Viticulture and Wine Sector Working Group - June 2024

Ministers’ Communique – Viticulture and Wine Sector Working Group

Ministers acknowledged the difficulties many wine grape growers and the broader Australian wine and grape sector are facing due to the oversupply of red wine grapes. This is a result of a range of factors including changing consumer preferences and trade disruptions, and has come at a time when the industry was dealing with a range of external threats, such as COVID-19 and natural disasters.

Ministers also acknowledged the actions taken by both Federal and State governments to date to support the sector. These include support to build demand through new markets, re-opening the China market, providing growers with the tools and resources to make better business decisions and providing a safety net of direct financial assistance for growers.

Acknowledging the oversupply is a national issue with most regions impacted to some degree, Ministers agreed to establish the Viticulture and Wine Sector Working Group. Ministers recognise that the working group responded rapidly to their request to visit regions most impacted by the oversupply. Ministers also acknowledge and thank all those from the wine and grape sector who have made valuable contributions to the work to date.

The working group has consulted with growers, winemakers, industry representative bodies, local councils, other key stakeholders and community members in each of the three inland regions, as well as engaging with impacted parties in other areas.

The working group heard diverse perspectives on the oversupply and possible solutions (attached) and provided a progress report to Agriculture Ministers out of session. Some suggestions were strongly supported by some stakeholders while strongly opposed by others.

Grape growers have expressed concerns about mental health challenges, financial distress and high debt levels, as grape prices for many are well below the cost of production. Growers have highlighted the need to manage red wine grape production levels and the need to support those wanting to exit the sector and/or diversify production. The need for better data to support decision making and transition to alternative crops, particularly around plantings, prices and supply and demand emerged as a key theme during consultation. Grape growers also raised concerns regarding representation and contractual fairness.

Winemakers highlighted opportunities to sell more wine as a key solution to the current oversupply situation and called for governments to assist in recovering their market share in China and diversifying and expanding Australia’s wine exports. Winemakers are also facing financial and mental health challenges.

Grape growers and winemakers had mixed views on whether government intervention, such as a vine pull scheme, is appropriate with concerns raised about the unintended consequences of such action.

The working group heard that some high value wine regions, such as those in Tasmania, are not currently impacted by oversupply issues. Nevertheless, any measures implemented to support the regions affected by oversupply should complement and support these high value regions.

The progress report also outlines existing activities in place and actions to assist the industry to manage the immediate financial and mental health challenges and longer-term actions to support improvement in the grape and wine sector and its long-term viability.

A key immediate action is the commissioning of a report from The University of Adelaide’s Wine Economics Research Centre to provide advice on how to move the sector to a sustainable supply-demand balance. The report will detail:

• Current situation
• Contributing forces: demand trends and shocks (global and domestic)
• Contributing forces: supply trends and shocks (global and domestic)
• Pros and cons of options for reducing the current over-supply of red wine stocks
• Ways of moving the sector towards a sustainable supply-demand balance

Ministers look forward to receiving the working group’s final recommendations to support improvement in the grape and wine sector and its long-term viability in July.

Referenced attachment:

The Grape and Wine Sector Long-term Viability Support Package was announced on 12 June 2024. Further details are available in the media release.