Increase in Australian bulk wine prices brings cheer to producers

After almost a decade of depressed market conditions, the strengthening of bulk wine prices has been welcomed as a positive sign by Murray Valley wine producers.  

In the year to December 2017, Australian bulk wine exports increased by 10% to reach $440m, with the average value per litre of bulk wine hitting $1.03, its highest price in five years.  

According to Wine Australia, strengthening bulk wine prices is an early indication of global under-supply putting upward pressure on prices.   In the Murray - Darling and Swan Hill regions, sales increased by 18% to more than $511m for wines priced at $2.49 and under, a $76m increase, while wine priced at between $2.50 to $4.99 jumped by 5% to just under $830m.  

Within these two price brackets, the increase in value of wine sales to mainland China has been a staggering 96% and 45% respectively, surpassing $282m. Bulk wine exports to Japan have also seen considerable growth, up by over 51% in the past year, while sales to Germany were up by over 34% and to the Netherlands up by 31%.  

At the same time, bulk wine exports to Italy plummeted by more than 44% compared to 2016, while shipments to the UK dipped by more than 8% and to Denmark by nearly 6%.  

While 2018 grape prices had improved, rising by around 20% for red grapes, some wineries with growers under long term contracts had been slow to respond to improving market conditions, according to Murray Valley Winegrowers executive officer Mike Stone.  

“Demand is high, particularly for red varieties, and prices of more than $500 a tonne are being offered, but the issue for many growers is that they’re contracted to a winery with prices well below those being offered elsewhere,” he said.  

“Growers who supply a winery that’s signed up to the Wine Industry Code of Conduct can easily dispute the prices currently on offer. Other growers should check their contracts carefully for dispute resolution provisions.”