Young people drinking less and climate factors creates six-decade low for wine production

Australian wine production has dropped by 25 per cent since last year.

Australian wine production has dropped by 25 per cent since last year. Photo: Getty

Global wine production has hit a six-decade low, as climate factors and changing demographics affect consumption in Australia and around the world.

The International Organisation of Vine and Wine (OIV) estimated global wine production in 2023 will be the lowest since 1961, attributing the drop to adverse weather conditions like frost, heavy rainfall and drought.

Larry Lockshin, emeritus professor of wine marketing at the University of South Australia, told The New Daily that while climate change has affected production, older generations were a major source of wine consumption between the 1980s and early 2000s.

“Younger generations drink some wine, but they drink other alcoholic beverages and non-alcoholic beverages,” he said.

“I don’t think we’re ever going to get back to the same level of production and consumption that we’ve seen for the past 50 years in Australia and the world.”

Australia’s wine production reduced by about 25 per cent from 2022 to 2023, as global production dropped by about 7 per cent.

Lee McLean, CEO of Australian Grape and Wine, said younger people are generally drinking less because of health and wellness factors.

“That’s going to have an impact over the long term if that trend continues,” he said.

“That’s also going to have an impact on some of the supermarkets and businesses in Australia.”

Different markets

Europe is the centre of the winemaking world, producing 60 per cent of the world’s stock, and Lockshin said governments in countries like Spain, Italy and France will support winemakers by paying for stock that is bottled, but not sold.

“That’s not a winning proposition, because you have to pay to do it, but it keeps growers going, where in Australia, we don’t have that government assistance,” he said.

“When there’s lower demand, the companies don’t buy so many grapes, so growers drop their prices tremendously.”

He said despite the drop in grape prices, it is unlikely to make a difference for the total price of wine.

“The prices for bottles, for corks, for processing, for salaries, for fuel or for tractors for the wineries have all stayed the same or gone up,” he said.

“The cost of putting something in a bottle has gone up. The price of grapes has come down a bit for some wine, so the wines on the shelf haven’t really changed in price.”

Two glasses of red and white wine on wooden rail overlooking Australian country setting.

Australian wine is unlikely to drop in price any time soon. Photo: Getty

China factor

McLean said Australia has a significant oversupply of wine, despite natural disaster impacting grape harvest in 2022.

“It is really difficult for some businesses that lost a significant proportion of their crop due to the floods or the disease pressures that come from the wet weather,” he said.

“If there was ever a year we were going to have a lower vintage, last year it was probably needed because we had such high stock levels.”

An opportunity may be on the horizon to clear some of that stock, with Australia negotiating to end trade restrictions with China on certain products, including wine.

McLean said the pre-tariff $1.2 billion market is unlikely to return even if restrictions are repealed.

“It’ll be important, but it’s not going to solve all of those problems in terms of oversupply in the system,” he said.

“We’ve got to keep building new opportunities and new markets.”

Another opportunity is online mystery wine sales, an area Lockshin said is becoming more common with prestige brands.

“Often with these hidden deals, the brand isn’t shown and we are starting to see $80 Barossa wines selling for $29.99,” he said.

“A $40 wine might sell for $15 in a hidden deal, which means when the wine is shipped you see the brand, but not when it is advertised online.”

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