Australia wine industry gets pounded

October 14, 2:51 PMInternational Wine ExaminerKevin Lynch

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The Australian wine industry is taking a beating. Lousy weather along with the vagaries of the global wine market have sent the Aussie wine industry into a {yellow tailspin}.

(The Million Dollar Baby posied to slug the $7.99 {yellow tail} 'roo.) 

All wineries have been hit, even the so-called factory wineries owned by conglomerations. These top-selling 25 wineries produce 90% of all Australian wine. (The remaining 10% number close to 2,000 wineries and are largely responsible for making the better quality Aussie wines.) Industry analysts blame a lack of long vision on the part of big business and not diversifying their product lines. Additionally, the Australian brand image has been tarnished by cheap “critter wines” like {yellow tail} that sold 5.8 million cases in the US in 2008, and other little ticket wines like Little Penguin, Rosemont and Jacob’s Creek. 

Signs of the times: 

Australia’s largest ag-investor Great Southern has gone into receivership or what might best described in the US as debt reorganization. The firm, that specializes in investment management for the agribusiness sector owns several wineries. Due to lack of funds it has ceased to actively farm 1,850 acres/750 hectares of land in South Australia.

Mega wine conglomerate Constellation Wines has closed Stonehaven Winery in Padthaway and the Leasingham Winery in Clare.

Upwards of 19,780 acres/8,000 hectares of Australian vineyards will go untended this year or will be ripped out completely.

Choice vineyards in McLaren Vale are being torn out and the land is being sold for housing development.

Making matters worse the Australian export market has dropped from $2.98 billion peak in 2006-07 to $2.35 billion in the past 12 months. The rising value of the Australian dollar is also making it difficult to sell wine to major overseas markets. (Source: The Advertiser, Adelaide, Australia)

Executive director Mark McKenzie of Wine Grape Growers Australia said, '"We have at least 20,000ha (49,900 acres) of vineyards more than we need. The wine industry needs to cut at least 10 per cent of Australia's 177,000 hectares (437,370 acres) of vineyards from production.”

To put this in perspective, Rhode Island is 515,178 total acres.

More bleak news for the Aussie wine market is that the demand for high-end wines in the US has dipped significantly. Australian wine sales in the $15 and higher range have declined by 17% (source: Nielsen industry analysis). Wine merchants across the US have been letting their slow moving back-stock of Shiraz dwindle and have not been ordering more. The lone ray of sunshine, albeit meager, came from San Francisco’s Jug Shop where wine buyer Chuck Hayward pointed out that sales of Australian wine in his shop are only down 5%.

In a recent post about the state of the Aussie wine Chuck Hayward opined:
“The wines of Australia are, in fact, world class wines… The swagger and confidence that is seen in Australian sport needs to rub off on those who make and sell Australian wine, along with an understanding that this country can easily be seen as one the globe’s top wine producing nations. When that happens, and it will surely happen given Australia’s drive and commitment to succeed, all this malaise we see today will surely be something of the past.”

Native Food & Wine -- is in Auckland trying New Zealand Sparlking