By Peter Hobson

GRIFFITH, Australia (Reuters) – Thousands and thousands of vines are being destroyed in Australia and tens of tens of millions extra should be pulled as much as rein in overproduction that has crushed grape costs and threatens the livelihoods of growers and wine makers.

Falling consumption of wine worldwide has hit Australia significantly onerous as demand shrinks quickest for the cheaper reds which might be its largest product, and in China, the promote it has relied on for development till current years.

The world’s fifth largest exporter of wine had greater than two billion litres, or about two years’ price of manufacturing, in storage in mid-2023, the latest figures present, and a few is spoiling as house owners rush to eliminate it at any worth.

“There’s solely so lengthy we are able to go on rising a crop and dropping cash on it,” mentioned fourth-generation grower James Cremasco, as he watched clanking yellow excavators strip out rows of vines his grandfather planted close to the southeastern city of Griffith.

About two-thirds of Australia’s wine grapes are grown in irrigated inland areas equivalent to Griffith, its panorama formed by vine-growing strategies introduced by Italian migrants arriving across the Nineteen Fifties.

As main wine makers equivalent to Treasury Wines and Carlyle Group (NASDAQ:)’s Accolade Wines refocus on costlier bottles which might be promoting higher, the areas round Griffith are struggling, with unpicked grapes shrivelling on vines.

“It looks like an period is ending,” mentioned Andrew Calabria, a third-generation winery proprietor and wine maker at Calabria Wines.

“It is onerous for growers to look out the again window and see a pile of grime as an alternative of vines which have been there so long as they’ve identified.”

Close by, the stays of 1.1 million vines that when comprised considered one of Australia’s largest vineyards had been piled in heaps of gnarled and twisted wooden so far as the attention may see.

Crimson wine has suffered essentially the most. In areas like Griffith, costs of the grapes going into it fell to a median of A$304 ($200) a ton final yr, the bottom in a long time and down from A$659 in 2020, information from business physique Wine Australia present.

The federal government, which forecasts decrease costs once more this yr, mentioned it recognises the numerous challenges going through growers and is dedicated to supporting the sector, although many growers say it will probably do extra.

Cremasco mentioned a few of his purple grapes bought for little greater than A$100 a ton.

To steadiness the market and carry costs, as much as 1 / 4 of the vines in areas equivalent to Griffith should be pulled up, mentioned Jeremy Cass, head of Riverina Winegrape Growers, a farmers’ group there.

That may destroy greater than 20 million vines throughout 12,000 hectares (30,000 acres), Reuters calculations based mostly on Wine Australia information present, or about 8% of Australia’s whole space beneath vine.

Growers and winemakers in different areas have additionally been pulling out vines.

“If half the vines in Australia had been ripped out, it nonetheless may not clear up the oversupply,” mentioned a wine maker in Western Australia.

Nonetheless, many growers unwilling to drag up vines are dropping cash whereas hoping for the market to show round.

“It is chewing up wealth,” mentioned KPMG wine analyst Tim Mableson, who estimates that 20,000 hectares (49,000 acres) of vines have to be taken out nationwide.

GIVING IT AWAY

Well being considerations are prompting shoppers worldwide to drink much less alcohol and once they do drink wine, they choose pricier bottles.

Chile, France and america are among the many different massive wine producers additionally grappling with oversupply, with even prime areas equivalent to Bordeaux uprooting hundreds of hectares of vines.

When China blocked imports throughout a political dispute in 2020, Australia misplaced its largest wine export market by worth. And in contrast to Europe, it affords farmers no monetary help to assist them destroy vines and extra wine.

Though China is anticipated to permit imports once more this month, that won’t mop up the glut, as demand there has fallen far more quickly than elsewhere.

Wine bought for lower than A$10 a litre – most of it constituted of grapes grown in areas like Griffith – accounted for two-thirds of the worth of Australian wine exports price A$1.9 billion within the yr to December 2023, Wine Australia says.

Some areas are faring higher, equivalent to Tasmania and the Yarra Valley in Victoria, which produce extra white wines and lighter, costlier reds which might be rising in reputation.

However throughout Griffith there are clusters of metallic storage tanks, every holding hundreds of litres.

“Everyone seems to be attempting to clear wine,” mentioned Invoice Calabria, Andrew’s father, including that wineries had been “all however giving it away” to make room for the incoming classic.

Many growers are turning to citrus and nut bushes as an alternative.

Cremasco hopes for better earnings from the prune bushes he’s planting in his grubbed-up acreage, whereas GoFARM, a company, is placing in additional than 600 hectares (1,500 acres) of almonds close by, additionally changing vines.

“There will be no subsequent technology of household grape growers,” Cremasco added. “It’s going to be all massive corporates, and all of the native younger guys might be working for them.”

($1=1.5225 Australian {dollars})