Inflation pushes up wine prices

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“Production costs have increased significantly. We have a vintage where due to freight issues we were unable to ship the product overseas. It now takes seven months from order to delivery if you export,” Mr Battaglene said.

“The inflationary impacts haven’t really kicked in yet. But this is happening as we head into an oversupply situation with products stored in tanks. »

Endeavor Group chief executive Steve Donohue said the Victorian wine regions, in particular, are presenting themselves as a hot spot for price increases due to a vintage below expectations. As La Niña ravaged the east coast, the rain stopped over the Victorian border as the grapes ripened, producing a potentially excellent, albeit low-volume, vintage.

“Victoria was a little light. We’ll see this play out [in prices],” he said.

Endeavor Group owns the liquor chains Dan Murphy’s and BWS, but also operates a division in which it owns wineries, including Oakridge Wines in the Yarra Valley, and Chapel Hill and Krondorf in South Australia.

Domestic demand has remained robust throughout COVID, offsetting some of the pain caused by China’s decision to close its doors to Australian wine in 2020 on the grounds that large volumes were being dumped at anti-competitive prices.

China has become the top destination for Australian wine exports, accounting for 40% for the first nine months of 2020, according to Wine Australia. In one year, the value of exports had decreased by 97%, falling to $29 million.

Mr Battaglene estimates around 60% of the stock has found a new home, with the remaining 40% sitting in warehouses across the country.

Domestic travel within the state has also been strong with areas such as the Yarra Valley, home of Yarra Yering, attracting large numbers from Melbourne over the past couple of years keen to explore their nearby neighborhoods while fearful of traveling between states.

But even booming localized demand at the cellar door was not without its complexity, Ms Crowe says, with COVID restrictions requiring wine tasting to be done only while seated, with a new glass for each wine to taste.

This has, in some ways, been a blessing in disguise, Ms Crowe says, giving wineries the chance to reset expectations that tastings should be free.

Yarra Yering now charges between $35 and $50 for each tasting, which includes eight wines.

“The new format means the customer has a more intimate experience with our tasting room staff. They can sit with the wines instead of rushing through them. It’s more educational and enjoyable,” she says, adding that they’re more likely to be turned away by older customers who are used to free tastings.

The wine industry has weathered the uncertainty and unpredictability of recent years in relatively good shape, says Andy Gregory, chairman of the National Wine Show of Australia, which will host the rescheduled 2021 show in Canberra from May 10-18. .

“There hasn’t been a lot of good news in recent years. But the best news is that we still produce brilliant wine and have some of the best winemakers in the world a million miles away,” Mr. Gregory said.

As for the fortuitous 5% price increase for the 2020 vintage, Ms Crowe says it is unlikely to be enough to cover the long-term cost increase, as inflation and labor shortages undermine all aspects of production.

“It will not be enough in the long term. We had established the price rise before the price of fuel rose and it affects everything we do,” Ms Crowe said.

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