The state of the Australian industry economics and business profitability
in SA wine grape regions
Simon Berry
ASVO July 2015
1
Vineyard Profit
(Grape Yield* Grape Price) – Costs
SA Winegrape Crush Survey
Price Dispersion from AGWA
Cash costs modified from WFA Expert
Report
ASVO July 2015
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Yield*price (revenue) trend
Chart One: SA Winegrapes Farm gate Value
(Purchased Grapes Only) 1998-2014
$m
600
550
500
450
400
350
300
250
200
1998
2000
2002
2004
2006
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2008
2010
2012
2014
3
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4
Serious Decline in Revenue
• Minimal changes in vineyard area
• Largely driven by falling wine grape
prices
• Wine grape prices falling due to
reduced demand for wine and
profitability in that sector
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Riverland
• Can get details from WGCSA websites for
2014 and 2015 (soon)
• 2015 expanded Riverland report card to
seven varieties
• Riverland grows solid yields with
increases in last two years
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Riverland 2015 using $5750/ha costs
Average District
average
yield
price $/t
t/ha
Gross
Revenue
$/Ha
Profit $/Ha
Cabernet
Chardonnay
19.0
25.6
$331
$236
$6,289
$6,042
$527
$291
Colombard
38.8
$198
$7,682
$1,941
Mus. Gordo Bl
Pinot Noir
Riesling
Shiraz
24.1
25.1
17.8
21.0
$219
$365
$344
$314
$5,278
$9161
$6,123
$6,594
-$472
$3,407
$359
$840
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Analysis for thinking about V16
5 year ave
yield
t/ha
Break
even $/t
(Cost/Av.
Yield)
Difference: 2015 district
average & break-even price
Probable P/L by tonne is make
5 year average and prevailing
price
Cabernet
Sauvignon
17.2
$334
-$3
Chardonnay
23.2
$247
-$11
Colombard
35.3
$163
$35
Gordo
21.9
$263
-$44
Pinot Noir
22.8
$252
$113
Riesling
Shiraz
16.1
19.1
$357
ASVO July$302
2015
-$13
$12
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Brief Riverland Analysis
• 2015 Yields up 9% cf. 5 year average
• All but Muscat Gordo Blanco covered cash
costs on averages against estimated costs of
production
• White prices increased on average while reds
declined on average
• On five year average yields and current
average prices 92% of Cabernet and 88% of
Shiraz will not earn costs of production.
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Barossa Valley
• average 2014 vintage yield for five varieties
was nothing over 5.5 t/ha.
• Average 2014 fruit prices paid $1504, $535,
$1301, $514 and $1849 per tonne
• Using costs of $6750/ha, only Shiraz made
profit
• On average2014 was a grim P/L year, but the
Valley is humming with activity now
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Barossa Valley 2015 Report Card
• Tables then provide some insights
– Five year average yields changed, noticeably
Cabernet fallen,
– Only 4% of Shiraz tonnes grown below the cash
costs of production, compared to 49% in 2014,
yield and price benefit
– Overall average price increases but not for
Chardonnay
– Whites overall unlikely to be profitable on five
year average
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Barossa Snap shot
Using $6750 per
hectare
production costs
5 year
ave
yield
t/Ha*
Break
even $/t
Average
tonnes
divided
into costs
Difference:
Average
2015
Profit
district
Potential
average & Per hectare
break-even
price
Cab Sauv.
3.7
$1,838
-$30
-$111
Chardy
6.8
$999
-$419
-$2849
Grenache
4.8
$1,404
$91
$437
Semillon
5.5
$1,236
-$633
-$3481
Shiraz
4.7
$1,422
$715
$3360
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Cabernet Sauvignon WAP
Barossa
Clare
Coonawarra
L Creek
McLaren Vale
Riverland
Padthaway
Wrattonbully
2013
1277
1050
1556
2014
1504
1193
1594
2015
1808
1155
1520
889
1360
409
949
1147
767
1364
345
876
1142
833
1371
331
987
1177
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Trend
↑
↔
↓
↓
↑
↓
↑
↑
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Shiraz WAP
Ad Hills
Barossa
Clare
Coonawarra
L Creek
McLaren Vale
Riverland
Padthaway
Wrattonbully
2013
1586
1719
1288
1416
2014
1609
1849
1310
1409
2015
1901
2137
1266
1281
976
1677
396
994
1105
901
1659
341
887
992
898
1782
314
1017
1021
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Trend
↑
↑
↔
↓
↓
↑
↓
↑
↔
16
Chardonnay WAP
Ad Hills
Barossa
Clare
Coonawarra
L Creek
McLaren Vale
Riverland
Padthaway
Wrattonbully
2013
1219
573
627
659
2014
1245
535
650
719
2015
1269
580
740
636
516
592
291
674
681
490
559
218
546
757
462
685
236
615
753
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Trend
↑
↔
↑
↔
↓
↑
↓
↓
↑
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Sauvignon Blanc WAP
Ad Hills
Coonawarra
Langhorne Ck
Riverland
Padthaway
2013
1180
2014
1246
2015
1276
845
741
323
836
824
726
293
835
850
729
330
825
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Trend
↑
↔
↔
↔
↔
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All Varieties Price Trends V13-15 across
SA regions
Cabernet
Shiraz
Chardonnay
Sauv. Blanc
All
Falling
3/8
Neutral
1/8
Rising
4/8
3/9
3/9
0/5
9/31
29%
2/9
2/9
4/5
9/31
29%
4/9
4/9
1/5
13/31
42%
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Profit and Loss Impact in Management
sense – “starving the beast”.
What I see crossing my desk and in field
• Low fertility (P and K) and poor distribution of
key cations on CEC
• Sodium above 5%, needs gypsum
• Less manipulation, such as shoot thinning and
wire lifting
• Increased grazing (neutral, is a mgt option)
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Options taken continued
•
•
•
•
•
Skipping early sprays, causes big issues
powdery mildew
Rust and bud mites damage
Phomopsis
pushing the interval time of sprays, risk taking
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Unmeasured Perceptions
• In some regions lowering stewardship inputs
such as higher graded vineyards and potential
fruit value exhibit
– Declining yields
– Increased poor health, Eutypa, Phomopsis
– Reduced vigour and thus less renewal and less
yield
– Is combined stress adding to earlier budburst
– Late harvest and reduced carbohydrates
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