Tough times for wine industry
Grape glut affects prices
Darren De Bortoli, the head of one of Australia’s largest family-owned winemakers, says inland wine regions are in the worst shape he has seen in his 40 years of winemaking as economic pressures and grape overproduction threaten the viability of producers.
Inland wine growing regions such as the Riverina in NSW, Riverland in South Australia and Victoria’s Sunraysia were particularly struggling under the weight of a grape glut which was forcing down prices.
And while visitors to his family’s cellar doors and restaurants in the Yarra Valley, Riverina and the Hunter Valley are still flowing, they are spending less on food and leaving with significantly fewer bottles of wine under their arms as cost-of-living pressures drain household disposable incomes.
However, a silver lining for the De Bortoli wine group, founded by northern Italian immigrants Vittorio and Giuseppina De Bortoli in 1928, is proving to be huge demand for its range of lighter style and Italian wines coming out of Victoria’s King Valley and Yarra Valley with the winemaker’s prosecco and rosé growing at double-digit growth rates.
Some of this success was boosted by the launch of a range of wines in partnership with pop star Kylie Minogue that included a Yarra Valley pinot that won a number of wine awards. In 2022 the international pop princess through the association with De Bortoli created a chardonnay and pinot noir made in collaboration with De Bortoli Yarra Valley winemakers Steve Webber and Leanne De Bortoli.
But elsewhere the trading and agricultural landscape remains tough. Mr De Bortoli said inland winegrowing regions were facing tough conditions.
“In terms of those traditional inland areas, yes. So the Riverina, Riverland and Sunraysia, those traditional areas that seem to be struggling a bit … and I think for the inland particularly it’s the oversupply, with the reds especially,” he said.
“The industry is in a really tough space and it is the toughest I have seen in my 40 years.”
And he doesn’t expect those depressed conditions to improve much over the next year, with the only key source of optimism being a weak Australian dollar which is helping to support wine exports as well as a possible reopening soon of the Chinese market to Australian wine if punishing tariffs are dismantled.
Latest accounts for De Bortoli show a slight rise in annual sales to $159.86m for 2023, up from $149.79m in 2022, with its losses more than doubling to $9.33m.
The majority of its sales ($130m) were in Australia while there was a strong uplift in sales to Europe which almost tripled in 2023 to $16.67m. This was countered by slowing exports to the US and British markets.
The accounts show a large leap in costs of goods sold as well as marketing expenses, which combined rose about $16m, and helped contribute to the larger operating loss for the year.