The Auswine Forum

Wine grape prices bleak for growers
By Sarina Locke,
ABC Rural
Posted July 09, 2012 12:02:35

http://www.abc.net.au/news/2012-07-09/w ... section=sa

Wine grape prices remain in the doldrums.

The average price this vintage was $457 per tonne, slightly higher than the year before but still the second-lowest in a decade.

The Winemakers Federation of Australia said it meant more grape growers would have to leave the industry before profits could return.

The 2012 crush increased by 4 per cent. That was kept low by a wet finish to the season, including flooding in areas including the New South Wales Riverina.

Shiraz has overtaken chardonnay production in the latest year, with the shiraz crush up by 16 per cent.

The change was largely because the last year's vintage was rain-soaked and botrytis infected grapes.

Pinot gris or grigio is becoming more fashionable. Pinot gris production increased by 40 per cent and muscat gordo blanco lifted by 30 per cent.

Simple equation in which the more consumers shop at the big chain stores to buy their wine the less dollars there are to pay growers to grow grapes. The cost of production (equipment, maintenance, running costs, labour etc) have all sky rocketed in the last decade but the end consumers price has dropped dramatically.

At the end of the day the industry as a whole is not sustainable the way it is going. If consumers want high quality wine they have to be willing to pay for it.

Also the more the big share holder bases producers are involved the worse it will get as they chase the mighty share holder return.

The day I and many other growers make money from our families vineyard will be a interesting day. We might buy a beer.

Makes sense as shiraz has to be the most popular Aussie varietal (I know it is in my cellar despite every effort to 'diversify' the styles of wine I own.)

Not sure what winw we are shipping out in bulk, mind. But we'd be better dumping it for all the bad image it creates for us.

pokolbinguy wrote:Simple equation in which the more consumers shop at the big chain stores to buy their wine the less dollars there are to pay growers to grow grapes. The cost of production (equipment, maintenance, running costs, labour etc) have all sky rocketed in the last decade but the end consumers price has dropped dramatically.

At the end of the day the industry as a whole is not sustainable the way it is going. If consumers want high quality wine they have to be willing to pay for it.

Also the more the big share holder bases producers are involved the worse it will get as they chase the mighty share holder return.

The day I and many other growers make money from our families vineyard will be a interesting day. We might buy a beer.

Has end user price dropped dramatically? From what I can see, in the last 10 years, prices for wine have increased 50-100%...Or maybe it is just the wines I'm looking at.....

Saying consumers need to be willing to pay for high quality wine seems to fly in the face of the fact that currently, Australia is one of the worst QPRs globally. There are of course exceptions but overall, most wine here is vastly overpriced...WET has something to do with it but really, except at the bottom end (sub 10 dollar bottles), Australia really doesn't compete very well against almost any region in the world. I'm talking free market prices (Not what we pay in Australia).

With some of the large stores starting to bring in imports at a better price, it is only going to put more pressure on wineries..and yes, some will go out of business...but I do think the industry will be better for it..stronger in the long run...

Again, this isn't to say there aren't good values in Australia..but at the current currency conversion rate and living in a free market, there are just very few wines that compete and that list is getting smaller and smaller.

I think that things will get better eventually when the global economy picks up, not through demand but through forex rates. I assume the AUD will fall from its historically very high levels and Australian wine will start to look good value again overseas. The wine world being the fickle world that it is (you would hope) Aussie wine will have its time in the sun again. It certainly deserve it.

The flipside of this argument is relevant to us wine buyers as although overseas wine look expensive on wine-searcher (as the prices haven't dropped here to reflect the current forex rates), when the AUD does fall, prices will rise here.

newworld wrote:I think that things will get better eventually when the global economy picks up, not through demand but through forex rates. I assume the AUD will fall from its historically very high levels and Australian wine will start to look good value again overseas. The wine world being the fickle world that it is (you would hope) Aussie wine will have its time in the sun again. It certainly deserve it.

The flipside of this argument is relevant to us wine buyers as although overseas wine look expensive on wine-searcher (as the prices haven't dropped here to reflect the current forex rates), when the AUD does fall, prices will rise here.

Polymer, agree 100%,
Newworld, being a simple chap and mathematics/economics 101 not being my strongest suits, a falling Australian dollar would be crippling to the domestic wine market and more importantly to the domestic wine consumer. By and large I don't care what happens OS as I do not buy any volume of high end foreign wine. A falling dollar would only lead to more inflated domestic prices, and they are too high already. Wine, like the rest of us in what ever products we make sell or buy, should consider the CPI and go up 3-4%, not 30-40% and in simple terms there inlies the problem.

Cheers Craig.

Craig.

Don't follow your logic.

I think a lot of Australian wine has very good QPR, in particular in the $10-$25 range. The statement that our QPR fares poorly internationally does not gel with my experience, though it has been a few years since I bought wine in other countries. Certainly a few years ago you could get cheaper wines in other countries, but there was a lot of rubbish. Given you can find plenty of wines that reflect their varietal(s) and terroir for under $25 I think we do pretty well.

Cheers

Michael

PS I agree that in theory it would be better if winemakers dumped wine that was not up to scratch (it would benefit everyone including them in the long run), but they have bills to pay in the short term and not in theory.

I spend a lot of time overseas and have over half my wine overseas...and from that standpoint, definitely Australian QPR is terrible.

From within Australia, it looks fine..that is because that 13 dollar bottle of Bordeaux sells for 50 dollars here (although that is changing). So people compare the two and say, hey, our 25 dollar Bordeaux blends is not too bad compared to that 50 dollar Bordeaux...Our 25 dollar Bordeaux Blend is good value...but in reality, our 25 dollar Bordeaux blend was not too bad compared to that 13 dollar Bordeaux and the QPR is not very good..

When are Australian wines good value overseas? I actually buy them when they're on clearance and that is about it. Unfortunately, the high AUD is hurting a lot...and the general state of the industry Australia seems to suggest there needs to be a bit of house cleaning...I think a few places need to go under which will be bought out and lower costs for other places and hopefully improve the quality at the same time. I think some of the large retailers starting to bring in imports at a more competitive price will create some pressure as well...Overall it'll be good. I'm not saying I want to see places go under but sometimes some pruning is good.

Polymer. I agree 100% with what you say.

Aussie wines are great value here. The lower end imports tend to be quite competitive (on wine-searcher), but as soon as you move up a level or two, they suddely become double (or more) the price the US/UK/EU pay. So I steer clear.