Australia 2007 — a vintage to end the surplus, or vintage from hell?

The 2007 vintage ends a difficult season for wine makers in which drought, frost and bushfire trimmed the national grape harvest by hundreds of thousands of tonnes. But the small vintage, harsh as it will be financially on many winemakers and grape growers, appears to have brought a profit-sapping surplus to an end.

Visiting Canberra recently, Barossa vigneron Grant Burge called 2007 ‘the vintage from hell’. He said he’d ‘never seen anything like it. Reds are down in volume by seventy per cent and whites by thirty five per cent’.

From Nagambie Lakes in Victoria’s Goulburn Valley, Tahbilk’s Alister Purbrick writes, ‘I wrote to you last October with a good news/bad news letter in regard to the effect of the frost on our and other Victorian vineyards. I predicted a crop loss of 50% – the bad news is that it is more like 70-75%.

The good news – the Australian wine industry will be down around one million tonnes (720 million litres) which will not only use up all 2005/2006 bulk wine excesses held in tank (450million litres) but will leave the industry in a grape shortfall situation ongoing, which will hopefully lead to a more stable marketplace, less discounting and some restoration of margin and profitability to winemakers’.

In his newsletter Tappenings, vigneron Brian Croser goes straight to the cause of the harsh seasons, ‘El Nino, the cyclic weather phenomenon of the Pacific Ocean and not global warming, was responsible for the “drought of the century”, a predictable by-product of which was the clear sky, dry soil, radiation frosts that ravaged a good proportion of Australia’s fine wine vineyards. The likelihood that Australia’s 2007 vintage is 1.3 million tonnes, only 65% of the exaggerated average of the past three vintages is good and bad news; bad news for the frosted victims, good news for the balance of supply to match the demand for Australian wine’.

While Croser, like Purbrick, sees an opportunity for the industry to return to financial health, he adds an important caveat for vignerons, “The intrigue of scarcity will again increase the respect for quality among fine wine consumers who will be willing to pay more and this time around the vignerons should respond by reinvesting in quality rather than quantity’.

The Australian Wine and Brandy Corporation’s April estimate of the vintage size (based on a survey of company’s responsible for about 85 per cent of Australia’s grape crush) puts the harvest at 1.34 million tonnes, 560 thousand tonnes less than in 2006 and the lowest since 2000.

The AWBC estimates that the white crush fell by 17 per cent to 702 thousand tonnes and the red crush by 39 per cent to 639 thousand tonnes. Their report also notes 2007 as the lowest yielding vintage – in tonnes of grapes per hectare of vines – since 1976, attributable to drought, frost and bush-fire taint.

And the low yields are likely to continue in 2008 because of ‘poor development of the primordial buds (next year’s fruiting buds that sit behind those that flower and bear fruit this year) …together with expectations of reduced amounts of water available for irrigation in the warm inland districts…’

Press releases from various Australian regions tend put the best spin they can on a tough vintage. But none has the poignancy of this note from De Bortoli about Victoria’s King Valley, ‘Disaster. Frost, drought and no water from the King River to irrigate, decimated the region. The bush fires imparted a smoke taint on the small crops that were salvaged, making the fruit virtually unusable. We look forward to a normal season in 2008’.

And what about quality? Well, as in any vintage, big or small, generalisations are not helpful. In the Yarra, for example, vineyards on the valley floor copped a hammering from spring frosts, while many on elevated sites produced reasonable volumes and good quality.

In the Barossa last week on what was admittedly a very short visit, winemakers tended to favour whites over reds – and I tasted some convincing Eden Valley and Clare rieslings. But the reds are mostly in the ugly malo-lactic fermentation stage, making it hard to gauge quality.

Those who’ve seen it all before reckon there are some great parcels out there, albeit in small volume. For example, former Grange maker, John Duval, says “Although the quantity is down overall, I’m really very pleased with the shiraz, grenache and mataro from this vintage.”

The sudden shift from surplus to shortage, though, has already firmed up bulk wine prices and is quickly slurping up the hangovers from 2005 and 2006. While competitive forces will almost certainly mitigate retail price rises, they’ll begin to hit before too long, starting with white wines.

But when the red increases begin, as they must, the sheer scale of shortage in the 2007 vintage suggests heftier price rises in store than for whites.

Perhaps the first to be hit by the shortage will be the burgeoning clean skin trade. It’s been around for many decades, of course, and rises and falls with supply. But several years of dramatic oversupply have probably given it a false sense of permanence.

The message for drinkers? Don’t panic. Australia’s not running out of wine. But as prices are likely to firm — and stay firm for the next few years — it might pay to grab an extra case of red here and there when the quality/price ratio is right. And if the going gets too tough, imports will fill the gap.

Copyright © Chris Shanahan 2007