In 1997 when BRL Hardy Ltd (now Hardy Wine Company, a division of US-based Constellation Brands) announced ambitious plans for Canberra, the local industry, then twenty-six years old, produced about thirty thousand cases of wine annually from about 400 tonnes of grapes.
It was a time of great optimism for the Australian wine industry. Surging global demand for our wines, especially reds, had sparked a vine-planting spree that was to last until the end of the decade.
As supply struggled to keep pace with demand, grape growers and winemakers alike enjoyed unprecedented returns. In conjunction with generous depreciation provisions, this sparked further planting.
As result, the area under vine in Australia grew from 88,474 hectares in 1997 to 166,665 hectares in 2005. By 1997 annual plantings had grown to 8063 hectares (up from 1646 in 1991) before peaking at 16,048 hectares in 1999 and tapering off to 5,819 in 2004.
These new plantings fed export sales that grew from 172 million litres worth $687million dollars in the year to December 1997 to 726 million litres worth $2.8 billion in the year to May, 2006.
In the same period domestic sales of Australian wine increased from 346 to 430 million litres. In total, then, the decade saw sales of Australian wine increase from 518 million litres to 1.16 billion litres – with imports increasing by 310 per cent and domestic sales by just twenty four per cent.
Viewed against this massive increase, Canberra’s growth from around forty hectares (270 thousand litres of wine) in 1997 to perhaps five hundred hectares now (3.4 million litres) seems spectacular on a relative basis, if modest in an absolute sense.
But poking around amongst those mind-bending statistics, it’s apparent that not all of the development was driven by the export juggernaut nor was it all on a grand scale.
As broadacre developments (some of them ill-fated tax-driven schemes) proliferated, so, too, did the number of mostly small vignerons — growing from just under one thousand in 1997 to a little over two thousand now. This national doubling was mirrored in Canberra’s increase in winemaker numbers from perhaps twenty to the forty listed in the current Canberra District Wineries Guide.
A few more statistics illustrate the stark contrast between our larger makers and our smaller ones: in a national grape crush of 1.9 million tonnes, about seventy per cent of wine makers crush one hundred tonnes or less while just twenty one winemakers account for almost ninety per cent of branded wine sales.
On the export scene the contrast between big and small producers is particularly sharp with twenty producers accounting for eight-five per cent of sales and a little under fifty per cent of our winemakers not exporting at all.
The last figure suggests that perhaps the majority of small makers of the kind we have in Canberra focus entirely on a domestic market that grew just twenty-four per cent in a decade when winemaker numbers doubled and production skyrocketed.
If that sounds like a tough commercial environment consider, too, that all of this coincided with the intense retail consolidation now underway as Coles and Woolworths increase their market reach.
How Canberra’s small vignerons deal with this and to what extent our only winemaking giant – Hardy’s Kamberra Winery – show market leadership will be the topic for the next few weeks.
Copyright © Chris Shanahan 2006 & 2007