The Riverland wine region is the largest wine producing region in Australia. It stretches west from north of Adelaide along the Murray River from Paringa to Blanchetown. It is home to about 1,000 grape growers who cultivate in excess of 21,000 hectares of vineyards, one third of Australia’s wine production.
Over half of these growers sell their grapes to a multinational company, Accolade Wines. Accolade now has more wine in storage than the Riverland produces in a single vintage, equating to about 400 million litres of excess red wine.
Accolade is offering financial incentives for growers to switch from growing red to white grapes or to leave their vines dormant for the foreseeable future. The incentives are not believed to be sufficient to cover the cost, thus making grape growing unviable.
Elsewhere, in the Murray Valley, it’s estimated that 20,000 tonnes of grapes were left unsold this season. Overall, in Australia, wine exports decreased by 26 per cent in 12 months with no relief in sight. This has been coupled with rising input costs, which have at least doubled in the past year due to the rising cost of chemicals, fertilizer, fuel and labour.
The oversupply of red wine is the result of tariffs on Australian wine being exported to China and global freight issues (see my post from December 31, 2021, on Wine Shipping Delays), which have led to a downturn in red grape prices. This situation is expected to continue for the next few years.
Although switching from growing red grapes to white would remove unwanted red and replace them with varietals like Sauvignon Blanc, Pinot Gris and Prosecco, which currently have much more demand, the transition would not be cheap or completed quickly. It takes anywhere between two and six years to switch from one type of vine to another and for them to start producing the same amount of fruit as before.
Grape growers are calling for government assistance but even that may be too little, too late for some. However, at this point it is most likely that the government would not provide direct financial assistance but instead refer growers to rural small business grants and rural assistance loans.
Some experts are forecasting a generational shift in ownership of vineyards. There has been a recent increase in the number of vineyards being listed for sale. Given the current favourable value of the Australian dollar, it is thought that the real estate market may attract the attention of international investors.
Some vintners are even expected to rip out their vines and plant almonds or other crops.
Having experienced fires, droughts and other effects of climate change over the past few years, Australian vintners continue to live in interesting times. Grape growing is proving not to be a career for the faint of heart.