In late April The Australian Wine and Brandy Corporation tipped a 2006 grape harvest of around 1.96 million tonnes – about one per cent down on last year’s record harvest.

AWBC’s estimate includes the assumption that, just like last year, two to three per cent of the 2006 vintage will be left on the vine or cast on the ground to rot.

With an estimated 900 million litres of excess stock in storage – and this year’s harvest running early – word is that storage capacity is stretched to capacity and the damaging surplus will be with us for a few years yet.

And the surplus may have been greater still had growers in some regions not responded to prospective lower prices and volume caps imposed by winemakers.

Grape yields “… were down five per cent in the Murray Valley and down ten per cent in the Riverland… due to low prices and tonnage caps. Many of the cooler climate regions also expected lower tonnages for similar reasons. For example, Langhorne Creek was down five per cent, McLaren Vale down eight per cent and Mudgee down ten per cent”, writes the AWBC.

But the warm, high-yielding Riverina increased its output by twenty per cent “on the back of winery capacity expansions in the area” – which I think we can safely assume means on the success of Casella’s ten million case a year Yellowtail brand.

Given the glut, it was somewhat surprising to learn of plans to add another 1800 hectares of vines to the 164 thousand that already exist in Australia.

On April 27th The Sydney Morning Herald quoted Mark McKenzie, executive director of Wine Grape Growers Australia, as saying “It beggars belief that some investment promoters are continuing to push large new vineyard plantings when the industry is struggling to digest current levels of production”.

But just to prove that booms, busts, gluts and surpluses seldom spread pleasure or pain evenly, the proposed plantings were defended by developer, Antonio de Francesca, and Winemakers Federation of Australia President, Stephen Strachan.

How could he be adding to the surplus Francesca, reportedly said, when a planned new 207-hectare development was pre-contracted to winemakers. And Strachan acknowledged that there can specific needs to be met – especially when we look at where demand might be in four or five years.

Writing in AWBC publication, ‘Wine Australia’, head of Hardy Wine Company, David Woods called the uneven spread of the glut a structural imbalance.

He wrote, “Approximately fifteen to twenty per cent of wine sold globally can profitably afford to come from what we loosely call cool climate regions, but in Australia currently as an industry forty per cent of our production from the last two vintages has been cool climate”.

In a nutshell that means that we have too many of our vineyards in high cost regions and not enough in low cost regions. Since winemakers produce to specific prince points, then they’ll pay only what that price point demands.

All of which says that for consumers vintage 1996 ensures that the good times will continue to roll. We can look forward to low prices for the foreseeable future.

But for uncontracted growers — or even those with contracts that allow lower tonnages or lower prices – it’s been another disastrous year.

Copyright © Chris Shanahan