Australian wine prices take a massive hit
Bad news from the antipodes -- from the
Australian branch of news.com:
Wine prices driven lower than water
A Wine glut has driven prices lower than bottled water as the industry faces an unprecedented meltdown and a fire-sale of unprofitable vineyards.
The price collapse and overplanting has forced Australia's biggest winemaker, Foster's, owner of prestigious labels such as Lindemans and Penfolds, to sell 31 vineyards across the country, including 16 in South Australia and nine in New South Wales.
Major wine retailer Dan Murphy's is currently selling cleanskins for $1.99 a bottle - cheaper than some bottled water - due to the oversupply crisis that has led to some vineyard owners leaving grapes to wither on the vine.
"We've seen growers who didn't bother picking their grapes this year," said wine industry critic and judge Stuart Gregor.
"There is a huge oversupply and we have more grapes than we are selling, and prices are being pushed down."
A Dan Murphy's spokeswoman said the company had offered $1.99 bottles for short periods several times due to the supply glut.
A crisis meeting by winemakers concluded that 20 per cent of vines needed to be phased out in the next three years to re-address the imbalance, said Winemakers Federation of Australia director Mitchell Taylor.
And one of the ancillary problems (the quote is from wine commentator Jeremy Oliver):
"Some vineyards are just being left. People are walking away, which is leading to concern that disease could take over and spread into other properties," he said.
Another bubble -- the wine business was doing so well that they over-expanded. Now, seeing as how they are not asking for federal bailouts, the wine business will go through a couple of crappy years, reorganize and come back stronger than ever with the correct number of vineyards and volume of production. Those vineyards that have a great product will survive, those that were not as well known probably will not.
This correction will only take five years at most. If the AU government bailed them out, the correction would be postponed, crappy producers would have no financial incentive to improve and the bursting of the bubble will be that much more painful down the road.
Roosevelt prolonged the Great Depression for decades and never ended it, it was our entering the European War that finally brought us out. And now we have a President who is using Roosevelt's actions as a model. The sooner the foul stench of
Keynesian economics is wiped off the face of this Earth, the better. The
Austrians were right.
Posted by DaveH at July 5, 2009 4:27 PM