The Western Australian wine industry appears to have entered the 2008 vintage with a positive outlook, amid signs the wine glut that has plagued the sector for a number of years is coming to an end.
Total Australian wine production fell 32 per cent in 2007 to just more than 961 million litres on the back of a 23 per cent drop in wine grape production, according the annual Australian Wine and Grape Industry report from the Australian Bureau of Statistics.
The reduction in supply drove inventories held by winemakers down by 15.3 per cent to their lowest levels since 2003.
Wine Industry Association of Western Australia president John Griffiths said the state’s wine sector, which operates at the premium end of the market, was in a good position to take advantage of a stronger trading environment.
“The surplus has been the gorilla in the corner,” he said.
“We’re going into [the 2008] vintage with a market that’s less competitive, and with less supply.”
It is also expected that the export price per litre for WA wine will recover to more than $5 per litre, after falling to $4.10 in 2007, when growers were forced to sell wine cheaply to generate sufficient cash flow, or to reduce stocks to a more manageable level.
WA produced 68,252 tonnes of wine grapes in 2007, up 12 per cent on the previous year, with early estimates indicating similar production for 2008.
Semillon and sauvignon blanc grape varieties are experiencing strong demand, with growers in the South West expecting to receive between $1,200 and $2,000/t.
Cabernet, merlot and chardonnay are in less demand, with prices for those varieties around the $1,000/t mark for growers in the south, and about $200 less in the Swan districts.
The 2008 vintage is already under way in the Swan Valley, with the Margaret River and Great Southern regions to follow in late February and early March.
The Australian Wine and Brandy Corporation is expecting that national production will again be reduced in 2008, which further cements the return to supply-demand balance.
