Millions of vines are being uprooted in Australia due to wine overproduction that threatens the livelihoods of growers and wine producers.
Rapidly declining wine consumption worldwide has resulted in Australia storing over two billion litres of wine, approximately two years' worth of production as of mid-2023, according to the most recent figures.
The surplus is most severe for the country’s most produced item, cheap reds, and in China, Australia’s previously growing market for their wines.
Australian vintner James Cremasco lamented the saturating growth and resultant low prices as he saw his grandfather’s rows of vines being uprooted near Griffith, a southeastern town where two-thirds of Australia’s wine grapes are grown, influenced by vine-growing techniques brought by Italian migrants around the 1950s.
Major wine producers like Treasury Wines (ASX:TWE) and Carlyle Group’s Accolade Wines are shifting their focus onto pricier bottles as the cheaper grapes of areas like Griffith remain unpicked on vines.
Andrew Calabria, a third-generation vineyard owner and winemaker at Calabria Wines, sees this as the end of an era, as the familiar sight of vineyards disappears into heaps of discarded vines.
The crisis is most acute for red wine.
In regions like Griffith, grape prices plummeted to an average of A$304 ($200) a ton last year, the lowest in decades, down from A$659 in 2020, according to data from industry body Wine Australia.
The government, predicting even lower prices this year, has asserted support for the struggling growers, though many argue that more can be done.
To balance the demand and supply and elevate prices, Jeremy Cass, head of Riverina Winegrape Growers, proposes uprooting a quarter of the vines in areas like Griffith.
This means eliminating over 20 million vines covering 12,000 hectares (30,000 acres), approximately 8% of Australia’s total vineyard area.
Though the oversupply issue remains unresolved despite similar measures in other regions.
Many growers, however, are reluctant to remove vines, choosing to bear the losses in anticipation of a market turnaround.
This compromising position is rapidly eroding wealth, according to KPMG wine analyst Tim Mableson, who estimates the nationwide removal requirement to be around 20,000 hectares (49,000 acres) of vines.
Amid this crisis, the global preference for lesser alcohol consumption and pricier wine varieties aggravates the situation.
Australia’s wine exports hit a value of A$1.9 billion in the year to December 2023, the majority of it being wine sold for less than A$10 a litre, much of it produced from grapes grown in areas like Griffith.
While regions like Tasmania and Yarra Valley in Victoria, known for their white wines and lighter, more expensive reds, fare better, storage tanks filled with thousands of litres of wine are strewn across Griffith as wineries scramble to find space for the upcoming vintage.
Many growers are looking at alternative crops, such as citrus and nut trees.
James Cremasco hopes for higher returns from the prune trees he is planting on his former vineyard, whereas GoFARM, a major corporation, is setting up more than 600 hectares (1,500 acres) of almond trees nearby, replacing former vineyards.
Cremasco predicted that family grape growing era would end soon in favor of corporate vinefields.
Treasury Wines (ASX:TWE) is a prominent wine producer focusing mainly on the production of red wines.