The 2018 crush Down Under will fall short of meeting current demand for Australian wine, driving prices upward.
This is the conclusion of a report from Australian bulk wine specialist Austwine which describes the quality of the 2018 harvest as “high quality”, while saying that it is “clear to most, of not all players, that the 2018 wine grape crop has been unable to fulfil current demand”.
Author of the report Jim Moularadellis confirms that the industry has “continued to witness increasing supply and pricing pressures” as rival brand owners and bottlers compete for limited supplies of 2018 wines.
The Austwine statement has emerged ahead of the official crop figure release later this month, but appears to confirm early reports that the total Australian crush for 2018 will be down between 5-10% on 2017, which it describes as a record harvest of 1.930 million tonnes.
Traditional markets such as the UK, where up to 80% of Australian wine by volume is shipped in bulk, will have to fight (and pay) that much harder for their share of Australia, with strong completion and demand being driven by China.
The Austwine document draws on AGWA figures that show a 32% volume and 34% value compound annual growth rate in exports to China in the five years to 30 June 2018.
This, however, is topped by a rapid acceleration in shipments over the 12 months to 30 June 2018, with growth of 66% by value and 50% by volume to the thirsty Chinese market.
Primarily a red wine market, with 20 litres of Australian red drunk for each litre of white, China is now equal in value to the next three Australian markets, importing more bulk Australian wine than USA, UK and Canada combined.
“Three years ago most domestic wineries were happy to sell to their competitor wineries almost any inventory item,” Moularadellis stated.
“But today most domestic wineries are buyers from their competitors (assuming the price is right). The item in most demand is entry-level varietal red wine, often to satisfy Chinese demand, or opportunities in other markets arising from China’s demand impact.”
Varieties described as “critically short” include commercial/entry level Shiraz, Cabernet Sauvignon, Merlot, while commercial/entry Sauvignon Blanc, Chardonnay and Pinot Gris and described as “short”.
Meanwhile, dryland/premium reds are described as “in balance”, while dryland/premium Chardonnay and Sauvignon Blanc are “long”.