Devil’s Advocate: It’s the Million-Litre Question. What Should Happen to Australia’s Excess Wine?

Robert Joseph suggests the best solution for the Australian wine lake is to drain it.

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Robert Joseph - the Devil's Advocate
Robert Joseph - the Devil's Advocate

Is anyone who's reading this interested in buying a million litres of 2021 and 2022 Australian Shiraz, Cabernet and Merlot? It tastes OK, apparently, and could be yours for just US$0.20 a litre.

This is not a frivolous or hypothetical question. I’m quoting almost directly from a message I received from a leading Australian broker who also has ‘a few hundred thousand’ litres of attractively priced New Zealand Sauvignon Blanc.

This query landed in my inbox as I was preparing to attend the UK’s first Festival of Georgian Wine at the beautiful old Dartington Trust in the southwest of the country. The cheapest red, white and amber wine on offer at that event would probably have cost 12 times the price of the Australian Shiraz if it were available in bulk. But it isn’t, because Georgia doesn’t really do bulk wine.

Moldova, another country I know pretty well, does do bulk — quite a lot of it in fact. But there is no way that its winemakers could compete with those Australian prices.

All of which is to say that we live in strange times where wines from Central and Eastern Europe are costlier than ones from Australia and France.

Who will buy all this wine?

Of course, one could reasonably say that this particularly cheap Southern Hemisphere red is a fire-sale offer that would not be available if the Chinese hadn’t slammed their door against Australian wine. Once the tariffs are lifted, possibly within the next few months, it will start to flow from Adelaide to Shanghai again, and bargain-basement prices will be an unhappy memory. At least that’s the hope. But nobody who has been looking at the data seriously imagines that the Chinese are going to buy anything like as much wine as they once did, whether Australian or not. At least not in the short term.

Nor does it appear as though the US or UK are going to take up the slack. Quite the opposite, given the falling consumption figures in both countries. Red wine for $0.20 may be a blip on the graph, but there will be plenty of $0.50 at the WBWE in Amsterdam this year, next year and, I suspect, the year after that and beyond.

So, where and how are we going to dispose of the cheap wine we can’t sell to our traditional customers? The obvious solution is the emerging markets of Asia, Africa and Brazil.

Cheap wine has a high price

Introducing new consumers to cheap wine will come at a cost. If it tastes ‘ok’, it will set the kind of low price-expectations whose consequences we have seen in European countries like the UK, Germany and the Netherlands. If, on the other hand, it is less palatable, the model may be China. For most Chinese, their first experience of wine was poor quality red from Bordeaux and elsewhere they were told was good for their health. Since 2013, as recent data-analysis by Kym Anderson shows, they haven’t been drinking nearly as much of it. Maybe they’ve simply discovered pills they believe to offer the same benefits.

Wine is not water, or milk or Coca Cola or even beer. Producing even the most basic red or white is harder and more susceptible to the changing climate. Selling it cheaply does little to convey that truth to the people who buy it. Instead of trying to get $200,000 for those tankfuls of excess wine, the Australian government would do better to follow the European model of funding its distillation. And the distillation of all the other similar batches of unsold stock. They would not only do the producers in their own country a favour; they would help the global wine industry as a whole.



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