Wine grape growers are feeling the full force of oversupply and economic downturn as prices for fruit plummet.  Wine exports have fallen by 21% since their peak in October 2007 and it is estimated that at least 20% of bearing vines in Australia are surplus to requirements.

An industry statement released by Wine Grape Growers’ Australia highlit the problem. “Structural surpluses of grapes and wine are now so large that they are causing long-term damage to our industry by devaluing the Australian brand, entrenching discounting, undermining profitability, and hampering our ability to pursue the vision and activities set out in the Directions to 2025 industry strategy.”

In the Sunraysia region of Victoria, which produces 20% of Australia’s wine grape harvest, growers are cutting their losses and leaving the fruit to wither on the vine.  In the market’s peak in the early 1990s, fruit was fetching as much as $1400 a ton.  Now, growers are being offered as little as $80 per ton for chardonnay grapes.  Some wineries, in an attempt to prevent growers supplying fruit above contracted volumes, are offering as little as $1 per ton.

The Murray Valley Winegrowers Association reported yesterday that in addition to the low prices, this year’s harvest might be the smallest in a decade. “The move by many growers to cut back on water and fertiliser is taking its toll, but even Chardonnay that’s been well managed is well down on 2009 production,” said CEO Mike Stone.

“There are early signs that the main red varieties will also produce lighter crops this year. Shiraz, Merlot and Cabernet Sauvignon wouldn’t normally be ready for harvesting until late February or early March but already some have reached maturity, which is an indication of reduced yields.”

In addition to economic downturn, the world wine market has been affected by a massive grape harvest in California – over 4 million tons – which has pushed prices down worldwide.

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