Australias wine grape harvest bigger than expected

Australia's wine grape harvest bigger than expected

Australia's wine grape harvest for 2011 is unlikely to help drain the industry's oversupply problems after coming in bigger than expected.

The 2011 harvest has been pegged at 1.62m tonnes, a 1% increase on last year, and almost in-line with Australia's average over the last five years, the Winemakers' Federation of Australia (WFA) said late last week.

Despite an upbeat report on quality, the WFA's harvest estimate will make disappointing reading for many in the industry. There were hopes that wet weather might produce a smaller grape haul, which in turn could have helped wineries to soak up excess wine.

"The vintage is too big," said the WFA's CEO, Stephen Strachan.

"It may seem harsh, given the year many people have had, to focus on the longer term rather than the demands of the present, but a harvest in excess of 1.6m tonnes is out of step with the realities of sustainable production and the market opportunity for premium Australian wine."

Another large grape haul will put extra pressure on the industry to implement its plan to cut production. In 2009, industry leaders unveiled a plan to rip out 20,000 hectares of vines, but estimates suggest that only a third of this figure has so far been achieved.

At the same time, Australian wine is enduring a tough time in key export markets, notably the UK and US. The strong Australian dollar continues to jeopardise profits at the likes of Treasury Wine Estates and Hardys, formerly of Constellation and now part of Champ Private Equity's Accolade Wines.

"Most in the industry now accept that decisive steps must be taken to align supply with market potential," said Strachan.

To read the just-drinks Management Briefing on Australia's wine industry, published last month, click here.