Grape growers in Australia’s largest wine-producing region are being encouraged to mothball their vines or switch varieties altogether amid a downturn in the nation’s viticulture industry.
Key points:
- More than 500 Riverland growers sell their grapes to multinational company Accolade Wines
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It is offering financial incentives for growers to make the switch from red grapes to white or “mothball” their vines
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Representatives say the incentives won’t cover costs and growers say costs are making the business unviable
Tariffs on Australian wine from China have created an oversupply of red wine and global freight issues and led to a downturn in red grape prices, with the pain expected to continue past the 2023 vintage.
In the Riverland, more than 500 growers sell their grapes to Accolade Wines, a multinational company that owns the Berri Estate winery, one of the largest in the Southern Hemisphere.
These growers are members of CCW Cooperative, which represents growers in price negotiations with Accolade Wines.
In a letter to CCW, Accolade Wines chief supply chain officer Derek Nicol outlined how Riverland growers would likely receive about $150 per tonne for red wine grapes – namely shiraz and cabernet – in 2023.
The letter said there was more wine in storage across Australia than the Riverland produces in a single vintage and that delivering more this season would likely push prices down further in 2024.
400-million-litre excess
To remedy this, Accolade has put forward a scheme offering viticulturalists $1,250 per hectare to make the switch from red grapes to white.
Alternatively, it is offering $1,000 per hectare for growers to mothball – which means to maintain a non-producing vineyard with minimal but critical input – their vines for the 2023 vintage.
Growers would then be paid a premium for future crops.
Mr Nicol told ABC Riverland a conservative estimate showed there was about 400 million litres of excess red wine in Australia at the moment.
“[Moving from] red to white as a proposal, to start off with, will remove unwanted red and basically replace them with things like sauvignon blanc, pinot gris and prosecco,” he said.
“There is real demand for them at the moment and there will continue to be demand both domestically and around the world for those varieties.
“We’ve offered a very generous removal support mechanism, which will help growers, because we know well and good that getting material to replant takes time, so we are happy to support growers through that.”
Incentives won’t cover costs
It takes anywhere between two and six years to switch vines from red to white and for them to start producing the same amount of fruit as before.
CCW chief executive Jim Godden said the prices being offered to growers were not fair, but did reflect the state of the industry.
“We will continue to negotiate price — it’s my role and our board’s role to look at, where at all possible, to increase that price,” he said.
Mr Godden said he appreciated Accolade negotiating ways to support growers through incentives, but said producers would still lose out.
“Will it cover all the costs for the grower? No it won’t,” he said.
“Does it assist the grower while we’re trying to get through this time frame and come out the other side? Well, all assistance helps.
“A grower said to me yesterday ‘I’m not going to knock it back, but it won’t pay all the bills.'”
‘A juggle and a gamble’
Barmera resident Joanne Cole moved to the region three years ago and took over a backyard vineyard that came with a contract with Accolade Wines.
She is now ripping them out of the ground due to price uncertainty and prices not covering expenses.
“You either have to have the equipment and have the ongoing expense of maintaining that equipment, or hire someone to come in,” she said.
“Some of the contracts don’t tell you when and how much you’re going to get paid until about a month or so before you’ve harvested.
“So, you’ve spent all this money investing into the grapes to find out you’re not going to get much return afterwards.
“It’s a bit of a juggle and a gamble.”
Mr Nicol said he accepted that some farmers may look at other crops to make a living, but his business was trying to keep wine grape growing profitable.
“Everyone has a choice and if you want to make more money growing almonds or other crops, that’s a personal choice,” he said.
“We adhere to our contractual obligations, but what we are trying to do here is make sure the wider industry recognises what needs to happen to future-proof [the business and ensure] it’s sustainable for everyone.”