Wine faces global pressure

"BRAND Australia" remains afloat in the global wine market, but the competition is rising fast.

Australian growers are contending with the likes of Chilean chardonnay, imported for an equivalent grape price of $350 a tonne of cool-climate Australian chardonnay.

Riverland grower and chairman of grape marketing co-operative CCW, Jim Caddy, said growers needed to know their product to make decisions on supply options and expected pricing.

Mr Caddy said increased South American exports to the US meant increased competition in the US market for Australian wines at the lower end of the product range, below $7 a bottle.

This in turn placed pressure on Australian wine makers to lower costs, putting pressure on domestic grape prices.

Speaking at a Water and Vine workshop at Wangaratta in Victoria, Mr Caddy said growers needed to talk to their wineries and undertake additional research to determine if prices were likely to remain stable or not.

Mr Caddy said price fluctuations were determined by winery stock level and national and international stocks, and trends in a variety's popularity.

He said international currency fluctuations had an increasingly important influence on exported wine demand and grape pricing.

"Next year we will have a 1.8 million-tonne crop and be sitting on another 300,000 tonnes (carryover), and prices will falling again," he said.

"There are calls for 400,000-500,000 tonnes of grapes to be removed in Australia, and the majority of those are cool climate."

Mr Caddy said growers needed to ask their winemaker about what products, markets and countries their grapes were destined for.

He said growers should know the varieties and tonnages their winery needed next year and in three to five years' time.

"Look at what other growers are doing - are they planting vines or different varieties?" Mr Caddy said.

"Always question the demand for more grapes and varieties if you are asked to plant.

"With the wine industry now mature and the water situation critical, it is important to have information on a home for your grapes and if you can keep growing grapes at current prices."

Mr Caddy urged growers to speak to their local business consultant, accountant or financial counsellor, and meet with the winemaker or grower liaison officer.

Winemakers Federation of Australia research and analysis manager Susan Bell said the cost of grapes generally represented about 6 per cent of the retail price of a bottle of wine.

Mrs Bell said taxation costs made up almost 25 per cent of the retail price of a bottle of wine and distribution costs accounted for more than 35 per cent.

This left about 40 per cent for winery-related costs.

"Of this, grape costs generally make up 5-7 per cent of the retail price, leaving wineries with a margin of about 3 per cent," Mrs Bell said.

"In the Australian market, 80 per cent of sales are under $11 a bottle."