YEARS of reality checks and persistent communications by Murray Valley Winegrowers have prepared the region’s wine grape growers for the price collapse that this week sent South Australia’s Riverland into crisis talks and meltdown.
SA growers were panicked by the lowest prices in more than 50 years and about 900 descended on Barmera for a meeting with government and industry representatives on Wednesday, while the Sunraysia and Swan Hill wine regions have been ready for the storm MVW knew was coming.
Growers in the region had been consistently advised that any uncontracted red grapes would likely not find a buyer in vintage 2024, and contracted growers were urged to seek winery guidance in anticipation of an agreed reduction in contracted yields.
Riverland growers may have been shielded from the volatilities of the industry over the years due to the ongoing grape-supply agreement between the growers’ CCW Co-Operative and Accolade Wines.
Similar to the Murray Valley, South Australian growers are seeing offers as low as $120 a tonne, if they can sell their fruit, against production costs of $400 per tonne.
Growers there say they are now facing decisions as devastating as walking off their properties.
MVW chief executive Paul Derrico said his organisation had spent almost three years clearly and loudly spelling out the message that the market and the industry were facing unprecedented challenges and tough decisions sooner rather than later.
Mr Derrico said with very few exceptions it was the red wines being hardest hit, but across his region at least 50 per cent of grapes grown were whites.
He also called for intervention in the face of a national red-wine glut, which will not be absorbed by the domestic or export markets.
This might involve federal and state government cash and commitment – and would need a better management strategy than the chaos that came with the wool stockpile during the 1990s.
“MVW has been working with the national peak industry body, Australian Grape & Wine, in developing a pre-budget submission for 2024-25 and we are hopeful our Federal Government will support the mechanisms totalling $86 million to assist with the recovery and resilience of the industry,” Mr Derrico said.
“Despite the proactive approach of our grape growers – in the past 20 years grower numbers have reduced from 1300 to 300 in the Murray Valley – we are still faced with industry rationalisation, where production and wine sales profiles are still badly skewed.
“Our industry’s perfect storm has come off the back of the China tariffs, the record crush in vintage 2021, and the COVID-related impact on global sales and logistics, from which we are still recovering.
“Now harvest is well ahead of where we have been in recent years, and while the growing season has presented its difficulties, wineries are already indicating vintage 2024 will be one of the more stable in terms of managing intake.
“Fruit has generally been harvested at its optimum following a relatively mild summer, allowing fruit to ripen naturally.
“Winemakers are very pleased with the quality of fruit processed to date, with pinot gris and sauvignon blanc being the standouts, both displaying excellent varietal characters.
“It also seems vintage will be finished much earlier this year, with some wineries advising mid-March cut-offs, as very few reds will be processed compared to a typical year.”
Mr Derrico said farmers who received a price offer for their grapes that they believed did not reflect the marketplace should contact their winery.
He said if growers did not object, then nothing would change. Most grape supply agreements have dispute mechanisms that allow growers to challenge the offer price.
“If the winery you are dealing with is a signatory to the code of conduct for Australian winegrape purchases, you may also wish to lodge a notice of dispute – if you need any guidance with price disputes, please contact the MVWI office for further details or assistance,” Mr Derrico said.
This stand enhances the position the industry peak body has taken in its determination to steer its members through the storm as safely as possible.
Mr Derrico said demand for whites started relatively slowly, but as wineries began crushing it became evident the crop was lighter than anticipated in most circumstances.
But despite there being solid demand for most white varietals, this still did not translate into markedly improved prices.
“Most reds, on the other hand, have been sadly disregarded, with nearly all uncontracted reds unsaleable (unless you have volumes of in-demand whites to accompany them),” Mr Derrico said.
“Many contracted reds have also had yield caps implemented, or wineries have paid growers modest amounts to not produce or deliver the crop. Many wineries have also reduced production of red grapes from their own vineyards as well, which has given independent growers some comfort that we are all in this together.
“Red grapes prices are at rock bottom and well below the cost of production – this sad situation aligns with our, and the broader industry, messaging in recent years and should come as no surprise.
“The volume of uncontracted fruit on the MVW 2024 grapes for sale register is quite high, and is on par with vintage 2022.”
Vintage 2023 had lower volumes due to widespread crop losses from disease issues.
Fruit registered for 2024 is about 27,000 tonnes.
“Whites account for 14,000 tonnes and reds 13,000 tonnes,” Mr Derrico said.
He said only a small volume of whites remained unsold, while the vast majority of reds could not find a home.
MVW February 6 Price Watch report for vintage 2024 is updated in the table below
Average market prices* at February 20
| Grape Variety | Average Price per Tonne |
|---|---|
| Chardonnay | $360 |
| Colombard | $290 |
| Gordo | $320 |
| Pinot gris | $503 |
| Prosecco | $624 |
| Sauvignon blanc | $521 |
| Semillon | $315 |
| Cabernet sauvignon | $174 |
| Merlot | $192 |
| Pinot noir | $680 |
| Shiraz | $154 |
*Average market prices calculated from reports of winery prices for fruit purchases in the Murray-Darling & Swan Hill regions (equalised for delivered-to-winery price)
Average market prices are not weighted and should be regarded as a guide. Some growers will have fixed minimum prices not included in the prices detailed but will have a positive impact on the weighted district average prices when they are released mid-year by Wine Australia. Out-of-district price offers have been adjusted to reflect an equivalent local delivered price where applicable.
Price Watch is compiled by MVW to give producers a guide to how their winery offer compares to other grape prices being offered. All data used to compile this report is provided to MVW confidentially by growers and wineries.
