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Price pressures impacting on SA wine industry

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A recent analysis carried out by the Wine Grape Council of South Australia has found that grape buyers are starting to move away from white wine grape varieties in favour of reds due to price pressures.

Inclusive of interviews with South Australia’s 17 largest wineries, the analysis set out to uncover how wineries in the state are responding to changing market conditions.

Project consultant, Sandy Hathaway states that high competition from New Zealand white wine producers is having a significant impact on the sales of Australian varieties, and that to ensure supply and demand trends are being met, grape growers must work closely with wineries, ABC News reports.

"It's just too difficult for an Australian chardonnay in the $10 or lower price point to compete with a New Zealand sauvignon blanc, so unfortunately they're pulling out of that market to a large extent," Hathaway told ABC News.

"The winery is not the end user of the product. They are also constrained by customers, so the message to growers is to understand that whole value chain and see where they can make the best contribution they possibly can, so that the product that they're contributing to has a competitive advantage and can be sold at a competitive price."

In addition, the survey also found that price constraints have resulted in selected wineries steering away somewhat from premium grape varieties.

"For example, if you were a grape grower in the Barossa Valley, shiraz from that region was becoming too expensive - there will come a point where wineries won't be able to afford it," Ms Hathaway says.

"A winery might be making a commercial product with a small quantity of premium region shiraz, but if that price rises too much, that amount might be reduced."

photo credit: rkramer62 via photopin cc

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