In its annual vintage survey, the Winemakers' Federation of Australia estimated that the 2014 Australian grape crush overall dropped by 7% compared with 2013 (see table below). The 2014 is estimated at 1.70 million tonnes, down considerably from the record 2005 vintage (see table below). This figure is on par with the seven-year average but 136,000 tonnes lower than last year's crush estimate. The decrease in overall crush is attributable to generally lower yields per hectare in some of the cooler temperate regions, offset by higher yields in the warm inland regions.
The crush of red varieties decreased by 5% and whites by 9%. The red crush was around 884,000 tonnes or 52% of total crush, while whites accounted for 813,000 tonnes or 48% of total crush.
The top three red varieties were Shiraz, Cabernet Sauvignon and Merlot, together accounting for 87% of the total red crush. Shiraz continues to dominate with 48% of the total red crush – a 3% increase from last year. Most varieties decreased in tonnage except for Ruby Cabernet (+1%), Lagrein (+10%), Malbec (+12%), Tempranillo (+22%) and Dolcetto (+43%). The largest decreases, in terms of tonnages, were Cabernet Sauvignon (-15,729 tonnes), Merlot (-13,752 tonnes) and Pinot Noir (-8,514 tonnes).
In the whites, Chardonnay still dominates the white crush at 44% despite decreasing 46,521 tonnes from last year. Sauvignon Blanc remains in second place with 12% although tonnage has marginally decreased, followed by Semillon accounting for 9% of total white crush even though tonnage decreased by 4,514 from last year. Most of the white varieties decreased with Viognier (-83%), Sultana (-53%) and Moscato Giallo (-37%) recording the biggest reductions. The biggest relative increases were for Marsanne (+158%), Doradillo (+118%) and Palomino & Pedro Ximenes (50%).
There was no change in the composition of the Top 10 varieties from last year, except for Pinot Gris/Pinot Grigio which is now ranked 8th while Colombard dropped to 9th place.
Vintage 2015 outlook
The below is adapted from the Winemakers' Federation of Australia 2015 vintage outlook as reported in its 2014 Vintage Report.
The resilient 2014 winegrape crush, decrease in average winegrape prices, increase in stock-to-sales ratio, increase in unprofitable production and relatively flat demand projections suggest the 2015 vintage will not see a fundamental change in industry dynamics or profitability unless action is taken. Further, expected above average vintages in Spain, Italy and France will continue to put pressure on global commodity wine prices.
Looking at AGWA's export approvals data, Australian wine (in terms of volume and value) continues to fall short of pre-GFC levels. Australia is still not regaining volume share in the US market and has lost volume in China (as have most other competitors) due to austerity measures imposed by the Chinese government. Unless the industry takes proactive action to grow the demand opportunity and accelerate the correction in the supply base, the industry will continue to see seasonal pricing fluctuations around an already low base. This should be a further incentive for the industry to pursue the necessary initiatives outlined in WFA's Actions for Industry Profitability.
WFA and AGWA believe there are opportunities to build demand. Although Australia has not reached pre-GFC volumes in the US market, the above A$7.50 per litre fob categories continue to improve.
Similarly, the UK and Canadian markets also present growth opportunities. Australia is still under-represented at the higher end of the UK market and in the independent retail sector, but there are some positive signs with growth in exports above A$7.50 per litre fob. Further, Canadian agents (importers) report recent Australian premium sales success and sense that 'things are starting to turn around' at higher price points.
Austerity measures introduced by the Chinese Government to curb spending by government officials on luxury goods such as wine have had a negative impact on the growth of imported wines to China. However, there are signs of recovery and Australia is well-placed to resume growth, particularly in the above A$7.50 per litre fob categories.
In the Australian domestic market, the Australian wine category holds an 85% share while imports continue to gain share particularly through New Zealand Sauvignon Blanc and Champagne. However, Australian wines are continuing to grow at all price points above A$12 per bottle, with the strongest growth coming at above A$25 per bottle, albeit off a relatively small base. The on-premise represents an opportunity as Australia is likely under-represented in this channel.