De Bortoli’s managing director, Darren De Bortoli says there is talk of 330 million litres of Shiraz with no market.
As news spreads that De Bortolis, the Rutherglen region’s largest wine producer, was ripping out vineyards, smaller winemakers say they are largely protected from a global oversupply of red wine, which is turning the industry on its head.
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Managing director, Darren De Bortoli said the impact was being felt across the world, especially in the Shiraz market with talk of 330 million litres unable to be sold.
“We had a very large exposure to Shiraz plantings in Rutherglen,” he said.
“It was by far the biggest planting and when the excesses started to hit, it caused significant issues.
“In some cases, the vines were old and past their economic life, so it made sense to make adjustments now.”
Shiraz has been hardest hit in a global downturn in red wine consumption.
Photo by
Chris Boswell
In March last year, China officially removed anti-dumping and countervailing duties on Australian bottled wine after more than three years of high tariffs, some as high as 218.4 per cent.
In 2019, there was a zero tariff on Australian wine, giving local winemakers a 14 per cent advantage over competitors.
“China was going gangbusters and willing to pay significantly higher,” Mr De Bortoli said.
“It created a planting boom of those varieties we now have a problem with; and then they pulled the plug on us.
“The tariffs effectively banned Australian wines, and we were stuck with very expensive wine in tanks we can’t find other markets for.
“Then covid disrupted supply chains.”
When China lifted tariffs last year, it was expected to provide relief to the Australian wine industry and potentially lead to a recovery in exports.
However, oversupply and a shift in international demand means the recovery has not been what winemakers hoped for.
Chinese tastes had moved away from red wine to white and globally, people were drinking less.
Chinese demand for wine has shifted from red varieties to white.
Mr De Bortoli said the proportion of vineyards being pulled out in Rutherglen was “not insignificant” but unlikely to have an impact locally.
Moving forward, the company will focus on other varieties and invest more into its cellar door and local infrastructure, potentially benefitting the Rutherglen economy.
Sales of Prosecco and Rosé are booming with De Bortoli’s King Valley prosecco range showing a 23 per cent increase in the 2024 financial year over the previous year.
De Bortoli’s Rutherglen winery is ripping out its Shiraz vines.
Chris Pfeiffer from Pfeiffer Wines in Wahgunyah said smaller winemakers in the Rutherglen wine region were less impacted than the larger producers, which were more exposed.
“De Bortolis is one of the top 20 companies in Australia, so they feel it a lot more,” Mr Pfeiffer said.
“Everyone else here is, at best, at the small end of medium, so we’re protected to a degree.”
Rutherglen’s boutique wineries focus mainly sell direct to consumer through cellar door sales and wine clubs.
But constant downward pressure on pricing is hurting winemakers, with electricity prices rising by four per cent on July 1 along with labour costs.
Wine is one of Australia’s most competitive industries with 2500 wineries and Mr Pfeiffer said the consumer had been seeing the benefit for some time without realising it.
He said 40 years ago, a bottle of chardonnay was $8.50 with no taxes.
Today that would sell for $25, with 30 per cent in taxes.
“The price has doubled but wages have gone up 350 per cent,” he said.
“That’s the pressure on us as an industry.
“We’re very lucky in Rutherglen that we’ve built events like Roam and Taste that maintain a profile for the district and helped our direct-to-consumer base.
“ When you are the size of De Bortoli’s, you have to respond to what the market is telling you.”
