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The rise in popularity of lighter and medium-bodied red wines around the world has seen a resurgence in Australian Grenache in recent years. The versatility of the grape means it is finding favour among consumers as a single varietal wine as well as a crucial component in a range of different styles of red blends and rosé wines.
While the size of the Grenache crush has been subject to the vagaries of seasonal conditions in key growing regions in Australia, the average purchase price has shown a long-term upward trend, reflecting the increase in demand (see Figure 1).
In 2010, Grenache purchases averaged $575 per tonne and have steadily risen to reach $1256 per tonne in 2021. Over this period, the Grenache crush peaked at 18,510 tonnes in 2017 and then declined for the next three vintages. The Grenache crush rebounded to 15,579 tonnes in 2021. This will assist supporting growth in demand for Grenache-based wines in the short-term.
Figure 1: Crush and average prices of Australian Grenache grapes over time
Source: Wine Australia
According to IRI MarketEdge, the growth in sales of Grenache in the domestic off-trade market, especially single varietal wines, has been exceptional over the past 2 years. In the 2 years ended 4 July 2021, the value of single varietal Grenache grew by 123 per cent while Grenache blends grew by 34 per cent (see Figure 2). In comparison, the value of total wine sales grew by 14 per cent over the same period. The stronger rate of growth in single varietal Grenache as seen its value share of total Grenache sales increase from 34 per cent in 2019 to 46 per cent in 2021.
By price segment, for single varietal Grenache, 81 per cent of the sales value is between $15 and $29.99 per bottle, and over the two years, sales in this segment grew by 136 per cent. For Grenache Blends, the price segment profile is slightly higher, with 71 per cent of the sales value between $30 and $49.99 per bottle. Sales in this segment grew by 55 per cent over the two years.
While the growth in Grenache sales in the domestic off-trade market has been very strong, it is a relatively small category, accounting for just 1.5 per cent of red still bottled sales in the past 12 months.
Figure 2: Sales of Grenache and Grenache Blends in the domestic off-trade market (A$ million)
Source: IRI MarketEdge
The growth in the value of Australian exports of wines labelled as Grenache has been somewhat constrained by the three consecutive lower vintages in 2018, 2019, and 2020. Exports of single varietal Grenache had been rising through to 2018–19 before declining in 2019–20 and 2020–21 (see Figure 3). This was a similar situation for Grenache Blends, with the value of exports rising through to 201718 before declining in the subsequent three years with the lack of supply a key factor. The past 12 months results have also been significantly impacted by the imposition of tariffs on Australian bottled wine exports to mainland China.
Figure 3: Exports of Australian Grenache over time (A$ million FOB)
Source: Wine Australia
Single varietal Grenache is a much smaller category in the exports compared to Grenache Blends. In 2020–21, single varietal Grenache exports totaled $4.5 million while Grenache Blends totaled $13million. It should be noted that these figures do not include exports where Grenache is not the major variety in a blend thus it will be under-estimating the true value of Grenache exports.
For single varietal Grenache, with the notable exception of mainland China, exports have increased to most of the top ten destinations (see Figure 4), including the two biggest in the United States (US) and United Kingdom (UK). Exports of single varietal Grenache increased by 6 per cent to $945,000 to the USA and by 59 per cent to $848,000 to the UK. Off much smaller bases, the strongest growth in export value was to Sweden (up 105 per cent to $280,000) and South Korea (up 114 per cent to $242,000).
Figure 4: Top 10 destinations for exports of single varietal Grenache (A$ million FOB)
Source: Wine Australia
There was a similar situation with Grenache Blends in 2020–21 (see Figure 5), with a significant decline to mainland China offsetting growth to most of the other top ten destinations. Exports of Grenache Blends increased by 33 per cent to $1.7 million to New Zealand, by 7 per cent to $1.4 million to the UK, by 18 per cent to $1.2 million to the US, by 194 per cent to $700,000 to Finland and by 140 per cent to $630,000 to South Korea.
Figure 5: Top 10 destinations for exports of Grenache Blends (A$ million FOB)
Source: Wine Australia
To discover more about Grenache, register for the Grenache: Rediscovering an Australian classic in Barossa and McLaren Vale webinar hosted by Sarah Ahmed and Mark Pygott MW on 16 September 2021 or listen to a conversation around “refreshing reds” hosted by Mark Davidson, Wine Australia’s Head of Education Development, with Laura and Brendan Carter of Unico Zelo, and Aaron Meeker of Vine Street Imports.