Peter Hobson
GRIFFITH, Australia (Reuters) – Millions of grapevines are being destroyed in Australia and tens of millions more must be restored to curb overproduction that has crashed grape prices and threatens the livelihoods of growers and winemakers.
The fall in wine consumption worldwide has hit Australia particularly hard as demand for cheaper red wines, its staple, has fallen fastest, as well as in China, the market it relied on for growth until recent years.
The world’s fifth-largest wine exporter had more than two billion liters, or about two years’ worth of production, in its warehouses in mid-2023, according to the latest data, and some is spoiling as owners rush to get rid of them at any cost. .
“We can only keep growing crops and losing money on it for so long,” said fourth-generation grower James Cremasco as he watched clanging yellow excavators cut down rows of grapevines his grandfather planted near the southeastern town of Griffith.
About two-thirds of Australia’s wine grapes are grown in irrigated inland areas such as Griffith, a landscape shaped by grape-growing techniques introduced by Italian migrants who arrived around the 1950s.
Since major wine producers such as Treasury Wines and Carlisle Group Accolade Wines (NASDAQ:) is shifting its focus to higher-priced bottles that sell better, the area around Griffith is struggling and unharvested grapes are shriveling on the vines.
“It feels like an era is coming to an end,” said Andrew Calabria, third-generation vineyard owner and winemaker at Calabria Wines.
“It’s hard for growers to look out the back window and see a pile of dirt instead of the vines that have been there for as long as they’ve known.”
Nearby, as far as the eye could see, the remains of the 1.1 million vines that once made up one of Australia’s largest vineyards lay piled in piles of gnarled and twisted wood.
Red wine suffered the most. In regions like Griffith, prices for grapes entering it fell to an average of A$304 ($200) per tonne last year, the lowest in decades, and down from A$659 in 2020 year, data from industry body Wine Australia shows.
The government, which is forecasting prices to fall again this year, said it recognizes the significant challenges facing producers and is committed to supporting the sector, although many producers say it can do more.
Cremasco said some of his red grapes were selling for just over A$100 a tonne.
To balance the market and raise prices, up to a quarter of vineyards in areas like Griffith would need to be cut down, said Jeremy Cass, head of local farming group Riverina Winegrape Growers.
Reuters estimates, based on data from Wine Australia, that this will destroy more than 20 million grapevines across 12,000 hectares (30,000 acres), or about 8% of Australia’s total vineyard area.
Grape growers and winemakers in other regions are also cutting down vines.
“If half the vines in Australia were ripped out, it still wouldn’t solve the problem of overproduction,” a Western Australian winemaker said.
However, many growers unwilling to uproot their vines are losing money while hoping the market will change.
“It’s destroying wealth,” said KPMG wine analyst Tim Mableson, who estimates 20,000 hectares (49,000 acres) of vineyards need to be cleared across the country.
GIVE IT AWAY
Health concerns are prompting consumers around the world to drink less alcohol, and when they do drink wine, they are choosing more expensive bottles.
Chile, France and the United States are among other major wine producers also struggling with oversupply, with even prestigious regions like Bordeaux uprooting thousands of hectares of vineyards.
When China blocked imports during a political dispute in 2020, Australia lost its largest wine export market by value. And unlike Europe, it offers no financial assistance to farmers to help them destroy their vines and surplus wine.
Although China is expected to allow imports again this month, that will not eliminate the glut as demand there has fallen much faster than elsewhere.
According to Wine Australia, wine sold for less than A$10 per liter (much of it made from grapes grown in areas such as Griffith) accounted for two-thirds of the value of Australian wine exports worth A$1.9 billion for the year until December 2023.
Some regions are doing better, such as Tasmania and Victoria’s Yarra Valley, which produce more white wines and lighter, more expensive red wines that are growing in popularity.
But across Griffith there are clusters of metal tanks, each holding thousands of liters.
“Everyone is trying to clean up the wine,” said Bill Calabria, Andrew’s father, adding that wineries are “almost giving it away” to make room for the new vintage.
Many growers are turning to citrus and nut trees instead.
Cremasco is hoping for big profits from the prunes he plants on his blighted plot, while the GoFARM corporation is planting more than 600 hectares (1,500 acres) of almonds nearby and also replacing grapevines.
“There won’t be a next generation of family grape growers,” Cremasco added. “These will be big corporations and all the local youth will work for them.”
($1 = 1.5225 Australian dollars)