Wine Grapes

GVP $165 million est. Down 27% year-on-year.
The total value and volume of NSW wine exports declined in 2022-23 with value down 12%.
Parts of the industry continue to face very difficult operating conditions with lower production and lower prices, especially for warmer region wine grapes.

NSW wine grape production dropped 28% during 2022-23 which was 36% below the 10-year average.⁵³ Despite the fall in production, prices continued to fall in the high-volume warmer production regions which, combined with a very difficult growing season, created many challenges for growers.

Production

NSW Wine Grapes Crush (tonnes)⁵³

NSW Wine Grapes Crush (tonnes)
10 year average

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Production fell 28% during 2022-23 to 355,083 tonnes which was 36% below the 10-year average.⁵³ Wine Australia reported that “the 2023 vintage is widely reported to have been the most difficult and challenging in at least the past 20 years”. The continued La Nina weather pattern created persistent rainfall and some flooding and combined with lower temperatures created difficulties in managing vines and with harvest. As a result of an oversupply of wine and grapes from the largest warm climate regions (the Riverina and Murray Darlin regions) there was some yield management imposed by wineries on growers and even some vineyards being taken out of production.

Production fell 31% in the Riverina and 24% in the Murray Darling – Swan Hill regions. Despite the seasonal challenges, most cooler climate areas (such as Canberra region, the Southern Highlands and Tumbarumba) actually increased production year on year. The overall national crush fell 24% to 1.7 million tonnes⁵³ which was the lowest crush since 2000 and 26% below the 10 year average.⁵³

Price

Average NSW wine grape prices increased marginally during the year, up 0.7% to $437/tonne. ⁵³ Given the large decrease in production producers may have hoped for better prices, however wine inventory levels remained elevated following several years of above average wine crushes across Australia and the continued impacts from the loss of the Chinese export market.

The average price change also masked significant differences between regions and wine varieties.

The oversupply of wine is having a much bigger impact on the cheaper end of the market. Wine Australia reports that, across Australia, average prices for grapes from premium, cooler region wine increased 4% to $1,523/tonne whereas prices for grapes from cheaper, warmer region wines fell 11% to $357/tonne.⁵³ Whilst the average price of both red and white wine varieties increased during the year, white varieties reached a new high and are now 24% above their longer-term average whereas red varieties are now 30% below the peak reached in 2020 and 2% below average.⁵³

NSW Wine Grapes average price ($/tonne)⁵³

NSW Winegrape Price ($/tonne)
Average ($/tonne)

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NSW Red and White Wine Grapes average price ($/tonne)⁵³

Red Wine
White Wine
Red Wine average
White Wine average

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Trade

Australian Wine Trade ($'million)³⁵

Wine imports
Wine exports
Trade balance

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NSW Wine exports fell 12% to $415 million.³⁵ The United States (US) remained NSW’s largest wine export market by value however exports fell 20%.³⁵ The United Kingdom (UK) is NSW the largest export market by quantity for NSW wine and the second largest by value. The volume of exports to the UK grew by 8% however weaker prices meant value of exports was only up 1%.³⁵ Export prices fell 8% despite a weaker currency.³⁵ Overall Australian exports also fell 8% to $2 billion with exports to China only just above $11 million.

Australian wine exports are now 30% lower than 2020, immediately prior to China imposing punitive tariffs on Australian wine imports. At the same time, imports of wine into Australia continue to grow, up 10% in 2022-23, to $1.1 billion. The Australian wine trade balance has fallen from $2.1 billion in 2019 to only $945 million in 2022-23. High production, lower exports and increased competition from imports are leading to increased competition in the domestic market.

Outlook

Despite lower production in 2022-23 the wine market remains oversupplied, especially for red wine grapes from the warmer inland regions. With lower exports the market is struggling to clear the oversupply. The industry’s challenge is to clear the current wine oversupply and better match supply with expected future demand. There also continues to be a divergence in performance between warm, inland wines at cheaper price points and those from cooler regions at higher prices. Premium wines continue to benefit from lower levels of supply and a change in consumer preferences to drinking less but at higher quality. For warmer, inland regions, in many cases prices are now below the cost of production and some farmers are reacting to this by mothballing vines, grafting red varieties over to white varieties and, in extreme cases, pulling out vines. However, with the current levels of oversupply, which are also replicated in other parts of the world, strong export growth is required for the market to regain some balance in supply and demand.

Growing exports materially remains challenging with economic uncertainty in key markets and a change in alcohol excise taxes in the UK making most wine more expensive in that market. Following the resolution of Australia’s dispute with China on tariffs for barley there are now hopes that a similar resolution can be achieved for wine. A resumption of exports to China would help clear some of the oversupply. At the time of publication there are positive signs of progress on resolving the trade dispute with China. Nevertheless, wine consumption is also declining in China and competitors have increased their market share in Australia’s absence.

Stronger Primary Industries Strategy

Supporting the Myrtle Rust Outbreak Response on Lord Howe Island

Strategic Outcome

Biosecure Industries and Environment

1.4 Work in partnership to minimise impacts to primary industries and the environment from endemic biosecurity threats

In February 2023 the invasive disease myrtle rust was found on Lord Howe Island, potentially threatening native forest.

Myrtle rust is an exotic disease from South America that was discovered on the central coast of NSW in 2010, and following establishment and spread, has now caused the near-extinction of native rainforest trees along Australia’s east coast. Eradication of myrtle rust from Lord Howe Island, which was previously achieved in 2016 (the only successful eradication of this disease globally), is essential to protect native trees in World Heritage national parks on the island.

Dr Angus Carnegie, DPI Forestry Senior Principal Research Scientist and a global expert on myrtle rust, was invited across to Lord Howe Island by the Island Board to provide technical input into the island’s myrtle rust eradication program. Dr Carnegie was kept busy, speaking to the local residents, business owners and tourists, answering questions on the potential impact of myrtle rust if not eradicated, and technical aspects of disease spread and infection and methods for eradication.

Dr Angus Carnegie, DPI Forestry Senior Principal Research Scientist looking at a tree

Dr Carnegie also spent time with Lord Howe Island Board staff training them in recognition of symptoms of myrtle rust, the best methods of eradicating the disease, and operational and management aspects of the eradication program. This included visiting sites of known infection, which required suiting-up in biosecurity gear and following strict biosecurity hygiene procedures.

Dr Carnegie is continuing to support the eradication campaign by providing technical advice via phone and email from his home base in Sydney. He will keep working with conservation officers from the Department of Planning and Environment in providing assistance to the Lord Howe Island Board, a long-standing collaboration in monitoring and managing the impact of myrtle rust in NSW natural ecosystems.