AUSTRALIA's wine grape growers are in for several lean years of over-supply and poor prices, according to the nation's top commodities forecaster.
The Australian Bureau of Agricultural and Resource Economics says the world economic slump and more competitive markets have slashed demand for wine with the lower Australian dollar having little impact.And at home, consumers are switching to NZ and Mediterranean wines, fuelling a big import surge despite the lower dollar.
In its latest forecasts released today, ABARE predicts wine grape production is likely to rise over the next few years after a sharp slump to 1.7 million tonnes in 2008-09.
It is expected to reach 1.85 million tonnes next year and more than 2 million tonnes by 2012-13, with production of both red and white varieties on the rise.
With an expected increase in wine stocks, wineries are likely to cut back on grape purchases and keep shifting into lower-priced bulk exports.
This would help keep wine grape prices low, ABARE said.
Prices are forecast to slump to $690 a tonne on average this financial year with a further fall to $676 next year and only modest increases in the following four years.
After adjusting for expected inflation, wine grape prices are heading for an 8 per cent fall in real terms over the next five years.
Wine exports are expected to remain down at about $2.4 billion in 2008-09 and next year, before slowly recovering to reach $3.4 billion by 2013-14.
This is likely to be under-pinned by economic recovery and the impact of industry efforts to revitalise demand for Australian wine, ABARE said.
Domestic wine sales are forecast to be down to 423,000 litres in 2008-09 with imports taking 15 per cent of the market.
ABARE said further declines were expected in 2009-10 before a subsequent recovery to about 560,000 litres by 2013-14.
