Coronavirus fear threatens Australia’s wine industry

Australia | With the 2020 harvest underway, it came as a relief to 2500 wine businesses and 6000 grape growers that their industry has been classed as an essential service during the covid-19 pandemic.

This means that the harvest can continue – it usually runs from late January to late April – and that state-imposed border shutdowns will not affect agricultural supply chains.

After many vintners have endured drought, bushfires destroying vineyards and smoke tainting their grapes, and now a sales collapse because of the current lockdown, one of the country’s largest wine brands, Jacob’s Creek (owned by Pernod Ricard) took an unprecedented step.

On 23 March 2020 it warned the government that if the industry shutdowns (those providing non-essential services) were extended to growers and wineries, a year’s worth of wine production could be lost.

Fires are out, but …

For more than five months, bushfires blazed. The flames are out, but the impact on the Australian wine industry is still being assessed. There are no official figures on the exact acreage of vineyards that have been lost – nor the value to the industry – because vintners must see how vines recover both from the fires and the searing heat over the next year, media report

Only three of the country’s 65 wine regions – Adelaide Hills and Kangaroo Island in South Australia and the Tumbarumba region of New South Wales – suffered burnt vineyards. Some may have to be replanted, while others may recover.

Exports could dip

Observers say that many vignerons are currently cutting burnt vines off below the current fruiting branches to encourage them to grow new fruiting canes for next year – or the one after. This is clearly preferable to having to plant new vines, which could take four to five years before vintners will see a return on their investments.

However, the biggest impact of all may be smoke taint. It is too early to say to what extent grapes were affected by the smoke, but several wineries have reported that they expect to sell no wines from the 2020 vintage.

Australia exports about 60 percent of its wine production. It ranks fourth among the world’s major wine exporters, behind France, Italy and Spain. In 2019, exports grew 3 percent in value to AUD 2.91 billion (USD 2 billion). China alone imported Australian wines worth over AUD 1.2 billion (USD 850 million).

At this stage it is hard to predict how the coronavirus pandemic will impinge on Australia’s wine exports, let alone domestic sales.  

Wine Australia, an industry association, estimates that overall, grape growers and winemakers as well as wine tourism operators contribute about AUD 45.5 billion (USD 33 billion) to the nation’s economy and the sector supports close to 164,000 direct and indirect full and part-time jobs.