Shiraz is one of the world’s major red winegrape varieties, ranking fourth in global red plantings behind Cabernet Sauvignon, Merlot and Tempranillo. As of 2016, there were about 180,000 hectares of Shiraz under vine around the world – with the largest area located in France, ahead of second-placed Australia (see Figure 1).
Shiraz is Australia’s most planted red variety ahead of Cabernet Sauvignon and Merlot. Australia is far more reliant on Shiraz than any of the other major producers. While Shiraz accounts for 7 per cent of global red variety plantings, its share in Australia is significantly higher at 46 per cent. This means that changes in demand for Shiraz wines in wine markets around the world proportionally impacts Australia more than others.
Figure 1: Shiraz plantings by country in 2016 (hectares)
Source: Anderson, K. and S. Nelgen, Database of Regional, National and Global Winegrape Bearing Areas by Variety, 1960 to 2016, Wine Economics Research Centre, University of Adelaide, September 2020 (slightly revised May 2021).
In the 15 years to 2023, the national Shiraz crush in Australia averaged 417,000 tonnes (see Figure 2). After a record crush of 535,000 tonnes in 2021, Shiraz tonnages declined in 2022 and were well below the average in 2023. Indications are that the national Shiraz crush will be once again below average in 2024. Both seasonal and market conditions are impacting on the size of the crush. The actual figures for 2024 will be known when the 2024 National Vintage Report is released on July 9.
Figure 2: National Shiraz crush in Australia (tonnes)
Source: Wine Australia
The average price paid for Shiraz in Australia has fallen since hitting a peak in 2020. This change has been most stark in the high-volume producing inland regions (Riverland, Riverina and Murray Darling – Swan Hill). After five years of increased prices, peaking at $674 per tonne in 2020, the average price paid for Shiraz across the inland regions has since dropped to a low of $279 per tonne in 2023. ABARES has estimated the inland average price for Shiraz to fall again in 2024 to $212 per tonne and has forecast the 2025 price to fall to $208 per tonne.
In contrast, the average price paid for Shiraz across the rest of Australia has also fallen from $1801 per tonne in 2020 to $1592 per tonne in 2023.
The decline, both in tonnages and average prices paid for Shiraz, over the past two years would suggest a softening of demand for Australian Shiraz wines. This also reflects an over-supply of red grapes and red wine nationally with a stock-to-sales ratio of 2.77 for reds in 2023. As it is by far Australia’s major red winegrape, this oversupply has impacted Shiraz prices.
Figure 3: Average price paid for Shiraz grapes by Australian region ($ per tonne)
Source: Wine Australia
One of the factors driving the decline in Shiraz prices has been the decline in exports of Australian Shiraz over the past few years (see Figure 4). Volume peaked at 223 million litres in the 12 months ended March 2018, before declining to a low of 137 million litres in the same period in 2024. The loss in export volume is roughly the equivalent of 120,000 tonnes. The value of exports has also fallen, from a high of $1.2 billion in the 12 months ended March 2020 to $530 million in the same period in 2024. The decline in Shiraz exports has come in both the commercial/value (under A$5 per litre) and premium (A$5 or more per litre) price segments. The volume of Shiraz exported under A$5 per litre declined by 34 per cent between 2018 and 2024 while at $5 or more per litre fell by 52 per cent. The share of Shiraz exports at less than A$5 per litre increased from 75 per cent to 81 per cent over this time.
Figure 4: Australian Shiraz exports over time
Source: Wine Australia
The biggest driver of decline in the volume–value of Shiraz exports in recent times has been reduction in trade to mainland China after the imposition of duties on Australian wine in late 2020 (see Figure 5).
In the 12 months ended March 2020, Shiraz exports to mainland China totalled 64 million litres valued at $620 million. This represented 31 per cent of the volume and 53 per cent of the value of total Australian Shiraz exports. In the 12 months ended March 2024, Shiraz exports to mainland China had fallen to 833,000 litres, valued at $4 million.
With removal duties in late March 2024, there will be growth opportunities in mainland China for Australian Shiraz producers. However, the size of the opportunity may not be as great as it was previously as the imported wine market in mainland China is now a third of the size it was five years ago.
Mainland China is also unlikely to resolve the oversupply of Shiraz in the inland regions. Shiraz exports at premium price points (A$5 or per litre FOB) accounted for 60 per cent of volume and over 80 per cent of the value of Australia’s Shiraz exports to mainland China prior to the imposition of trade duties.
Any future long-term demand in mainland China is likely to have a similar premium profile.
Figure 5 also illustrates that there has been no uplift in the volume and value of Shiraz exports to the rest of the world since the loss of trade to mainland China. In fact, over the past decade, exports of Shiraz to the rest of the world have been relatively stable, with a value of $534 million in the 12 months ended March 2014 compared to $523 million in the same period in 2024. Volume has also fallen in the rest of the world in the same period from 170 million litres in 2014 to 136 million litres in 2024.
Figure 5: Shiraz exports by market over time (A$ million FOB)
Source: Wine Australia
In the 12 months ended March 2024, Australian Shiraz was exported to 112 destinations. The top five destinations by value (63 per cent of the total Shiraz export value) were:
- United Kingdom (UK) – $107 million
- Hong Kong – $86 million
- United States of America (USA) – $51 million
- Singapore – $47 million, and
- Canada – $42 million.
The top five destinations by volume (73 per cent of the total Shiraz volume) were slightly different:
- UK – 59 million litres
- Canada – 14 million litres
- USA – 11 million litres
- Denmark – 9 million litres, and
- Germany – 8 million litres.
There were very few destinations that recorded an increase in Shiraz exports over the past 12 months. Shiraz exports to the UK increased by 7 per cent in volume but fell 2 per cent in value. Value declined as the increase in volume was unpackaged shipments and the average value of these unpackaged exports declined by 2 per cent to A$1.27 per litre. Bottled Shiraz exports to the UK also fell by 13 per cent.
There was a 79 per cent increase in the value of Shiraz exports to Hong Kong, perhaps in anticipation of the removal of duties to mainland China. Other stand-out destinations for Shiraz exports were New Zealand (up 7 per cent in value to A$31 million), Japan (up 7 per cent to A$10 million) and the United Arab Emirates (up 19 per cent to A$6 million).