The 2015 vintage crush, which at 1.67m tonnes is marginally lower than the seven-year average, will benefit from some modest and patchy strengthening in prices and exports, the Winemakers’ Federation of Australia said.
“We are seeing a 5% increase in average wine grape prices over the past year, albeit off a low base,” said Paul Evans, its chief executive.
But conditions were extremely difficult for grape growers in warm inland regions such as the Riverland in South Australia, Mildura and Swan Hill in Victoria, and around Griffith in NSW.
“We must also remember that this is an industry average and many producers in the warm inland regions in particular continue to experience enormous challenges. Our analysis shows that 92% of production in warm inland areas is unprofitable.”
More favourable exchange rates, the signing of important free trade agreements with Asian countries and improved consumer sentiment in traditional markets have combined to buoy the beleaguered wine industry over the last year.
However, Australian winemakers must keep ahead of the game, Evans said.
“While these developments will help, they will not be enough to restore lost margin and share across the industry over the longer term unless we work with government to make the most of the opportunity.”
Specifically, Australian winemakers need to spend more to promote Australian wines on the global market.
“Adequate funding for the global marketing of our wines is critical if we are to compete with heavily subsidised Old World producers and lower-cost New World producers.”
To this end, the industry has asked the government for A$25m (US$18.5m) over four years to supplement its marketing activities.
“This will enable the industry to work together to boost our profile, build demand, maximise the potential of the FTAs and to restore levels of profitability throughout the supply chain,” said Vic Patrick, chairman of Wine Grape Growers Australia.
“If these activities are not undertaken, our competitors will quickly fill the vacuum and the modest gains made in some regions over the last 12 months will be fleeting and the recovery of inland grape prices further delayed.”
The top 20 wine companies in Australia, led by Treasury Wine Estates which makes Penfolds, Wolf Blass, Wynns and Rosemount, account for 85 per cent of the total grape crush, the report revealed.
Tasmania was the most efficient winemaking region, with 99% of grapes grown to profit. Conversely, grapes from the Margaret River region of Western Australia were only 30% profitable, while New South Wales’s Hunter Valley saw 94% of production done at a loss.
Australia’s 2015 vintage (in tonnes)
Red crush: 835, 523
White crush: 834,041
Top 3 red varieties
Shiraz (391,649)
Cabernet Sauvignon (209,588)
Merlot (107,280)
Top 3 white varieties
Chardonnay (376,339)
Sauvignon Blanc (89,125)
Semillon (66,572)
Crush by state/region
South Australia: 716,592 (47%)
Murray Darling-Swan Hill: 381,732 (25%)
NSW (excl Murray Darling-Swan Hill): 332,092 (22%)
Victoria (excl Murray Darling-Swan Hill): 60,258 (4%)
WA: 30069 (2%)
Tasmania: 7,197
Queensland: 610
ACT: 21