Analysis and Commentary

Wine production hits 15 year low – Wine Australia

Analysis and Commentary

Australia’s wine industry recorded the lowest wine production in 15 years in 2022-13, with total sales exceeding wine prodiction, according to new figures from Wine Australia.

Total sales of Australian wine were 11 per cent above production in 2022–23 – not enough to substantially reduce pressure on historically high national wine inventory levels

Wine Australia’s Wine Production, Sales and Inventory Report 2023 said wine production was 964 million litres, the lowest since 2006–07 and the first time since then that it has fallen below one billion litres.

Meanwhile sales of Australian wine remained steady at 1.07 billion litres, with a small increase in domestic sales countering a similar-sized decline in exports.

Wine Australia Manager, Market Insights Peter Bailey said: “This is the first time in five years that total sales volume has remained steady on a year-on-year basis.

“Sales of Australian wine have been decreasing in our domestic market and in export markets over the past five years, due to declining wine consumption combined with increased cost-of-living pressures and the effects of the significant duties on Australian wine to China.”

As a result of sales exceeding production, the national wine inventory decreased by four per cent to an estimated 2.2 billion litres on 30 June 2023.

The reduction was driven by red wine stocks, which were down by 10 per cent compared with the previous year.

Bailey said nonetheless inventory levels remain very high, particularly for red wine.

“This is a move in the right direction for the sector as it responds to the challenge of rebalancing supply and demand.

“However, it is only a small reduction after the lowest vintage in 20 years, and stocks of red wine remain at historically high levels.”

The national stock-to-sales ratio – a measure of how many years’ worth of sales is held in inventory – was 2.57 for reds, still 45 per cent above the 10-year average despite decreasing by seven per cent due to the decrease in inventory.

Bailey said: “The long-term average stock-to-sales ratio for red wine is around 1.8, which equates to having just under two years’ worth of sales in stock.

“The current level is over two-and-a-half years’ worth, which is very high in historical terms.

“If the ratio is too high, it puts pressure on winery inventories and reduces demand and price for wine grapes.”

The situation for whites is better than for reds, with the stock-to-sales ratio at 1.49 – much closer to its long-term average of 1.35. It decreased by two per cent in 2022–23 due to the slight increase in sales.

While supply and demand for white varieties appear to be more balanced, Bailey said that sales of white wine in 2022–23 were 463 million litres, considerably lower than the 10-year average production of 579 million litres.

Picture: Wine Australia

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