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Grape excess to hit wine prices

AN Australia-wide glut of wine grapes threatens grape growers but could bring big benefits to wine consumers over the next year.

Trouble has been brewing for grape growers for some time and a large 2001 vintage has brought those troubles to a head.

Swan Valley grape growers are trying to sell an excess of nearly 1,400 tonnes of grapes – the equivalent of 1.4 million bottles of wine.

Margaret River growers without contracts to wineries are having problems offloading their crops.

Some growers had been receiving high prices for their fruit and this attracted others to the industry. Until this year it had been a sellers’ market for growers.

The growth of syndicates hoping to cash in on the tax benefits for agricultural projects entering the grape growing industry is also blamed for the oversupply.

Varieties such as semillion, chenin blanc, verdelho, grenache, cabernet, shiraz and even merlot are oversupplied.

However, riesling grapes are in strong demand.

The benefits of this oversupply of fruit are already being felt, with cheaper wines going onto the market, although wine companies also are discounting product in an effort to get their brands established.

It may also let some wine makers price themselves into overseas markets they previously were unable to compete in.

Industry sources believe the oversupply of fruit will result in a number of cleanskin wines hitting the market as growers try to recoup some of their costs.

Growers with contracts to wineries can expect to be squeezed on price if the oversupply still exists when those contracts are up for renewal.

Most grape contract prices are based on the wholesale price of the wine. Growers’ prices will not go down until the wholesale wine price goes down.

Recently Margaret River winery Abbey Vale went into administration when its owners realised there were insufficient funds to honour the contracts it had with grape growers to supply an additional 400 tonnes of fruit.

The grape glut threatens to force some growers out of the industry. Those on mid-sized vineyards that outsource the vineyard work are believed to be the most at risk.

Swan Valley Marketing Association executive officer Howard Bromley said there were more vines planted than the wine industry had envisaged needing by 2025.

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