The Winemakers’ Federation of Australia (WFA) recently convened its national two-day outlook conference in Adelaide. The following is a brief excerpt of the National Vintage Report. All members are urged to read this and go to the WFA website for more detailed analysis.
The 2014 Australian grape crush is estimated at 1.70 million tonnes, a 7% decrease from last year’s crush1. This figure is on par with the 7-year average and 136,000 tonnes lower than last year’s crush estimate.The decrease in overall crush is attributable to generally lower yields per hectare in some of the cooler temperate regions, offset by higher yields in the warm inland regions.
The 2014 beverage wine production estimate is 1,202 million litres, a decrease of around 2% on last year. An analysis of sales and inventory levels suggests that if 2013-14 inventories remain the same as last year’s, the industry’s stock-to-sales ratio will further increase to 1.48 due to a decrease in the volume of export sales. The 2012 Expert Review analysis on production profitability has been extended to include 2014 data.
Accounting for a 3% increase in the cost of production, profitable production across all regions decreased to 7% of total production and unprofitable production increased to 84%. Results are due to factors such as an approximate 11% decrease in the average winegrape purchase price from 2012 to 2014, decrease in average yields for the cooler temperate regions and an increase in yields for the warm inland regions. Complementing the WFA Vintage Survey, the Australian Grape and Wine Authority (AGWA) has completed its annual Winegrape Purchases Price Dispersion Report. It shows that, overall, the national average winegrape purchase price in 2014 was $441 per tonne, down 12% on the 2013 average. See discussion on page 5. The 2015 vintage will continue to present challenges to the industry.
Unless the industry takes proactive action to grow the demand opportunity and accelerate the correction in the supply base, the industry will continue to see seasonal pricing fluctuations around an already low base. This should be a further incentive for the industry to pursue the necessary initiatives outlined in WFA’s Actions for Industry Profitability.