‘Perfect storm’ buffets wineries

The Australian wine industry has faced many challenges and lots of adversity over the past couple of years and Coonawarra is no exception.

The Chinese market leaving the industry dealt a heavy blow, causing and exacerbating many ongoing issues and left wineries in search of new markets.

Balnaves of Coonawarra business manager Kirsty Balnaves believed that to address the trade issues, the challenging state of the wine industry needed to be considered.

“It’s not a bump, it’s a significant situation in our industry at the moment, in terms of trade, diversifying into the markets just takes time and money so it’s going to be very challenging I think,” she said.

Ms Balnaves said she was uncertain how the industry would overcome these challenges.

She also said there was an oversupply issue, particularly with red wine, with wine stored in wineries from 2021 and 2022.

“It certainly has a significant impact, if we cannot shift some of these volumes it will be an even more challenging 2023 vintage,” she said.

“So there’s that coupled with shipping issues which are still significant coupled with labour shortages, COVID interruptions, inflation, interest rate rises, it’s almost like a perfect storm.”

Ms Balnaves said China left a “massive hole” in the industry that no one country could fix and the industry was experiencing oversupply even before China became a market for Australian wine.

“China took a majority of red wine as well, so it’s just compounded the issue, China walking away is significant,” she said.

Ms Balnaves said there had been good growth in some markets, such as South Korea and Vietnam, which was good news but “a drop in the ocean” compared to what the industry lost with China.

“Diversifying into markets takes money and time and people having the ability to travel overseas to go into market and sell our wines, the opportunity has not been there for that either,” she said.

Ms Balnaves said the domestic market was also declining, with people drinking less along with significant growth in low alcohol and non-alcoholic wine.

She believed the cost of living increases would also affect the wine industry, as wine was a discretionary item rather than essential.

Ms Balnaves said although the signing of the Australia-India Economic Cooperation and Trade Agreement was good news, the Indian market would take time to develop and mature.

“I think 89% of the alcohol sold in India is either beer or spirits at the moment, wine is only small but Australia is the biggest importer by volume of wine into the country,” she said.

“So there’s opportunity for more growth, but it’s cultural and selling our story and then we get down to logistics and shipping.”

Ms Balnaves said wineries would have to make changes, such as removing vines that were not performing or varieties that were not selling and believed going forward the industry would have a major focus on environmental responsibility.

“I think we have just got to rip the band-aid off and say, yes, it is challenging news, and we all have to do what we can to help solve the problem,” she said.

“We have to regroup and work out where the future is, but I think it’s sustainability, it’s growing these export markets organically and keep supporting the ones we’re already in.”

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