Drowning in wine?

In todays Daily Wine news“, I found an article describing the recent changes in the Australian wine industry.

It starts with saying that “between 1997 and 1999 an unprecedented 40,000 hectares of grapevines were thrust into the soil across the nation”. Uff, I am one of those lunatics who put in vines during that time. Only a little, though, 3.5 ha to be precise. Now it (the land, our land) contributes as Two Hills Vineyard to the grape heap and/or wine lake. The increase in area under vines led to a 40% increase in output. Such growth was never seen in the history of the Australian wine industry before.

Two Hills Vineyard with the two hills in the background

Well, but I am actually exaggerating. There is no wine glut any more one could argue. Although it was not easy to find a market for our fruit, the very fact that there was fruit in abundance forced us to add value to the operation, e.i. make wine and sell it in Germany. We have survived so far. Of the last 8 vintages, two were to our full satisfaction, and the trend is positive. There is reason for optimism.

We are mainly growers and sell most of our fruit. The remaining part is turned into wine, mostly our Merlot grapes fall into this category. It allows me breathing space. I do not need to sell as fast as possible but rather on a pace we can stomach.

In the good old days growers had long-term contracts with wineries. Paradise has been lost ever since and the “spot market” is a true hassle. Some wineries are not relay reliable partners and it takes a while to sort out the ‘jewels’ from the ‘chaff’. That is costly for small vineyards. To run after small amounts of money and unpaid bills can be a hazard and it is a hassle. But some wineries treat their growers well. I know it from our friend Steve Sadlier, viticulturist (who tends our small property) and supplier of prime fruit to Yering Station in the Yarra Valley/Victoria.

Good to learn from the Daily Wine News article that the grower-producer relationship is about to change in response to the international market place and the flexibility required there. If that relationship, one of asymmetry in the past, would be more balanced, what a good news. Last vintage we had many cases of wineries retracting from earlier price offers. When they realised that the expected shortage of grapes was not to come and that they got sufficient fruit, they lowered fruit prices.

Another trend the Daily Wine News detected is that big companies shift away from developing their own vineyards. Well in the mid 1990s when the growers had no problem with selling any amount of fruit, wineries wanted to be on the save side and therefore invested in the establishments of their own vineyards. This is not only expensive, it also prevents the wineries from investing in other aspects of their business, for instance cellar technology, etc.. Some large wineries, it is said, rely on about 25-30% of their own vineyards, the bulk of their fruit intake is bought from growers.

Another welcome trend is that the industry is moving away from cheap fruit from warm and irrigated wine regions. That sounds nice to a small vintner from a cool climate region (the Upper Goulburn Wine Region). The rising water costs have hit growers hard and the change of demand does the rest: turn this land to other crops, maybe water saving food crops. The rising worldwide demand for food might be the incentive needed for that tectonic shift.

However, for small vineyards the development of boutique style wines and their own labels is a sine qua non for survival. And survive we will. Cheers

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