To track the advances in the South Australian resources, forestry, agri-food and wine industries, PIRSA has
developed a series of Industry ScoreCards, which capture the key value-chain measures, covering the production,
processing, export and consumptions stages for each key product. This report outlines the 2009/10 findings for SA’s
grape and wine industry, measuring progress against industry plan targets and across key South Australian Strategic
Plan Targets.
1. OVERVIEW - GRAPE & WINE SCORECARD RESULTS FOR 2009/10
The South Australian grape and wine industry continues to experience challenges, with Table 1 and 2 highlighting
declines over the year across all key performance indicators including: production, wine making, exports and
consumption.
Table 1 SA Wine ScoreCard - Value-Chain - Change over Year to 2009/10, Value $million
Value-Chain 1. Farm Gate 2. Wholesale 3. Overseas
Value of Grape Value of Wine Exports
Production
Made
4. Net Interstate
5. Retail &
Sales + Change in Hospitality
Stocks
Consumption
6. Gross Wine
Revenue (Sum of 3
to 5)
2009/10
$456.9 m
$1,548 m
$1,326 m
$40.2m
$508m
$1,873 m
Change over - $29.8 m
year
- $466m
- $250 m
- $73 m
- $9m
- $333m
% Change
over year
-23%
-16%
-65%
-2%
-15%
-6.5%
Table 2 SA Wine ScoreCard Change of tonnes over the Year from 2008/09 to 2009/10
Change of tonnes
Grape Production
(tonnes)
Wine Making (million
litres)
Overseas Exports Interstate Trade & Change
(million litres)
in Stocks ( m litres)
2009/10
730,628
505,611
453
40
Change over year
- 27,600
- 13,986
4
- 74
% Growth over year
- 0.04 %
-3%
1%
-184%
Tables 1 and 2 show declines across most of the Wine ScoreCard’s value-chain measures over the year:

Grape Production values fell by 6% to $457m, following 0.04% fall in volume to 730,628 tonnes, and a further
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



drop in average prices from $666/tonne to $625/tonne (down 6%);
Wine making values decreased by 30% to $1.5b, with volumes down 2.8% to 506m litres;
Overseas Exports volumes up by 1 % to 453m litres1 due to the strong demand for cheaper wines. Despite
increase in volumes, export values down by $250m (-16%) to $1.3b.
Local Consumption values fell by $9m (down 2%) to reach $508m.
Interstate Sales/Stocks have fallen by $74m over the year.2
The decline in the value and volume of wine making in the State has been exacerbated by declining grape and wine
prices. Given the importance of export markets to the local wine industry, the dual constraints of a high and rising
Australian dollar, combined with abundant world wine market supply, means that the short to medium term outlook for
grape and wine prices remains poor.
2. GROSS WINE REVENUE - falls by 15% to $1.9 billion
The ‘headline’ Gross Wine Revenue (GWR) figure measures the ‘final’ values of wine either exported or consumed in
SA. In this way GWR is the sum of SA retail and hospitality sales3, overseas exports and combined interstate exports
and changes in wine stocks.
In 2009/10 GWR reached $1.9b, a fall of $333m or 15% over the year. In combination with Gross Food Revenue of
$12.4b, the total food and wine revenue to the State reached $14.3b. The wine industry contributed around 13% to
this total.
In 2005, the wine industry strategy, Wine: A Partnership 2005-2010, set a goal for GWR to reach a target value of
$3.1b by 2010. Due in significant part to the shift in world wine markets, this target has clearly not been reached.
Figure 1 outlines the composition of Gross Wine Revenue for 2009/10 showing that 71% of the total value was
generated through wine exports.
Figure 1 2009/10 Gross Wine Revenue: $1.9 billion
Source: Wine Scorecard 2010
While GWR measures the total turnover (including all inputs) associated with grape and wine sales, recent analysis
1
Export and Import values are based on ABS Trade data (unpublished) using detailed 8 digit AHECC data.
Note: slight differences in values between the ABS wine export data and other sources may be possible from time to
time.
2
Net interstate sales and wine stock changes are calculated as a residual or balance item between wine
production and local consumption for a given period, taking overseas trade into consideration.
3
GWR includes imports into the State, valued at an estimated $36.4m based on apportioned national wine
imports.
2
by Econsearch4 enables comparisons between these revenues and expected outputs from the various sectors
associated with grape and wine making. From this work, it is estimated that the direct value-adding from the State’s
farm based grape growing sectors, wine making, trade, and wine retail and services sectors has contributed around
1.4% to total Gross State Product (GSP) over 2009/10.
3. GRAPE PRODUCTION - SA produced 731 thousand tonnes of grapes worth $457m (farm
gate)
Over the 2010 season, South Australian grape growers produced 731 thousand tonnes of grapes worth $457m.
Grape Production values fell by 6% (down $30 m) over the year. In contrast volumes of grapes produced fell by a
more modest 0.04%. As with the previous season, in 2010 around 3,590 ha were left on the vine or dropped on the
ground at maturity.
Currently in SA there are over 73,4095 hectares of wine grape producing vines, with average yields estimated at 10.2
tonnes per hectare. With unseasonal hot conditions in the early part of the season, and ongoing restricted water
allocations, SA grape production remains significantly lower than the production potential (estimated at around
900,000 tonnes based on 2004/05 output).
The average grape price (weighbridge) in 2009/10 was $625/tonne,6 down $41/tonne (or 6.5%) from 2008/09. The
2009/10 average grape price was the lowest average price since ScoreCard records began in 1996/97. This decrease
has resulted in the value of production being well below the five year average of $ 532m, with the value of wine
production in 2009/10 totalling $ 457m. The rising Australian dollar and an apparent world oversupply of wine , has
led to a significant decline in the average wholesale value per litre of wine produced, down 21% from $3.88 in
2008/09 to $3.06 in 2009/10.
Figure 2 shows how the Farm Gate Value of wine grape production in SA has grown over the past decade and a half,
up from $367m in 1996/97 to a peak of $813m in 2003-047. Given lower prices, the 2010 vintage of 730,628 tonnes,
resulted in the Farm Gate Value of wine grape production falling to $457m8 in 2009/10.
4
Econsearch SA, Value-Added ScoreCard, 2010
5
ABS source, Vineyard estimates 2009/10 (cat.no.1329.0.55.002)
6
Average Grape prices are derived from the SA Winegrape Utilisation and Pricing Surveys. The Survey notes
that these prices exclude any bonuses or adjustments applied beyond the weighbridge, and therefore represents a
conservative estimate of total crop value. According to the 2006 SA Winegrape Utilisation and Pricing Survey: "There
is considerable variation in the pricing arrangements made by different wineries. For example, some wineries make
adjustment payments based on the average value per tonne reported in the survey and some pay quality bonuses
based on the end use of the product. These additional payments are not made in the reported figures. The average
price does not include any indication of the distribution of prices, or variables that go into individual contracts.
Therefore the average price should not be compared directly with any individual grower’s arrangements. ’’
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Grape Production volumes & values are estimated using estimates from the ABS Vineyard estimates
2009/10, and regionally derived SA Wine Grape Utilisation & Pricing Survey, Phylloxera & Grape Industry Board SA.
3
Figure 2 Volume and Value of SA Grape Production, 1996/97 to 2009/10
Figure 3 highlights the declining fall in average SA grape prices from 1996/97 to 2009/10. By way of comparison, over
this period the lowest average price level of $625/tonne in 2009/10 is almost half the highest average price of
$1,111/tonne in 2000/01.
Figure 3 Grape Prices (Farm Gate), $/tonne, 1996/97 to 2009/10
SA’s wine grape production is divided between seven Geographical Indicator (GI) zones. Figure 4 shows both the
volumes and values of production across the State, with that the majority of production volumes associated with the
Lower Murray region, while values are more evenly distributed across the five zones ranging from Lower Murray with
21% of the total production value to the Mount Lofty Ranges with 14%.
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Figure 4 SA Wine Production by Region, 2009/10 – Volumes and Values
Over the year, regional variances in production values were significant, with a strong decline in the Lower Murray
(down by 31%) and in the Limestone Coast (down 7%), not able to be offset against increases in the Barossa (up
20%) and the Fleurieu (up 7%). In contrast, changes in the volume of production included falls in the Lower Murray
(down 10%), which were offset by increases in the Fleurieu Zone (up by 13%), Barossa Zone (up 28%) and Mount
Lofty Zone (up by 9%).
4. WINE MAKING - fell by 30% to $1.6 billion
Following trends in grape production, the wholesale value of wine making in the State fell by $466m (down 30%) to
reach $1.6b over the year.9 In value terms this represents the lowest wine making total since 1998/99. The decline
over the year in average wholesale wine prices down 29%, caused most of the resulting fall in values. By way of
comparison the volume of wine produced in 2009/10 was around 506m litres, a decline of 14m litres or -3%.
Nevertheless, the significance of value-adding in the grape and wine sector is such that for every $1 worth of grapes,
$3.40 of wine is produced. By way of comparison, the average value-adding ratio for the agri-food sector is around
1.4.
Figure 5 shows the trends in wholesale value for wine produced in South Australia since 1999/2000, with the share of
bulk wine highlighted in the dashed pink line.
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The value of wine processed (measured in wholesale prices) has been estimated by calculating the share of
grapes going into bottled and bulk categories and then estimating separate per-litre values based on input grapes and
cost inputs. Wine costs have been derived from various Deloittes ‘benchmark’ estimates for different scale wineries.
5
Figure 5 Value of SA Wine Processing, $m, 1999/00 to 2009/10
Figure 5 shows fluctuations in the bulk-to-bottled wine ratio depending on market demand and season. During
2009/10 around 36% of all SA grapes were used for bulk wine, producing around 181m litres of wine worth an
estimated $231m (or 15% of the total value). The majority of grapes 64% are used in bottled wine, valued at $1,317m
wholesale.
5. OVERSEAS TRADE - EXPORTS fall by 19% to $1.3 billion - Imports fall 2% to $36.4m (FOB) 1
Despite a marginal increase in the volume of wine export sales (up 1%) to 453 m litres, SA’s value of wine exports fell
by over $250m (19%) to reach $1.3 b in 2009/10. Over 2009/10 SA Wine exports comprised 19% of total SA
Merchandise trade worth $8.1 b. As such, wine exports represent a significant contributor to achieving the SASP
Target T1.14 of $25 billion in state exports by 2014.
With volumes stable, the decline in export values is due to a significant drop in average wine prices, down 20% to an
average $2.93 per litre (FOB). This level remains the lowest level since ScoreCard records commenced in 1996/97.
The decline in returns can be closely aligned to the sharp appreciation of the Australian currency, up 18% to an
average 88.2c against the US dollar. In a trend sense the extent of the AUD appreciation over the past decade is
significant, up by 72% from 51c in 2001/02 to 88c in 2009/10.
Figure 6 below shows a timeseries of the composition (red and white) of wine export value since 1996/97.
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Figure 6 Value of SA Wine Exports, $m, 1996/97 to 2009/10
Source ABS Trade Data 2010
Figure 6 shows that In 2009/10 the red wine export sales made up two-thirds (64%) of total value, with white wine
(33%) and other wine (fortified wines) making up the remainder. While the share of red/white wines remains relatively
constant, a significant shift has occurred in the composition of bulk wines in the export total. Since 2006/07 bulk wine
as a share of total wine export volumes has grown from 28% to 36%.
Figure 7 shows the main destinations of wine exports from SA over 2009/10. SA exported wine to over 120 countries,
up from 90 countries in 1996/97. Both the United Kingdom (UK) and the United States of America (US) remain the
key export destinations for SA wine, comprising more than half (51%) of total SA wine export value. However,
following increased competition, the value of wine exports to the UK and US declined by 36% and 26% respectively
over the year.
In contrast growth in wine exports to China (including Hong Kong) increased rapidly over the year, to become SA’s
fourth biggest export market (representing over 8% of the total value). In 2009/10 the value of wine exports to China
increased by 25% to over $101m. Contrary to most other destinations, the average price per litre of wine exports to
China also increased over the year, up from an average $1.53 per litre in 2008/09 to $3.67 in 2009/10.10
In 2009/10 around 5.5 million litres of wine worth $36.4m was imported into South Australia11. Despite a 14%
increase in the volume of imports over the year, the value of wine imports has declined slightly (down $0.7m, or 2%).
While the size of overseas imports of wine appear negligible compared with exports, import growth has been
significant. Over the past 5 years, the value of imports has doubled, with import volumes increasing by around 27%
per annum.
10
Average price estimates for exports to China have fluctuated markedly over the past 5 years
11
ABS Trade Data, unpublished. Imports are derived using National wine imports (volumes and values)
apportioned on a population share basis.
7
Figure 7 SA Wine Exports by Destination, 2009/10 % Share of $1.3 billion
6. INTERSTATE TRADE AND CHANGES TO WINE STOCKS12 - falls 65% to $40million
Net interstate exports and change in stocks13 declined by $73m (65%) to reach $40m in 2009/10. The significant
change in interstate trade/stocks reflects a continued reduction in stocks following high volumes retained in the
2008/09 period.
7. SOUTH AUSTRALIAN CONSUMPTION VALUES - falls 2% to $508 million
Despite a relatively small share of SA wine production that remains onshore, domestic consumption of wine remains
an important component of the local grape and wine value-chain. With falls in average wine prices, local consumers
have enjoyed the benefits of comparatively cheaper wine. However, this has, in turn, reduced values consumption,
fallen modestly over 2009/10 to $508 m (down from $517m in 2008/09).
8. SUMMARY AND OUTLOOK
Over 2009/10 the SA Grape and Wine Industry has continued to face challenges, including: an ongoing apparent
12
These values are derived using an average wholesale processed price used with the remaining volumes of
wine production that is neither
estimated to be consumed locally nor exported overseas. Local consumption is estimated using the average
Australian apparent consumption of wine 29 litres per person multiplied by estimates of our local population size 1.6
million).
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world oversupply of wine; high exchange rates; rising costs of production; and continued water use restrictions. The
effect of the apparent global oversupply is expected to continue to put ongoing pressure on the value of the Australian
exports, detrimentally driving grape and wine prices down, and ultimately affecting the profitability of South Australian
grape growers and wine makers. In recognition of the significant challenges facing the sector, the industry has led
substantial restructuring by both grape growers and major wine companies and their assets across the State.
While significant progress to the SA Wine Plan target was achieved in previous years, shifting patterns of world
demand, combined with a sharply rising Australian dollar has meant that the 2010 GWR target has not been
achieved.
Despite these challenges, SA continues to export near record level volumes of wine at over 450 million litres. While
average export prices have fallen by almost 30% over the past 2 years, there is evidence that the local industry has
adapted to changed market conditions, by greater bulk wine sales and in particular through targeting emerging market
opportunities like China. Exports to China now represent almost 1 in every 15 cases of SA wine sold, with China
accounting for almost 8% of SA wine exports to now be SA’s 4th largest market.
For further information please contact Rob Esvelt.
Industry Strategy and ScoreCards
Corporate Strategy and Policy Branch
PRIMARY INDUSTRIES AND RESOURCES SA
November 2010
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