Domestic price of wine grapes

IBISWorld expects the domestic price of wine grapes to inch downwards by 0.7% in 2024-25, to reach $590.70 per tonne. Weak demand and extensive red wine inventories from previous vintages have maintained low red wine grape prices in warm inland regions. White wine grape prices are projected to remain stable, with the exception of Chardonnay, which is forecast to edge upwards thanks to stronger consumer demand. Reduced wine demand has caused an oversupply of wine grapes, which will continue to place downwards pressure on the domestic price of wine grapes in the current year.

Wine producers are wine grape producers' only downstream market, since grapes grown for winemaking are unsuitable for consumption as table or dried grapes. Consequently, demand from wine producers plays a major role in determining wine grape prices. The decision by the Chinese Government to impose tariffs of up to 212% on Australian wine in November 2020 significantly influenced demand, especially for red wine grapes. Demand from wine production plummeted over the past five years, as China was the largest export market and one of the largest markets overall for Australian wine before the tariffs were introduced. Reduced demand and excess supply have weakened wine grape prices over the past few years. The Chinese Government has removed heavy tariffs on Australian wine in March 2024, yet wine consumption and the import market for wines in China have shrunk dramatically in recent years.

Demand for Australian wine has reduced through the end of 2023-24, while demand for wine grapes has slightly increased. Over the past five years, an appreciating Australian dollar and the commencement of export tariffs to China have contributed to weakened export demand, cutting into domestic wine grape prices. According to Wine Australia, commercial wine export volume and value have dropped with the global oversupply of wines over the past few years. Wine exports to China, the UK and the United States have all reduced, as have those to other countries, including New Zealand, Germany, Japan and the Netherlands. Growing consumer health consciousness and the cost-of-living pressures have constrained wine consumption and placed downwards pressure on domestic wine grape prices. Overall, IBISWorld forecasts domestic wine grape prices to decline at a compound annual rate of 3.4% over the five years through 2024-25.