Bargain wine prices
Australia’s big wine companies have warned grape growers in the Murray-Darling Basin to expect a 30 percent decline in grape prices for major varieties from the 2009 vintage. Foster’s, Constellation (Hardys) and Pernod Ricard (Jacob’s Creek) have indicated that varieties such as shiraz and cabernet sauvignon could attract about AUD 500/tonne but chardonnay may fetch only AUD 250 to AUD 350/tonne – which is below production costs that have risen because of higher fertilizer, water and fuel charges.
The Foster’s Group, giving a broad hint, has already sent its growers copies of a booklet (“Taking care of yourself after retrenchment or financial loss”), issued by the national depression organization Beyond Blue, in readiness for what the winemaker considers “will be a diabolical vintage.”
Indeed, growers brace themselves for a poor vintage. South Australia’s grape harvest, which started at the end of January, is expected to be one with up to 30 percent of the crop left on the vines and prices lower by 20 percent to 30 percent. The price cut in some regions has some growers already knocking contracted fruit to the ground.
Australia’s wine exports plummeted in November 2008, falling 26.3 percent by volume compared with October and giving a drop of 11.9 percent for the full year. The fall in value for the year was 15.1 percent. The WFA warns that “the market is over-supplied and we are seeing a softening, which adds up to a pretty grim situation for winemakers.”
The volume of wine exported in 2008 fell for the first time in 13 years with the value of exports falling for the first time in 15 years. U.S.-based Constellation Wines, owners of Australia’s Hardys, Leasingham and Banrock Station brands, has already downgraded its full-year earnings.
