Meininger’s: Do you believe this is merely a bad moment for Australia or will there need to be some essential changes in the industry?
Hornabrook: Make no error, this is a disastrous moment for an extremely considerable part of the Australian white wine market. There’s wine manufacturers getting in voluntary administration, warm environment grape growers with their head in the sand, investing upwards of AU$ 7,000/ ha not understanding they’re going to get less than AU$ 3,000/ ha earnings in June 2023. What’s worse is you have State farming authorities checking out white wine areas talking about “flood relief assistance” – without any mention of how they’re addressing the “white wine flood crisis”!
With higher rate of interest, lower margins and lower sales we’re anticipating cashflow to become important and perhaps loan payment defaults. It’s a fact, the only factor there hasn’t yet been a financial collapse yet is since the banks have not revalued wineries’ underlying properties and proceeded insolvent trading – however it’s possibly a ticking time bomb.
I can’t help however feel if this was taking place in practically any other nation there would have been widespread loud protests on the inaction by industry authorities and Federal government. Part of the issue is the Australian market is not unionised and, without any singing uprising, the Federal government has no inspiration to financially assist and facilitate a plan to support the grape growing and winemaking heart of the industry.
It will need a structural reset for a big share of the Australian white wine industry to make it through, and once again flourish. However, prior to that, grape growers and wine makers need to seriously and relentlessly lobby authorities and buyers similarly. The 2023 harvest starts in less than two months!
Australia can’t sustain producing its present level of grapes, it no longer has the international competitive advantage it once had – quality, variety, organic and sustainable viticulture is the way forward, with a boost in white to red varietals needed. Production from the existing 150,000 ha of vineyards (throughout warm and cool climate regions) requires to decrease by 25% through lower annual yields to somewhere in between 1.1 – 1.5 m tonnes each year, below the record yield of 2m tonnes in 2021.