics and capital constraints.

Despite the challenges brought to the industry, there were opportunities as well, including the prospect of growing exports to a post-Brexit United Kingdom. The UK is the world’s sixth largest wine consumer and Australia’s largest export market by volume. The signing of the Australia-UK Wine Agreement in early 2019 promised the continuity of Australian wine exports to the British market. The Australian Government Minister has continued to work toward finalising a free trade agreement between Australia and the UK which could translate to lower tariffs, quotas and overall barriers to winemakers. An Australian trade delegation was expected to meet with British officials early in 2020 to negotiate future trading opportunities between the two Commonwealth countries. It was expected that a post-Brexit UK wound enter Australia’s top 10 trading partners following the successful conclusion of a trade deal.

However, with the bilateral Wine Agreement already in place a guaranteed assurance of continuing trade from January 1, 2021 was already in place. By 2020, one in five bottles of wine sold in the UK was Australian, despite there being no tariffs on European wines. The preference for Australian wine, coupled with a move by UK supermarkets to build up stockpiles of Australian wine
from mid-2019, ahead of Brexit, indicates that access to the British market by Australian winemakers is looking more assured for the foreseeable future.

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