Vintage 2020 saw wine grape production continue to decline as poor seasonal conditions, low water allocations, high water prices, smoke and fire damage all tested the industry and put grape yields under pressure. Output value declined by 5%, with low production slightly offset by stronger prices.
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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.
Grape prices for 2019-20 again showed improvement with the average NSW purchase price of wine grapes rising by 11% year-on-year to reach $565 per tonne 141. Most varieties saw annual increases in price with Verdelho up 10%, Merlot up 8% and Pinot Noir up 6% more than for the 2019 harvest142 ak.
Competition for supply was the main driver of price, with the smaller yields forcing winemakers to source grapes from further afield. Price movements were also off the back of wineries from regions affected by the bushfires and smoke taint seeking alternative grapes from unaffected regions.
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.
A total of 195 million litres of wine was exported in 2019-20 at a value of $551 million 94. In the face of the COVID-19, the total value of NSW wine exports increased by 2% along with a marginal volume decline of 3% 94 however, the full impact of the pandemic on wine consumption and the food service industry is still yet to be realised 141.
The United Kingdom and China both continued to be a source of growth for NSW exports. Shipments to China increased in both volume and value by 7% and 3% respectively 94. Exports to the United Kingdom also performed well, increasing in value by 7% and volume by 5% 94. The USA remained NSW largest export market by value, comprising 46% of the total state export market, but 38% of the market by volume in 2019-20 94.