Production

The state crush was down 11% year-on-year to 286,905 collected tonnes,^{141 ak} however given the geographic spread and diversity of the NSW wine regions, the reductions in production were spread unevenly with some regions hit harder by the tough seasonal conditions than others. The total bearing area at the commencement of the season was 30,820 hectares, down 2% year-on-year ⁸.

Smoke-taint was an issue where some vineyards were directly affected by the fires and the density of smoke from nearby fires left many grapes unharvested. The scale of the impact of smoke damage varied greatly around the state and largely depended on how close to the fire front the vineyards were and what stage of ripening the grapes were at when the smoke was at its worst ¹⁴⁹. The most affected regions of NSW were the Hunter, Orange, Tumbarumba, Southern Highlands and Hilltops ¹⁴¹.

Vintage 2020 was described by one winemaker as “a bad vintage for accounts but a good vintage for winemakers” ¹³³, as despite the fall in production, on-average grape quality was up. Successive drought years resulted in the production of lower yielding, thicker-skinned and smaller berries, with concentrated colour and aromatics, and for red-wine producer’s grapes with higher quality tannins ¹⁴⁰. Shiraz was the largest variety by volume with a crush of 40,387 tonnes, down 12% year-on-year and accounting for 45% of the total red crush. Chardonnay was the second largest variety with 32,871 tonnes, down 17% year-on-year and accounting for 34% of the white crush ¹⁴¹.

Macroeconomic Conditions

Global wine production in 2019 was estimated at 260 million hectoliters and global consumption at 244 million hectoliters ¹¹⁸. Significant year-to-year differences are common and can create particular supply and demand challenges given that country of origin is one of the main factors affecting consumer purchasing behavior ¹¹⁸.

Before the advent of COVID-19, the reduction in global supply in 2019 along with a favourable exchange rate for the AUD against the USD and strong demand from Asian markets, suggested that there would be growing export opportunities for Australian wine producers in 2019-20 and beyond. However, wine consumption fell dramatically as a result of the global shutdown of the food service and retail sector and large volumes of wine held up in storage or held up at ports. Adding to the softened demand was also an estimated increased in supply of 2020 Northern Hemisphere wines and large carry-overstocks from the large 2018 vintage ⁸⁴.