Earlier this year, we reported that the Australian wine sector was in the strongest position for more than a decade, following its above-average harvest in 2017 in the context of historically low production globally. In this issue we report on the early indications for the 2018 harvest, both globally and at home.
With southern hemisphere harvests complete or near complete and winter over in the northern hemisphere, early indications are for a return to a more average global harvest in 2018.
According to Ciatti, Argentina is expecting a harvest of at least 2.2 million tonnes, which is back to average and should see Argentina move in front of Australia again as the world’s fifth largest wine producer. It is expected that Chile will also have a larger crop after two lower years. It is estimated that New Zealand’s harvest will be lower than initially expected due to on-going wet weather and resultant disease pressure.
Europe has made up for a dry start to winter with good rains in March and April in Spain, France and Italy. This means that harvests are not likely to be constrained by a dry winter, although it is too early to predict the likely size of the crop in these countries with so much of the season still to go.
Similarly, California has seen good autumn rains and is well positioned at this early stage for a normal harvest. Only South Africa looks like having a significantly below average crop as a result of a prolonged and extreme drought. However, the effect of even a 50 per cent reduction in South Africa (as some locals are predicting) would only be around 0.5 billion litres less in a world market of 25–30 billion litres.
France, Italy, Spain and USA together account for more than 50 per cent of the global crush, while Australia increased its share from 5 per cent to 6 per cent in 2017, after a relatively large harvest (see figure 1).
Figure 1: World wine production share by country 2017
Australia has a history of consistent production, with less variation around the average each year than most other major producing countries (see figure 2).
Figure 2: Percentage variation from the average production 2011–2017 by country
Early indications from producers are that the 2018 Australian crush will be down on the record 2017 crush, while grape prices are expected to increase in line with increasing average export prices. There has historically been a strong correlation between export demand and grape pricing (see figure 3) and the latest export figures (MAT March 2018) showed an increase in average value of 5 per cent to $3.14 per litre, while bottled export value reached an all-time high of $5.74 per litre ($51.66 per 9 litre case equivalent) FOB.
Figure 3: Average export price and average Winegrape purchase price over time
The total Australian crush figure, as well as details of the crush and grape pricing by region and variety, will be reported in the National Vintage Report later this year. The report is based on Wine Australia’s National Vintage Survey that commenced in the last week in April. The survey collects tonnage and price information from individual wineries across all winegrowing regions in Australia. Wineries are encouraged to complete the survey to ensure the accuracy of the report. For more information contact the survey coordinator Sandy Hathaway 08 8228 2052.