Australian drinkers are “swimming” in a wine glut that may hold costs low for years to come back, a brand new report has said, even when China strikes to carry tariffs on Australian winemakers and ramp up imports.
Rabobank’s 2023 Wine Quarterly studies exhibits that wine in storage in Australia has hit some 2 billion litres, the equal of 859 Olympic swimming swimming pools or 2.8 billion bottles, partially the results of Chinese tariffs on Australian wine that induced exports to the Asian big fall by a 3rd previously two years.
RaboResearch affiliate analyst Pia Piggott mentioned the tariff punch coincided with a spread of things that led to the dramatic oversupply.
“The tariff coincided with an exceptional growing season and Australia’s largest crush on record,” she mentioned.
“Wine production for the ’21 vintage increased 36 per cent year on year, which would have in any case caused an oversupply.
“This coincided with Covid, logistics bottlenecks and inflation, which were major hurdles in the way of plans to grow and diversify exports.
“Thus, two plus years into the tariff, prices of Australian commercial red grapes have significantly declined and oversupply issues remain.”
China’s latest resolution to scrap tariffs on Australian barley has given winemakers some hope their very own merchandise might be subsequent.
But Rabobank expects the availability glut to stay, even when China reduces import taxes, on a mixture of declining shopper demand and the difficulties winemakers have confronted in rising exports in different markets.
“Chinese consumers began transitioning away from wine as part of a broader decline in alcohol consumption on a per capita basis; however, declines were greater for wine than beer and spirits,” she mentioned.
“Covid lockdowns and the economic slowdown curbing discretionary spending have also played a role in declining consumption to levels not seen since the 1990s.”
The report mentioned it might take the trade no less than two years to work its means via the present surplus.
“To return to balance and profitability, acreage needs to be reduced, thus over the next five years we will see rationalisation of assets throughout the supply chain,” the report said.
But as producers confront “margin pressure”, customers will doubtless get pleasure from high quality wines at decreased costs and buyers may snap up bargains as “distressed” vineyards come up on the market, the report mentioned.
Source: www.perthnow.com.au
