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Australia Plants Premium Varietals
By Scott Turner
Australian growers, presiding over both optimal growing conditions and first harvests from new plantings, racked up a record harvest for 1997/98 wine grapes. All the varietal categories--from premium reds and whites to multipurpose grapes– produced about 20 percent over the previous year. The Winemakers Federation of Australia estimates that the crush was 950,000 metric tons.
Back in its infancy, the Australian wine industry considered its 1986/87 marketing year, when exports were 110,000 hectoliters, to be an excellent year. Little did the vintners dream that just 11 years later, exports would be up to 1.94 million hectoliters, an 18-fold increase.
The export market now accounts for nearly 35 percent of all volume sales, with bottled wine exports rivaling domestic sales. The value of exported wine reached over $500 million in the 1997/98 market year, 36 percent higher than the previous year.
Australia’s major export markets in recent years have been led by the United Kingdom:
| Australia's Top Export Markets | |
| Thousand Hectoliters | |
| United Kingdom | 90,000 |
| United States | 32,000 |
| New Zealand | 22,000 |
| Canada | 8,000 |
| Japan | 5,000 |
The Australian Bureau of Agricultural and Resource Economics (ABARE) predicts Australia’s wine exports will top out at 381 million liters in 2002/03, with the wine grape supply increasing 40 percent by that time.
As in other wine-producing countries with international customers, Australia’s new plantings will be premium varietals: mostly chardonnay, semillon, shiraz and cabernet sauvignon. By 2002/03, premiums will make up three-quarters of Australian wine production.
Although there are 3,000 independent grape growers and 900 wineries, several large companies account for 75 percent of Australia’s wine production.
In 1996, the Australian wine industry envisioned a $4.5 billion industry by 2025. To achieve this objective, they will need to increase productivity and plant an extra 40,000 hectares of new vineyards by 2022. While the goal sounds optimistic, around 13,000 hectares were planted in 1998.
The expected bountiful supply of wine grapes and falling prices means that vintners will be able to supply a much larger volume of more competitive wine to export markets.
But there are hints that the industry’s infrastructure, as is, might not be able to support such a deluge of grapes, which could result in downward pressure on wine prices.
Government Limits Help to Industry
The Australian government provides no subsidies for wine exports and little assistance for production. Matching funds are available for research and development, up to 0.5 percent of the gross value of industry production. The funding came to $1.64 million in 1996/97.
The government has been providing some assistance for export promotion--about $240,000 in 1996/97. The majority of promotional dollars were channeled through the Australian Wine Export Council (AWEC). Most of future promotional expenditures by AWEC will be covered by levies on wine exports, making the industry’s promotional efforts self-sustaining.
The AWEC also performs a regulatory function for the industry; it licenses wine exporters, ensuring quality and appropriate labeling.
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The author is an agricultural specialist with the FAS Office
of Agricultural Affairs in Canberra. Tel.: (612) 6214-5854; Fax:
(612) 6273-1656.
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