Whilst the wine industry has become accustomed to cyclical disruptions, the unprecedented disruption to world trade and consumption of discretionary consumer goods such as wine has not been seen previously.
For growers to plan their future, they must now get out the crystal ball and make some informed assumptions.
Jim Caddy has recently been studying the numbers from Wine Australia trying to gauge winegrape prices for the 2021 vintage. Other than COVID-19, the three major Australian export markets all seem to have a problem – China, the threat of tariffs; the USA, the upcoming election; and the UK, Brexit –adding uncertainty to prices and demand for Australian wine.
While it appears that China may be showing some small signs of recovering, the UK, US & Canadian regions are approaching winter, which may increase their problems. Australia should expect a slowing of exports to these destinations for a while; however, the commercial sector will not be as affected as the premium sector. We must also look at the world wine supply that will be marketed against Australian wine; this will have a considerable influence on the price growers receive for their grapes in 2021.
There are concerns from winemakers regarding the wine market. Currently, export statistics are stable with some growth in prices which is expected to remain steady. Indications are that sales of 2020 vintage wine are ahead compared to the same time last year, which should give winemakers some confidence they will be able to sell any 2021 wine at reasonable prices.
There are some concerns and unknowns for winemakers that will restrict them offering increased prices for 2021 on many varieties including Brexit, potential tariffs in China, an oversupply of European wine, the strengthening Australian Dollar and COVID-19 recession/uncertainty. Despite these uncertainties, there appears to be little reason for winemakers to decrease prices based on sales to now. The following estimated price ranges are for the major varieties, based on the current market situation. However, this may change due to any number of the above mentioned concerns. It is anticipated that 2021 grape prices will remain at a similar level to 2020 prices.