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Experts warn demand for Aussie wine may outstrip supply

Experts warn demand for Aussie wine may outstrip supply

A new report by Colliers Agribusiness has forecast that demand for Australian wine may outstrip supply in 2019. 

"The Australian wine industry is showing strong growth after a challenging decade," the report notes. "Based on the current outlook, the industry is quickly approaching a point where demand will outstrip supply."

Colliers predicts the growing international enthusiasm for Australian wine, coupled with the yield from the 2019 vintage being expected to be down on previous years, could lead to a shortage. 

“Over the last 10 years the national vintage crush has been about 1.8 million tonnes on average. This year we would expect below that, largely as a result of the heat in eastern Australia and South Australia,” Australian Grape and Wine general manager Lee McLean told The New Daily.

At the same time, the volume and value of Australian wine being exported overseas is rising. 

The latest statistics from Wine Australia show a 5% lift in exports for the 12 months to March to $2.78 billion.

This included $1.11 billion of wine to China, up 7% on the previous year.

“Demand for Australian wine is continuing to grow in China,” McLean said. “That’s been a strong story over the last few years. It’s proving to be an excellent and growing market for Australian wine … from Penfolds Grange down to everyday drinking wines.”

Colliers said winemakers were struggling to maintain grape supply levels.

"Recently we have seen growers look to expand as margins in key regions are once again making it economically viable to develop vineyards or bring mothballed plantings back into production," the report said. 

The report tracked farmland deals of more than $5 million last year. It showed that despite dry conditions, vineyards and wineries were among the shining lights of the Australian agribusiness property market last year.

The value of property sales overall rose to $3.34 billion across 254 deals, up from $2.74 billion in 2017.

There were a high volume of vineyard transactions, with investment coming from Asia, UK, North America and New Zealand on the back of growth in the value of wine exports.

The report noted: "The high Australian dollar has not deterred this segment of the market with buyers looking to grow distribution channels abroad."

“We have seen this segment of the market focus on premium and super-premium assets in recognised wine areas with small to medium wine companies in the $2 million-plus to $20 million range appearing to be more attractive,” said Colliers vineyard specialist Tim Altschwager.

“On a macro industry level, property values are at last showing signs of growth in both vineyard values and in wineries in key locations.”

The report said the Barossa Valley had been the focus of the upsurge in demand. 

"We cite three examples: Greenock Creek Wines, Hare’s Chase Wines and Burge Family Winemakers, which Colliers International Agribusiness sold to Chinese entities," said Altschwager.