Australian bulk red wine prices down on last year

Bulk wine prices for Australia’s three key red varietals Shiraz, Cabernet Sauvignon and Merlot are all down in July compared to the same period last year, with prices well below the levels achieved in the first half of 2018 following the record low global vintage of 2017.

This is according to Wine Australia which states that prices for white varieties generally stayed the same or softened slightly, but not to the same extent as the major red varieties since 2018. .

Generic red wine, although reaching a much lower price than the other reds (USD 0.91 per litre compared with USD 1.08) increased in value in July compared with 2019 and was close to matching its price of USD 0.92 per litre achieved in July 2018, indicating the relatively high current demand for Australian red wine at this price point.

While prices in general have been slowly sliding over the past year, the monthly trend for global bulk Australian wine prices shows a recent increase for all varieties since most reached at least a 12-month low in March 2020. The subsequent upturn  in prices was particularly notable  in June, when supply switched to the new vintage.

The low price in March also coincided with a recent low in the Australian dollar (AUD) to USD exchange rate and could indicate that prices did not change in AUD but converted to a lower price in USD.

Between January 2018 and January 2020 the Australian dollar depreciated by 10% and since mid-2019 has stayed around USD 0.70– its lowest level for more than 10 years. “However, the degree of competitive advantage this provides to Australian businesses depends on their individual financial arrangements, the exchange rates of competitive currencies and the market into which the wine is being sold,” said Wine Australia.

And in comparison to other countries (except for the US), Australia had the highest global price recorded for generic red in July, and close to the highest prices for the other major reds. “Higher prices generally indicate relatively strong demand, higher quality and/or short supply, but can make Australian wines less price competitive from a buyer’s perspective.”

According to Wine Australia’s National Vintage Report 2020 released earlier this month, average grape prices increased overall by 5% compared with 2019. Red grapes from the Riverland, Murray Darling–Swan Hill and Riverina increased on average by $68 from $591 to $659 per tonne, while white grapes from the same regions increased by an average of $36 per tonne.