Grape Glut Forces Aussie Growers to Sell Vineyards

     Twenty vineyards in southwest Australia worth a total of at least $80 million are on the books of just one commercial real estate agent, who says “managed investment schemes” are largely to blame.

     Brian Moulton, director of Acton South West, said contracts to supply grapes that had been canceled by some of the big national winemakers also had forced some of the sales.

     “In a nutshell, there are probably about 2,000 tons of fruit in WA that haven’t got a place to go,” Moulton told The West Australian.

     “The people who are good at their job, and the (owners of) well-known labels in the Margaret River region and other regions, grow their vineyards to suit their market. But you get an MIS that suddenly says they are going to produce 2,000 tons of fruit and they don’t know where they are going to sell it.”

     It is expected that more vineyards will come onto the market once the effects of the collapse of Great Southern and Timbercorp filter through.

     Moulton said the number of vineyards being put on the market had increased in the past few months.

     “It is due to a combination of things,” he said. “Quite a lot of the big wine institutions Australia-wide have canceled contracts or not renewed contracts for fruit. So people who have vineyards suddenly haven’t got a contract for fruit this year or next year.”

     A number of people had bought a vineyard as an investment and had a five-year plan.  “They have suddenly said enough is enough,” he said.

     And several were about to be put into the Australian equivalent of foreclosure in the next couple of weeks, forcing the sales.

     The price for grapes had fallen dramatically because of over-supply. Grapes for red wine were being sold in some areas for $0 to $600 a ton, whereas it cost $800 per ton to produce them.

     “The strong ones in the area, especially Margaret River — which are well positioned and have good, strong labels and good markets — are doing quite well,” Moulton said. “It is just the people on the fringes.”

Posted in The Wine Business
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