Australian Farmers Grapple with Wine Surplus, Remove Millions of Vines
In a bid to address overproduction and falling grape prices, millions of vines are being uprooted in Australia, with plans to remove tens of millions more. The global decline in wine consumption has hit Australia hard, particularly affecting the demand for cheaper red wines, a significant product for the country. The reduction in demand, especially in China, a crucial market for Australia, has left the nation as the world’s fifth-largest wine exporter grappling with an oversupply crisis.
Australia had over two billion liters, equivalent to about two years’ worth of production, in storage as of mid-2023, and some of it is reportedly spoiling as vineyard owners rush to sell it at any price. Major wine producers, such as Treasury Wines and Carlyle Group’s Accolade Wines, are shifting focus to more expensive bottles, leaving areas like Griffith, where two-thirds of Australia’s wine grapes are grown, struggling with unpicked grapes withering on vines.
The prices of grapes, particularly those used for red wine in regions like Griffith, have plummeted. Last year, the average price per ton fell to A$304 ($200), the lowest in decades and significantly down from A$659 in 2020, according to data from industry body Wine Australia. To balance the market and boost prices, there is a call to pull up to a quarter of vines in areas like Griffith, which could result in the destruction of over 20 million vines across 12,000 hectares.
While the Australian government acknowledges the challenges faced by growers and expresses commitment to supporting the sector, many growers argue that more needs to be done. Some grape growers are selling red grapes for as little as A$100 a ton, causing financial strain and prompting calls for the removal of a substantial portion of vines to stabilize the market.
The oversupply issue is not unique to Australia, as other major wine-producing countries like Chile, France, and the United States also grapple with excess supply and are pulling up vines to address the problem. Health concerns leading to reduced alcohol consumption, a preference for pricier bottles when consumers do drink wine, and geopolitical factors, such as China’s previous block on Australian wine imports, have collectively contributed to the current challenges faced by the industry.
In the face of these difficulties, some growers are turning to alternative crops like citrus and nut trees. However, the situation poses a threat to the traditional family grape-growing model, with the likelihood of big corporates taking over and local growers working for them. The oversupply issue highlights the need for the industry to adapt to changing consumer preferences and global market dynamics to ensure its sustainability.
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