Drought effect on wine prices/supply

Grand Cru · Post by **Grand Cru** » Fri Apr 27, 2007 11:51 pm

I read somewhere that over 40% of our wine production comes from the Muray Darling basin fed by irrigation.

If the PMs recent announcement on an irrigation ban becomes reality, what will happen to the price and availability of wine?

Is it true that the recent small vintage has already absorbed the wine lake created over the previous few vintages and the big players are now struggling to find wine for cask wine?

KMP · Post by **KMP** » Sat Apr 28, 2007 6:13 am

Hardy's seems to be hit less than the dire predictions I've heard about.

The Hardy Wine Company today said it had crushed 255,600 tonnes of wine grapes, a 24 per cent fall on the 2006 vintage.

That accounted for about 19 per cent of Australia's total harvest estimated at 1.34 million tonnes.

Chief winemaker Peter Dawson said cool regions in Australia were the hardest hit with yield in some areas down by as much as 45 per cent.

Warmer inland regions, including South Australia's Riverland and the Murray Valley in Victoria and New South Wales, fared better with the harvest down by about 19 per cent.

With Western Australian not experiencing the weather extremes of the eastern states the grape yields there were only down by about 15 per cent. Link.

Mike

Nayan · Post by **Nayan** » Sat Apr 28, 2007 12:12 pm

If you're on broad band, check out this reportage in the ABC 7.30 report from Tuesday

naomi · Post by **naomi** » Sat Apr 28, 2007 3:34 pm

Regions in the Murray darling basin may have fared well this year, but if their irrigation is cut they will be in trouble. Sure, you can grow vines dryland, but the soil type needs to be right (good water holding capacity), and the vines need to adapt to those conditions. Vineyards which have been irrigated all their life will have very shallow root systems, and if their water is cut, they will die.
I think if we get another dry year Australian wine prices will soar. Any cheap wine that is around will be lesser quality or from South America.

Sean · Post by **Sean** » Thu May 10, 2007 2:48 pm

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Gregoire · Post by **Gregoire** » Thu May 10, 2007 2:56 pm

Large scale irrigation growers will go. It's only a matter of when.

Red Bigot · Post by **Red Bigot** » Thu May 10, 2007 3:33 pm

Sean wrote:
Last year it was 1.9 million tonnes, but more important was the trend (upward) and the message that we had a grape glut. That message had been repeated over and over again so many times it was accepted as axiom, like an unchangeable law of nature.

The 2007 number has come out and while it's more of an estimate the AWBC number of 560,000 tonnes is a shocker.

Just to clarify, that's 560,000 down, not 560,000 total.

"The 2007 Australian winegrape harvest is all but complete with a harvest of 1.34 million tonnes expected, the smallest since 2000. The harvest estimate was based on a survey of wine companies covering approximately 85% of the industry’s winegrape crush.

If the current estimate eventuates, the 2007 harvest will be 29% or 560,000 tonnes lower than last year’s tonnage and will give Australian winemakers around 400 million litres less wine this year than last year. The white crush is estimated to have fallen by 17% to 702,000 tonnes, 52% of the total crush. Reds were harder hit, with the crush falling 39% to 639,000 tonnes, 48% of the total crush. The red share of the total crush is the lowest since 1999."

Sean · Post by **Sean** » Thu May 10, 2007 4:30 pm

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Sean · Post by **Sean** » Thu May 10, 2007 4:48 pm

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707 · Post by **707** » Thu May 10, 2007 4:56 pm

Chatting to several people in the industry recently and it appears the wine lake is just about gone. Bulk back vintages are now miniscule and the larger companies are scouting hard to find wine to fill bags in boxes.

It has been a buyers paradise for the last couple of years and there's still plenty of bargains to be had.

The quality of wines between $15-25 has been sensational but with grape prices up significantly for this vintage and a probable small crop in 2008, we'll see prices rise and quality drop.

If the Murray basin has severe cuts in irrigation then the under $20 bracket could be devoid of stock.

Gregoire · Post by **Gregoire** » Fri May 11, 2007 1:45 pm

And focussing on quality not quantity is fine, until "permium" wines like the Balmoral 2002 come along!

McLaren Vale Vine Doctor · Fri May 11, 2007 5:35 pm

KMP wrote:Hardy's seems to be hit less than the dire predictions I've heard about.

[i]The Hardy Wine Company today said it had crushed 255,600 tonnes of wine grapes, a 24 per cent fall on the 2006 vintage.

Large companies do have to be careful with what they say because they don't want to send certain signals to sharemarket etc. Hardys have large operations based out of Berri Estates. The tonnages for this winery will be way down next season because of the River Murray irrigation cut backs. But there this a benefit to all this...

The low crops this season will help clean out the oversupply of 'cool climate - premium' from Southern Australia.

Another year of lower than average yields is expected with water restrictions and frost recovery effects would change that balance. I certainly think cleanskin specials will dry up.

Remember Barossa and Clare access River Murray water (20% and 17% respectively). Coonawarra, Southern Clare, Padthaway, Goldburn etc were all frost reduced this season.

This may see another 10-20% reduction in the crush.

My question is will be low cost imports of bulk wine to fill the cleanskin section of the market? The two season of low crops may not be the end of $2.99 wine specials.