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Australian wineries face selling wines at a loss in 2014

Published:  03 July, 2014

Australian wineries face selling their wines at a loss this year if prices fall below current levels, given high costs of grapes and production in 2014, warns top wine broker.

Although official figures on Australia's 2014 harvest have still not been released, it is anticipated that it will be smaller than last year. But this is not necessarily bad news for the Australians given the slowdown in growth of bottled wines thanks to the strong Australian dollar and austerity measures in China, one of its major markets.

Murphy Wine CompanyAustralian wineries face selling at a loss in 2014 given tight marginsAustralia's wineries are facing very tight margins and the real possibility of selling at a loss in 2014, thanks to high costs of grapes and production.

According to wine broker Murphy Wine Company, good volumes of all major varietals from Australia are available except for Pinot Grigio which is extremely tight. The firm's latest price list offers Pinot Grigio at £0.65 FOB per litre. The firm's Anya Robson describes the quality of Australian wines this year as "good", with "dark, ripe flavours".

Australia's basic dry white wines are on a par with south African in price terms at around £0.30 per litre FOB , but Italy and Spain are coming in cheaper still.

As for New Zealand, 2014 was the biggest crush on record - up 29% on last year to 445,000 tonnes.

Most major players are reporting strong sales, with many up by 20% or more.

However, the final 10% of the harvest happened after very heavy Easter rain and the quality is said to be rather diluted. Robson predicted that we may "end up with a market with two price segments".

The first New Zealand 2014 wines are yet to hit the market.

Despite New Zealand's bumper crop size, chief executive of New Zealand Winegrowers Philip Gregan told in March that he expected demand to exceed supply until 2017. In fact, shortages of the country's signature grape have even led to imports of Sauvignon Blanc from Chile and South Africa to satisfy demand. According to New Zealand Winegrowers' European marketing manager Chris Stroud, some wineries have been importing Sauvignon Blanc from elsewhere in the New World since 2012 shortages to place into lower-priced brands for the domestic market. Stroud stressed that imports have always had their country of origin clearly labelled.

For subscribers: To find out the latest price list from Murphy Wine Company click here