Australian vineyards uproot millions of vines to combat oversupply
Amid a wine surplus crisis in Australia, millions of vines are being uprooted to address overproduction, which has led to plummeting grape prices and jeopardized the livelihoods of farmers and winemakers. Tens of millions more vines are slated for removal in a bid to stabilize the industry.
Millions of vines in Australia are currently being destroyed, with tens of millions more needing to be pulled up. This action is necessary to address the issue of overproduction, which has led to a significant drop in grape prices and poses a threat to the livelihoods of growers and wine makers.
The decrease in wine consumption globally has had a significant impact on Australia, especially as demand for cheaper red wines, which are a major product for the country, has decreased rapidly. This trend is particularly concerning in China, which has been a key market for Australian wine growth in recent years.
The most recent figures show that the world's fifth-largest exporter of wine had over two billion liters in storage in mid-2023, which is approximately two years' worth of production. Unfortunately, some of this wine is spoiling as owners rush to sell it at any price.
Fourth-generation grower James Cremasco expressed his concerns about the situation. He mentioned that there is a limit to how long they can continue growing crops and losing money on them. He observed yellow excavators clearing rows of vines that his grandfather had planted near the southeastern town of Griffith.
About 66% of Australia's wine grapes are cultivated in irrigated inland regions like Griffith. The techniques used for growing vines in this area were introduced by Italian immigrants who settled here in the 1950s.
With prominent wine companies like Treasury Wines and Accolade Wines shifting their focus towards higher-priced bottles that are in higher demand, the regions surrounding Griffith are facing difficulties. As a result, grapes are left unpicked and drying up on the vines.
Andrew Calabria, a third-generation vineyard owner and winemaker at Calabria Wines, expressed that it feels like an era is coming to a close.
He mentioned that it is tough for growers to gaze out the back window and witness a pile of dirt instead of the vines that have been a familiar sight for as long as they can remember.
Nearby, you can see the remains of 1.1 million vines that used to be part of one of Australia's biggest vineyards. The piles of twisted and gnarled wood stretch as far as you can see.
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Red wine has been hit the hardest by the drop in grape prices. In places like Griffith, the average price for grapes used in red wine plummeted to A$304 ($200) per ton last year. This is the lowest price in decades, significantly lower than the A$659 price in 2020, according to data from Wine Australia.
The government is expecting prices to decrease even further this year. They acknowledge the tough situation that growers are facing and have expressed their commitment to supporting the sector. However, many growers believe that more can be done to help them during this challenging time.
Cremasco mentioned that he sold some of his red grapes for just over A$100 per ton.
Jeremy Cass, who leads the Riverina Winegrape Growers, a farmers' group in Griffith, suggested that in order to stabilize the market and increase prices, about 25% of the vines in regions like Griffith need to be removed.
More than 20 million vines across 12,000 hectares (30,000 acres) would be destroyed, according to Reuters calculations based on Wine Australia data. This accounts for approximately 8% of Australia's total area under vine.
In addition, growers and winemakers in other regions have also been removing vines.
A wine maker in Western Australia mentioned that even if half of the vines in Australia were removed, it may not resolve the oversupply issue.
Despite this, numerous growers who are hesitant to uproot their vines are experiencing financial losses as they wait for the market to improve.
“It’s chewing up wealth,” said KPMG wine analyst Tim Mableson, who estimates that 20,000 hectares (49,000 acres) of vines need to be taken out nationwide.
Giving it away
Consumers worldwide are choosing to drink less alcohol due to health concerns. When they do opt for wine, they are selecting higher-priced bottles.
Chile, France, and the United States, along with other major wine-producing countries, are facing oversupply issues. Prime regions like Bordeaux are even removing thousands of hectares of vines to address this surplus.
Australia suffered a major blow in 2020 when China halted imports due to a political conflict, causing the loss of its largest wine export market. Unlike Europe, Australia does not provide financial assistance to farmers to remove vines and excess wine.
While there is anticipation that China will resume imports this month, the oversupply issue remains unresolved as demand in China has declined at a much faster rate compared to other regions.
Most of the Australian wine exports, valued at A$1.9 billion in the year to December 2023, come from wine sold for less than A$10 a liter. These wines are mainly made from grapes grown in places like Griffith, making up two-thirds of the total value, according to Wine Australia.
On the other hand, there are regions like Tasmania and the Yarra Valley in Victoria that are doing well. They focus on producing white wines and lighter, more expensive reds that are becoming increasingly popular among consumers.
In Griffith, you can find groups of metal storage tanks filled with thousands of liters of wine. Bill Calabria, Andrew's father, mentioned that wineries are currently trying to clear out their wine. He noted that they are practically giving it away in order to create space for the new vintage.
Many growers are now opting to plant citrus and nut trees instead. Cremasco is looking forward to earning more money from the prune trees he is planting in the land he cleared, while nearby, GoFARM, a corporation, is converting over 600 hectares (1,500 acres) of land to almond orchards, replacing vines.
“There’ll be no next generation of family grape growers,” Cremasco added. “It’ll be all big corporates, and all the local young guys will be working for them.”
Editor's P/S:
The plight of Australian grape growers is a stark reminder of the challenges facing the global wine industry. Overproduction, declining demand, and geopolitical tensions have created a perfect storm, forcing growers to make difficult decisions about the future of their livelihoods. The destruction of millions of vines is a heartbreaking necessity, but it also highlights the need for a more sustainable and resilient wine industry.
The article raises important questions about the role of government support and the need for innovation. In the face of oversupply, growers need assistance to transition to more profitable crops or to develop new markets. Additionally, the industry must explore ways to reduce its environmental footprint and attract new consumers. By embracing sustainable practices and investing in research and development, the Australian wine industry can overcome these challenges and emerge stronger than ever.
