Viticultural Information

Statistics information from The Australian and New Zealand Wine Industry Directory
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Vineyard Area

New figures on vineyard area was not available in 2016 with the cessation of data collection by the Australian Bureau of Statistics. However, South Australia was the exception, where data is still collected by Vinehealth Australia (formerly the Phylloxera and Grapde Industry Board of South Australia).

Vinehealth Australia reported a decrease of 3.4% or 260 ha in the area planted to vines in South Australia in April 2016, compard to the previous year. Total vineyard area now stands at 75,858 ha after four consecutive years of decline. New plantings were also lower at 462 ha, down from 864 ha planted in the previous season.

Data in the rest of this section pertains to the last report issued by the ABS for 2015. A new national data series on vineyard area is under development by Wine Australia.

The total area of Australia’s vineyards continued to decline in 2015. Estimates from the Australian Bureau of Statistics show total vineyard area (including not-yet-bearing areas) decreased by 9% from 148,507 ha in the previous survey in 2011-12 to 135,178 ha in 2014-15 (Tables 25 and 26). Vineyard area has now declined by 22% from the record level of 2006-07, and is lower than any time since 1999.

The contraction was evident in all states except Tasmania. New South Wales suffered the biggest decline, reducing by 5,073 ha or 13%, followed by South Australia, where vineyard area decreased by 4,398 ha or 6.2%.

South Australia remained the leading vineyard state, with 66,912 ha. This represented 49.5% of national vineyard area and was almost double the next largest state, New South Wales, with 34,092 ha under vine. Victoria was the third largest State (23,088 ha), followed by Western Australia (9,013 ha). Tasmania defied the national trend to increase its area under vine by 14% to 1,505 ha, and slightly lifted its national share to 1.1%. Big Rivers in New South Wales and Lower Murray of South Australia were the largest zones.

The national decline in vineyard area was led by white winegrapes, which dropped by 15.1% to 48,530 ha. Red winegrapes decreased by 5.1% to 86,648 ha. As a result, the mix of grape varieties shifted even further towards red winegrapes, which now account for 64.1% of all vineyards, up from 61.5% in 2012.

Vineyard areas for all varieties of white shrunk in 2015 from the previous survey in 2012. Chardonnay remained the most popular white winegrape, occupying 44.1% of all white vineyards, although it has steadily lost ground in relative terms to other varieties since 2008-09. Semillon and Riesling suffered the biggest decline among whites, with both varieties shrinking by 18.9% to 4,568 and 3,175 ha respectively. Pinot Gris now accounts for a significantly larger area than Riesling, with 3,372 ha, and is set to overtake Semillon if current trends continue (Table 27). Prosecco was a significant new entry since the last survey, with an estimated 183 ha now planted.

Among red varieties, Shiraz continued its steady decline since 2009, but with 39,893 ha planted, it is still easily the most important grape variety in Australia. Shiraz accounts for 46.0% of all red vineyards and almost a third of all vineyards around the country. The second largest red variety, Cabernet Sauvignon, decreased in area by 4.6% to 24,682 ha, while the third largest variety, Merlot, dropped by 8.7% to 8,477 ha. Pinot Noir was almost steady at 4,948 ha.

A number of smaller red varieties went against the national trend and increased in vineyard area, including Durif (up 25.0% to 625 ha) and Ruby Cabernet (up 11.1% to 855 ha). A new entrant in 2012, Nero d’Avola, continued to grow strongly, with planted area more than doubling from 33 to 77 ha.

New Plantings

New plantings of vines increased in 2015 for the first time in at least a decade, up from 940 ha in 2012 to 1,235 ha in 2015 (Table 28). New plantings were heavily weighted towards red winegrapes, which accounted for 988 ha or 80% of the 2015 total. The national increase was driven by South Australia, where new plantings almost doubled from 435 ha to 825 ha. Activity also lifted in Victoria and Western Australia.

New plantings of red winegrapes were dominated by Shiraz (462 ha) and Cabernet Sauvignon (295 ha). Among white varieties, Chardonnay accounted for 66 ha or almost 27% of total plantings of 247 ha. Pinot Gris was the second most popular among new white plantings (39 ha), followed by Riesling (33 ha).

Vintage 2016

The 2016 Australian grape crush soared well above the average level of recent years to reach an estimated at 1.81 million tonnes, an increase of more than 100,000 tonnes or 6% from the actual crush in 2015, as tallied by the Department of Agricuture and Water Resources from levies paid (Table 1). The latest crush is well above the five-year average of 1.70 million tonnes between 2011 and 2015. The increase in total crush came from the cool and temperate regions of Australia, which more than offset a 0.6% decrease in the warm inland regions of the Riverina, Murray Darling-Swan Hill and SA Riverland (Table 2). More specifically, the growth in 2016 was largely driven by extraordinary increases in the estimated crush from two regions in SA — Langhorne Creek and McLaren Vale, which lifted by 57% and 47% respectively and accounted for 40,000 tonnes to the national increase of about 100,000 tonnes. Langhorne Creek overtook the Barossa Valley and delivered a bigger crush than the entire state of Victoria.

South Australia overall lifted by 16% and accounted for 51% of the national crush, up from 47% in the previous year. In NSW, the overall crush was down by 5%, reflecting a difficult year in the Riverina, while Victoria was down by 9%. WA increased by 16%, but still accounted for only 2% of the national crush, while Tasmania and Queensland were up 27% and 212% respectively off low bases.

The 2016 red crush was estimated to be 935,466 tonnes, an increase of 83,000 tonnes or 10% compared to 2015. The white crush was estimated at 871,741 tonnes, an increase of 21,000 tonnes or 2%. Red varieties increased their share of the national crush from 50% to 52%.

The crush of most major red varieties increased, with Cabernet Sauvignon up 20%, Pinot Noir up 9%, Shiraz up by 7% and Merlot up by 3%. The top three red varieties by volume were Shiraz, Cabernet Sauvignon and Merlot, together accounting for 85% of the total red crush. Shiraz continued to dominate with 46% of the total red crush, down slightly from 47% in 2015. Cabernet Sauvignon increased its share from 25% to 27%, while Merlot decreased from 13% to 12%.

Among the white varieties, Chardonnay increased its dominance, lifting from 45% to 47% of the overall crush, with an increase of 6% in tonnage. Australia’s second-most popular white grape, Sauvignon Blanc, also increased its share of the crush, up from 11% to 12%, but a number of other top 10 varieties fell from favour. The tonnage of Colombard crushed was down by 17%, Semillon fell 6% and Pinot Gris/Grigio was down by 4%. Overall, the top 10 varieties did not change, while Riesling remains just outside this group.

The Winemakers Federation of Australia reported the total value of fruit purchased by respondents to its 2016 Wine Sector Survey was estimated to be $646 million, a 15% increase from $564 million in 2015. The WFA extrapolated this figure to estimate a value of $951 million for the 2016 national grape harvest, a 21% increase from $788 million in 2015. The total harvest value grew at a faster rate than grape purchases because of an increase in winery-grown fruit, up from 28% to 32% of the national harvest.

The WFA then calculated an average price per tonne purchased of $529, up 14% from $463 in 2015. This figure is the highest since 2009 and above the average price for the past five years of $477 per tonne. While grape growers received a welcome increase in their receipts, they are still suffering from a structural oversupply of grapes. For example, the five-year average price from 2001 to 2005 was $763 per tonne, which is equivalent today to $990 per tonne after adjusting for inflation.

The average purchase value of red grapes increased by 13% from $575 per tonne to $651 per tonne, while the average value of white grapes increased by 12% from $356 per tonne to $398 per tonne.

The price growth was led by Australia’s most popular grape varieties, which recorded above-average gains. Chardonnay had the greatest increase (up 21%), followed by Cabernet Sauvignon (up 17%), while prices for Shiraz increased by 14%, slightly above the overall 13% rise for red grapes. These figures suggest that prices for less popular varieties under-performed the average, and could lead to a further shift towards the major varieties.

Vintage 2017 outlook

Almost a decade has passed since the most recent wine industry boom came to an abrupt end in 2008 with the Global Financial Crisis, a soaring Australian dollar, drought and high water costs. The prolonged hard times that followed make many in the industry wary of calling the end of the bust that arrived in 2008, but 2016 produced many signs that better times are here to stay, at least for the foreseeable future. For the second year in a row, prices, production and exports increased. Moreover, growth in most of the industry’s vital metrics accelerated. Against this background, the painful unwinding of Australia’s oversupply of grape production appears to have almost run its course, with the national vineyard area dropping to levels last seen in 2001.

The revival of the industry’s fortunes is being led by exports. International markets for Australian wine are opening up like never before thanks to free trade agreements with China, Japan and South Korea. The Australian dollar, which averaged around $US0.75 in 2016, looks set for further depreciation on the back of rising US interest rates. Across the board, overseas buyers have a growing appetite for premium Australian wines, particularly in China and US. Industry-led marketing of Australian wine on global markets has also received a boost with a $50 million allocation to Wine Australia in the 2016 Federal Budget.

Perhaps the clearest signal yet of a return of good times for the wine industry is the decision by the private equity owner of Australia’s largest producer Accolade Wines, to launch an initial public offer in early 2017. This follows six years of ownership and is timed to capitalise on improved industry conditions.

There is no denying the industry still faces challenges, including a continuing grape oversupply in some regions. Changes to the Wine Equalisation Tax in the 2016 budget may help to restore balance to supply and demand by curbing abuses of ‘virtual’ producers who are more interested in tax concessions than making wine. However, industry bodies are concerned the tax changes have gone too far and will affect profitability of many producers.

Rising costs of water and electricity are also increasingly pressing issues, and there does not appear to be much relief in sight to the retail price wars that are damaging the domestic market. Rising imports also continue to put pressure on local producers, but this could be alleviated in 2017 if the Australian dollar does weaken as forecast to around $US0.70 by the end of the year.

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