Vineyards rush to sell millions of litres of wine at cut price

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Millions of vines are being destroyed in Australia and tens of millions extra have to be pulled up to rein in overproduction that has crushed grape costs and threatens the livelihoods of growers and wine makers.

Falling consumption of wine worldwide has hit Australia notably laborious as demand shrinks quickest for the cheaper reds which are its greatest product, and in China, the promote it has relied on for progress till current years.

The world’s fifth largest exporter of wine had greater than two billion litres, or about two years’ price of production, in storage in mid-2023, the latest figures present, and a few is spoiling as homeowners rush to dispose of it at any price.

“There’s only so long we can go on growing a crop and losing money on it,” stated fourth-generation grower James Cremasco, as he watched clanking yellow excavators strip out rows of vines his grandfather planted close to the southeastern city of Griffith.

About two-thirds of Australia’s wine grapes are grown in irrigated inland areas similar to Griffith, its panorama formed by vine-growing strategies introduced by Italian migrants arriving across the Fifties.

As main wine makers similar to Treasury Wines and Carlyle Group’s Accolade Wines refocus on costlier bottles which are promoting higher, the areas round Griffith are struggling, with unpicked grapes shrivelling on vines.

“It feels like an era is ending,” stated Andrew Calabria, a third-generation winery proprietor and wine maker at Calabria Wines.

“It’s hard for growers to look out the back window and see a pile of dirt instead of vines that have been there as long as they’ve known.”

Nearby, the stays of 1.1 million vines that when comprised one of Australia’s largest vineyards had been piled in heaps of gnarled and twisted wooden so far as the attention might see.

Red wine has suffered probably the most. In areas like Griffith, costs of the grapes going into it fell to a mean of A$304 ($200) a ton final yr, the bottom in a long time and down from A$659 in 2020, knowledge from trade physique Wine Australia present.

The authorities, which forecasts decrease costs once more this yr, stated it recognises the numerous challenges going through growers and is dedicated to supporting the sector, although many growers say it could actually do extra.

Cremasco stated some of his crimson grapes bought for little greater than A$100 a ton.

To stability the market and elevate costs, up to 1 / 4 of the vines in areas similar to Griffith have to be pulled up, stated Jeremy Cass, head of Riverina Winegrape Growers, a farmers’ group there.

That would destroy greater than 20 million vines throughout 12,000 hectares (30,000 acres), Reuters calculations based mostly on Wine Australia knowledge present, or about 8% of Australia’s complete space below vine.

Growers and winemakers in different areas have additionally been pulling out vines.

“If half the vines in Australia were ripped out, it still might not solve the oversupply,” stated a wine maker in Western Australia.

Still, many growers unwilling to pull up vines are shedding cash whereas hoping for the market to flip round.

“It’s chewing up wealth,” stated KPMG wine analyst Tim Mableson, who estimates that 20,000 hectares (49,000 acres) of vines want to be taken out nationwide.

Health issues are prompting customers worldwide to drink much less alcohol and once they do drink wine, they decide pricier bottles.

Chile, France and the United States are among the many different giant wine producers additionally grappling with oversupply, with even prime areas similar to Bordeaux uprooting 1000’s of hectares of vines.

When China blocked imports throughout a political dispute in 2020, Australia misplaced its greatest wine export market by worth. And not like Europe, it affords farmers no monetary assist to assist them destroy vines and extra wine.

Even although China is anticipated to enable imports once more this month, that won’t mop up the glut, as demand there has fallen rather more quickly than elsewhere.

Wine bought for lower than A$10 a litre – most of it made out of grapes grown in areas like Griffith – accounted for two-thirds of the worth of Australian wine exports price A$1.9 billion within the yr to December 2023, Wine Australia says.

Some areas are faring higher, similar to Tasmania and the Yarra Valley in Victoria, which produce extra white wines and lighter, costlier reds which are rising in recognition.

But throughout Griffith there are clusters of steel storage tanks, every holding 1000’s of litres.

“Everyone is trying to clear wine,” stated Bill Calabria, Andrew’s father, including that wineries had been “all but giving it away” to make room for the incoming classic.

Many growers are turning to citrus and nut timber as a substitute.

Cremasco hopes for better earnings from the prune timber he’s planting in his grubbed-up acreage, whereas GoFARM, a company, is placing in additional than 600 hectares (1,500 acres) of almonds close by, additionally changing 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.”