Grape growers in the nation’s biggest wine region are calling for a moratorium on planting vines in a bid to solve the red wine oversupply crisis.

The sugestion was one of several solutions raised by farmers at a wine industry meeting in South Australia’s Riverland amid historically low prices for grapes.

The Riverland has been the hardest hit by the issue, and is one of three regions in the Murray Darling Basin that contribute grapes to almost every Australian-produced wine bottle or cask. 

But how did the situation get so bad?

Mum and dad money-makers

Former wine industry leader Paul Clancy has been raising the alarm about over-planting for decades.

The retired grape grower, who lives in the world-famous Barossa wine region but grew up in Renmark, in the Riverland, was the inaugural chair of state and federal grape grower bodies.

Riverland Wine says 40 per cent of the region’s shiraz and cabernet grapes are not contracted. (ABC News: Che Chorley)

He said while winemakers became aware of a looming oversupply in 2004, a lack of action meant by 2015 red wine grapes accounted for 64 per cent of all vines in Australia.

“They thought this never-ending export and domestic boom would last but nothing lasts forever,” he said.

By August last year, according to Rabobank, Australia had amassed a wine glut of more than 2 billion litres — enough to fill 860 Olympic swimming pools.

The oversupply crisis had been compounded by the trade ban with China, but Mr Clancy said the supply imbalance was rooted in tax concession schemes from the 1990s, which encouraged investment in agricultural products.

Mr Clancy says the wine industry has focused on reviews rather than restructure at its own peril.(Supplied: Paul Clancy)

The managed investment schemes, approved by the Australian Tax Office, ended in a multi-billion-dollar collapse in 2012.

“Fast money men convinced people earning big money to invest, and hundreds upon hundreds of hectares of vineyards were planted,” he said. 

“It happened in other industries as well, like avocados, which it almost wiped out.”

Mr Clancy said mum-and-dad growers also planted vineyards, with some wine regions doubling in size during that period.

“Even in the Riverland, people were getting paid up to $1,500 a tonne for chardonnay, and with those prices you can make very good money,” he said.

Mr Clancy said the big wineries that dominated the industry were winners from the oversupply because it drove grape prices down.

The Riverland is known as a bulk wine producing region, with vines yielding an average of 20 tonnes of grapes per hectare.(ABC Rural: Eliza Berlage)

“They became very competitive in international markets because they could sell their wine at a good margin as their input costs were so low,” he said.

He warned that without significant reforms and restructure, the industry could lose its capacity to cater to consumers looking for cheap wine.

“The great majority of the world doesn’t drink $40 to $50 bottles of wine, they drink $10 bottles,” he said.

Lessons not learned

Jim Caddy is the chair of the Inland Wine Regions Alliance, which represents grape growers in the Riverland, Murray Valley and Riverina.

Prior to this role he spent more than two decades on the board of Australia’s largest member-owned wine grape cooperative, CCW cooperative.

The cooperative negotiates the price of grapes with multi-national company Accolade Wines, which has been taken over by Australian Wine Holdco Limited (AWL) — a consortium of institutional investors.

Jim Caddy says South Australia has better data than other states on the number of vineyards and grape production.(ABC Rural: Eliza Berlage)

Mr Caddy said the industry had failed to learn the lessons of past decades, and that a lack of reform had caused the crisis to spread. 

“It’s not an inland problem anymore, it’s an industry problem,” he said.

He said his organisation was supporting calls by farmers for the voluntary wine grape code of conduct to be made into a mandatory code to improve the relationship between wineries and growers. 

“Sometimes the winemakers can be bullies [to the growers], and sometimes when there’s a shortage of supply some of the grape growers can be bullies to the winemakers too,” Mr Caddy said.

Petria Byrne and her family run one of several family wineries in the Riverland.(Supplied: Jarred Walker Photography)

Grape to glass

As hundreds of growers consider exiting the industry amid low prices, one of South Australia’s largest family-owned, estate-grown wine producers is restructuring its business model to have more control over the supply chain.

Byrne Vineyards was established when Eric and Romla Byrne planted vines at Devlin’s Pound near Waikerie in 1960, before later establishing a vineyard at Morgan.

Petria Byrne wants to have more control over the supply chain to improve the profitability of her family wine business.(Supplied: Jarred Walker Photography)

Their granddaughter, Petria Byrne, is now chief executive and said the family planned to put more of its own grapes into glasses to improve the profitability of the business.

“We do about 50/50 of selling our grapes to other wineries and bottling them ourselves, but long-term we want to get that up to 75 to 80 per cent,” she said.

“It’s purely about profitability for the business … you’ve got more flexibility and authenticity for your product if you have your own label.”

Ms Byrne’s grandparents first planted vines at Devlin’s Pound near Waikerie in 1960 but later established a vineyard at Morgan.(Supplied: Jarred Walker Photography)

Ms Byrne, who oversees operations with her father Rob, and son Will, said the multi-generational structure had served them well, with the business celebrating 60 years last year.

“It does have its lows but obviously the positives outweigh the negatives, otherwise we wouldn’t be here today still,” she said.

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