Australia producing too many wine grapes

Bad news today for the Australian wine industry as national stock levels rise.

Wine production exceeded sales in 2024–25, leading to a rise of 5% in national stock levels, The Australian Wine Production, Sales and Inventory Report 2025, released by Wine Australia.

The worsening imbalance between supply and demand comes as global conditions for wine remain tough. 

Analysis of global market conditions suggests that the outlook for wine has deteriorated in the past 12 months. 

Global consumption has continued to decline and remains lower than global production. Consumption is forecast to decrease further in the next five years.

These unfavourable market conditions are compounded for Australia by the high stock levels carried forward from 2024–25. 

The increase in Australian wine stocks without an increase in sales is likely to reduce future demand for wine and wine grapes. As a result, grape prices are unlikely to improve in the next few years.

Results large winemakers in Australia indicated that total Australian wine production from the 2025 vintage was 1.13 billion litres, or 126 million 9-litre case equivalents. This was 9% higher than in 2024, but 7% below the 10-year average of 1.22 billion litres.

The production of red wine increased by 15%, while the production of white wine increased by 2%. 

Wine Australia manager for market insights Peter Bailey said that the result was expected, after the grape crush in 2025 increased by 11%, with nearly 90% of the additional tonnes being red.

“Production was still below the 10-year average, but it was the second vintage in a row where the crush increased from the 20-year low in 2023, despite the high levels of stock going into the 2025 vintage,” Bailey said.

Export sales increased by 3% to 638 million litres, driven by growth in exports to mainland China, which increased by 53 million litres to 85 million litres in the latest 12-month period.

Image: Andrii Omelnytskii, Scop.io

French government offers millions to support vine pull scheme

The French Ministry of Agriculture this week unveiled a rescue package for the country’s ailing wine sector that will include a €130 million ($231 million AUD) funding package to support vineyard removal.

It comes comes after grape growers protested in the streets of the southern city of Beziers calling for urgent government and EU support as the sector struggles with a combination of extreme weather conditions, soaring costs and falling sales, news hub the drinks business reported.

The goal of the new support package is to "stabilise the wine market and support long-term solutions".

A ministry statement said: “The government is allocating €130 to fund a new, permanent vine-pulling plan requested by the wine industry in order to rebalance the supply and restore the viability of struggling farms in the most vulnerable regions".

Minister of agriculture, agri-food and food sovereignty of France, Annie Genevard, announced the package to sector stakeholders at a major trade fair, SITEVI, in Montpellier. It also includes a loan component.

French officials have lowered projection for this year’s wine output to 36 million hectolitres, down from the 37.4 million forecast last month and 1% below last year’s harvest, citing a heatwave in August.

The revised forecast, based on the latest harvest results, was 16% below the five-year average.

Genevard has also urged the European Commissioner for Agriculture Christophe Hansen to “mobilise the European crisis reserve, particularly to finance the crisis distillation of non-marketable surpluses, primarily in co-operative cellars.”

In the statement, Genevard added: “This new very significant financial effort, despite a particularly difficult budgetary context and subject to the adoption of a finance bill, demonstrates the Government’s determination to sustainably save our viticulture and enable it to bounce back."

She insisted it was not “yet another emergency plan to correct a structural imbalance,” but “an investment to give a future” to the wine industry.

The wine and spirits sector supports 600,000 jobs in France, and accounts for €32 billion in turnover, half of which is exports.

The Béziers demonstration on November 15, organised by the Aude winegrowers union, highlighted the plight of French winegrowers.

Damien Onorre, president of the union, told Le Monde newspaper: “For three years, we have suffered droughts and heat waves above 40°C. I have lost 50% of my production over this period.”

China news sees optimism return to the Australian wine industry

There were toasts all round in the Australian wine industry today after Prime Minister Albanese announced that China has agreed to a review of the 220% import duties currently imposed on Australian bottled wine.

There has been an oversupply of Australian wine over the past three years after Chinese markets virtually closed.

"This is great; all Australian winemakers are very happy about this," said Mitchell Taylor, managing director Taylors Wines, talking to Channel 9.

"We've been suffering for the past three years."

Treasury Wine Estates CEO Tim Ford said: “It’s great to see an agreement for an expedited pathway forward to allow our Australian brands and wine to be sold in the Chinese market.

"There are only positives to come out of a favourable review, for the Chinese consumer, customers, and the wine category, as well as for the Australian wine industry and TWE.

"We're well placed to rebuild our Australian wine export business to China should tariffs be removed at the end of the review period."

NSW Wine Industry Association president Mark Bourne echoed that the announcement was good news for the entire industry.

“This is an encouraging step forward that will hopefully lead to the removal of Chinese import duties on Australian wine,” Bourne said.

“It is currently a very difficult time for the wine industry. Following several seasons of challenging weather events and the Covid pandemic, we are now facing worldwide falling consumer demand and an oversupply of wine.

"The announcement of a potential pathway to resolve the multi-year trade dispute, and the reopening of the Chinese market, is positive news for many grape growers and winemakers.”

It has been reported the Chinese Government’s review may take five months to complete.

“Under the current circumstances, we are hopeful that the proposed approach is the best way for the Australian wine industry to achieve its desired result within the shortest time frame.” 

Prior to the imposition of crippling import duties in 2020, the value of Australian wine exports to China were $1.2 billion annually.

Australian wine industry still faces a major problem

Even the early removal of Chinese tariffs on wines imported from Australia would not be enough to prevent the wine industry facing several years of oversupply, a new report preidcts.

Rabobank's Wine Quarterly Q3 2023 report says that improved trade relations between the two countries and the recent removal of Chinese tariffs on Australian barley has led to optimism that five-year tariffs placed on Australian wine in March 2021 may be removed early.

But the Rabobank report says even in a “best case scenario”, with tariffs removed this year and Chinese consumption of Australian wine recovering quickly, this would “not be a panacea” with Australia’s wine industry still facing at least two years to work through its current wine surplus.

While this isn’t good news for Australian wine makers, there is an upside for consumers, says the report author: RaboResearch associate analyst Pia Piggott (image).

She says the oversupply is keeping prices of many quality Australian red wines at reduced levels.

So large is the current oversupply, says Piggott, that Australia has the equivalent of 859 Olympic-sized swimming pools worth of wine in storage.

"That’s over two billion litres of wine, or over 2.8 million bottles of the wine,” she said.

The Rabobank report says Chinese anti-dumping tariffs placed on Australian wine had led to significant disruptions for Australia’s wine industry, with Australia’s value of exports decreasing 33% over the past two years.

Piggott said with the tariffs coinciding with significant growth in Australian production and logistics bottlenecks from Covid, the Australian wine industry is now dealing with inventory oversupply which is depressing prices - particularly for commercial red varieties.

“Driven by sustained economic growth, rising incomes as well as the social status of wine drinking and gifting, global wine imports to China grew at an impressive 18% compound annual growth rate (CAGR) in the decade up to 2017 elevating China to be a top five wine importing nation globally,” she said.

“In the four years following the China-Australia Free Trade Agreement in 2015, the tariff on Australian wine reduced from 14% to zero %, helping to double Australia’s market share in China from 12% to 24%.

“When a slew of Chinese anti-dumping tariffs and soft bans hit various products exported by Australia in 2020-2021, wine took the most notable hit, losing about one third of export value from its peak in 2019.

“Unluckily, the tariff coincided with an exceptional growing season - and Australia’s largest crush on record.”