Wine prices predicted to rise following bushfires

Analysts are predicting that bushfire and smoke taint damage will lead to increased grape and wine prices in Australia.

"Australia continues to face an unprecedented bushfire emergency," notes the Rural Bank Insights Update - January 2020.

"This has devastated many farming and regional communities. Our thoughts are with everyone affected and we thank emergency services and volunteers for their tireless work in protecting and rebuilding communities.

"Wine grapes in both New South Wales, South Australia and Victoria have been impacted by fire and smoke.

"Direct fire damage has been more prevalent in the Adelaide Hills with almost one third of the region’s wine grapes damaged.

"In New South Wales and Victoria, it will take longer to assess the impact of smoke taint on this year’s vintage.

"Both scenarios have the potential to push wine grape prices higher in the coming months with flow on effects to wine export volumes and values in the coming year."

Rural Bank is a division of Bendigo and Adelaide Bank and provides a monthly analysis of production and pricing trends for Australian agriculture.

JPMorgan analyst Shaun Cousins said in a note to clients last month that there would be limited impact to aggregate crush volumes for the wine sector and value, yet there was likely to be added upward pressure to grape and wine prices.

“Initial press reports indicate that a third to half of the wine production in the Adelaide Hills (SA) has been destroyed. Adelaide Hills comprises roughly 1% of total Australian wine crush and wine value … suggesting a modest national impact although likely to add upward pressure on grape prices.”

Meanwhile, Wine Enthusiast noted: "In the coming years, grape shortages are expected to send prices through the roof and impact the entire region."

Smoke taint concerns

Adelaide Hills winemaker Brian Croser (below) remains optimistic about the current vintage.

"It might surprise many people to learn that this year is turning out to be a really, really good year for most wine districts in Australia," he told ABC News.

He said that while a small number of grapes were beyond redemption and would produce a strong flavour reminiscent of a wet ashtray, the vast majority of fruit would be suitable for winemaking.

"If you pay to pick it, we'll make it and then we can sort it out later," he said.

Regarding smoke taint testing, he said: "Testing is not foolproof — there's still a lot of suck it and see, or perhaps I should say sniff it and see."

Australian Grape & Wine's Tony Battaglene added that there were a broad range of issues facing winemakers: "Probably what people don't understand is the drought and the lack of water is probably having a bigger affect on the vintage than the actual smoke taint, so you need to put it in proportion."