Wine columnist RICHARD CALVER is surprised to see numbers that suggest the state of the wine industry is far from grim...

A man walks into a bar with an alligator on a leash. 

“Do you serve lawyers here?” he asks. 

“Yes”, says the barman. 

“Great”, says the man, “I’ll have a glass of red and a lawyer for my alligator, please.”

I THOUGHT the Australian wine industry was up to its ears in alligators caused by drought, the 2020 bushfires and resultant crop losses because of smoke taint, as well as topsy turvy outcomes in sales and marketing wrought by COVID-19. 

Richard Calver.

But it seems that the old cliché about clouds and silver linings may ring true. 

A recent edition of "Daily Wine News" reported: "Australian wine sales during 2019 to 2020 exceeded supply for the third year in a row impacted by drought conditions and bushfires in some regions of the country. This has led to the lowest stock-to-sales ratio in nine years and strengthening wine grape prices."

At the macro-level, this news item was summarising the Wine Australia report from March, which shows that Australian wine production in 2019-20 was just under 1.1 billion litres, 9 per cent below the previous year’s production and 10 per cent below the 10-year average. 

The good news was that the total volume of Australian wine sales in the same period was 1.2 billion litres. Just 40 per cent of that was sold on the domestic market. With 60 per cent being exported and a high percentage of exports going to Asia (just under a quarter) especially China, the emergence of the alligators in this financial year can’t be denied. 

That’s especially the case as it now appears that China is not just putting up fiscal barriers. In February, more than 11,000 litres of wine from two Australian producers were stopped in Shenzhen for alleged poor labelling and excessive use of additives.

At the micro level, stock-to-sales basically measures how quickly inventory is sold and then replenished during a period of time. The stock or inventory-to-sales ratio shows how much inventory you are converting to sales

Managing wine sales is like every other product: there is a balancing act between making enough sales and stocking enough inventory to meet customers' requirements. 

So, I asked John Ings, proprietor of Canberra Wine and Spirit Merchants, a retailer in Civic since 2019 who specialises in this district’s wine, about whether the macro-indicators translated to his business or his experience in selling Canberra wines.

“Our experience is that our stock levels are similar to where they were last year, but sales are substantially better," he said.

"I place orders every day and see them filled in about three days so I can keep a low stock-to-sales level. Online makes up about 30 per cent of our sales, which went from nothing this time last year. We decided to go online when covid hit. 

“A lot of the Canberra places have had to buy grapes from other places. For example Mada Wines and Mallaluka bought from the Riverland and others from all sorts of places to make wines in substantially the same style. For example, Mount Majura bought pinot gris grapes and others have supplemented their lack of fruit from other places. 

"People have been very inventive to keep their cash flow going. We’ve got a few holes where some didn’t buy in but obviously this pattern has increased the cost of grapes. Retail prices are directly affected by the wholesale price and there have been some price increases, but it hasn’t nudged up that much.

“The quality of the local wine is sensational at around the $25-30 price mark for artisan wines. I suspect that it's going to get better in size and reputation.”

"If you are in it up to your ears, keep your mouth shut." –Anon

 

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