Premium focus to counter grape glut

WESTERN Australian wineries are attempting to counter the effects of the nation's worst grape and wine glut in 20 years by focusing on producing high-quality grapes and premium wines.

Last week, the wine industry's four national organisations released an industry update, spearheaded by the Winemakers' Federation of Australia, stating the country's wine industry is enduring its toughest period in two decades.

So bad are the current levels of oversupply that the national organisations suggested "at least 20 per cent of bearing vines in Australia are surplus to requirements, with few long-term prospects".

The update said Australia was producing between 20 million and 40 million cases of wine a year more than it was selling, and while surplus already exceeded 100 million cases, at the current rates of production and demand surplus levels would double in two years (to 200 million cases).

WA Wine Industry Association president and Faber Vineyard owner, John Griffiths, agreed the glut was affecting WA wine operations. But the proposed 20 per cent vineyard reduction by industry was not critical for local operators, as there remained opportunities in the industry during this "bust part of the agricultural cycle".

“The main thing in WA is that all grapes produced are high quality, grown in great locations and to the specifications the winemakers want, which are what the wine drinkers want to drink," he said.

“Perhaps there is an opportunity for producers to cut some of their property or some of their vineyard that's not as good as other parts, or producers who are growing varieties in less demand or in locations that are going out of favour.

“It is a chance for us to look at what we are growing and why, and make sure we are only growing high-quality fruit."

Mr Griffiths said that, in the short time since the industry update's release, he had seen downward pressure on prices, in particular from the UK market.

Barrecas Estate owner Filippo Barrecas has reduced the size of his crop by almost 50 per cent during the past three years to focus on quality, and said he pulled out of contracts supplying fruit to larger operators such as Houghton's when prices dropped due, at least partly, to the glut.

“We're more worried about survival than about profits," Mr Barrecas told WA Business News.

“There won't be any profits in the wine industry for the next few years.

“But if we go into our vineyards thinking doom and gloom we're already setting ourselves up for disaster ... but we're happy to go in there producing regardless."

Barrecas Estate's 2008 shiraz was named the best wine at the WA Wine Industry Awards last Friday, beating 10 other entries that had already been named best in show at WA wine region shows this year.