Standout vintage eases supply pressureAustralia’s 2012 vintage is expected to be 4% higher than last year, with unanimous reports of above average quality across most regions and varieties. Expectations are that it will be recognised as a standout vintage.The Winemakers’ Federation of Australia’s annual Vintage Survey estimates the total national crush at 1.66 million tonnes, compared with 1.6 million in 2011. This is close to the latest fi ve-year average of 1.63 million, but well below the peak of 1.93 million in 2005.The warm inland regions are estimated to have accounted for nearly one million tonnes – an increase of 70,000 tonnes (7%) over last year. Production of red and white wines was just about equal in 2012, and Chardonnay and Shiraz continued the trend of trading the crown for highest individual variety by volume. Shiraz took it back again, but not by much. Pinot Gris/Grigio continued its rapid growth – up by around 40%.The higher crush comes despite many individual regions reporting lower yields. The explanation appears to be that high yield propensity in 2011 primed vines for a level of fruitfulness lower than in 2011, but closer to average.There was no significant change in bearing area during the year and anecdotal evidence suggests unharvested fruit and production caps were not a factor in determining vintage size. There was some yield loss at fruit set and localised losses due to rain events occurred in some regions in the eastern states. However, seasonal conditions were generally favourable and ripening conditions were ideal, which was greeted with unbridled delight in many regions.Consensus is that the quality of the wine produced in 2012 will be high, irrespective of yield size or weather impact. Regional reports collated by Wine Australia include such phrases as "truly special", "excellent to exceptional", "one of the strongest on record" and "one of the region’s fi nest".A summary of these regional reports has been produced as a companion to this document and can be downloaded at www.wfa.org.au/vintage_reports.aspx The following pages present the detailed results of the WFA Vintage Survey (pages 2 and 3) and a summary of the 2012 Australian Winegrape Purchases Price Dispersion Report just released by Wine Australia (page 4). This reveals the fi rst signs of grape prices fi rming, perhaps allowing greater recognition of quality differentiation.While the average purchase price from the survey (covering about 80% of all purchases) of $457 per tonne was the second lowest in the last decade, it was 11% higher than the 2011 average of $413 per tonne. WFA’s Manager Economics & Policy, Paul van der Lee, said the reports showed some positive signs for growers and winemakers and great news for wine consumers, but also underlined the need to continue the restructuring process to restore profi tability more broadly across the sector."On the positive side, the figures show the sector’s inventory-to-sales ratio is down to the lowest level since 1995, which means a slight easing of the inventory overhang – the oversupply – that has caused us so many problems over recent vintages," he said."However, while overall grape production appears close to balance with total sales, we are vulnerable to returning to oversupply because our current bearing area could produce higher yields in future vintages." WFA believes there are still mismatches between the cost and quality composition of grapes produced and wine demand, and analysis suggests a signifi cant amount of current production and sales are not viable in the long term because they provide an insuffi cient return on capital. Nevertheless the demand for quality wine continues to expand in markets such as the US, China and other parts of Asia, providing an avenue for committed brand owners to convert some of the surplus into sustainable sales.
2012 a standout vintage for quality
Vintage estimated at 1.66 million tonnes, 4% up on 2011
Shiraz again overtakes Chardonnay to take top spot by volume
Grape prices show first signs of firming
2012 has assisted in reducing inventory overhang but industry vulnerable to reversal of this gain based on yield potential of current bearing area
Industry restructuring still required to restore profi tability across sector
Future demand opportunity offers promise