Since 2020, a convergence of Covid-fueled cost increases and Chinese tariffs has pushed up supply and depressed prices in the country.
Though global production hit a 60-year low in 2023, a wine glut is persisting, signifying that demand is falling even faster.
Australia produced its smallest amount of wine in 15 years in the 2022-23 season but continues to struggle with historically high inventory levels.
On top of Covid, costs for inputs like fuel and fertilizer have gone up because of the war in Ukraine and insurance premiums are increasing due to climate change.
Meanwhile, secular changes in drinking habits are taking root, with red wine feeling the pain more acutely.
More people are drinking lower-alcohol sparkling, rosé or white wines instead of reds.
Gen Z consumers are also consuming less alcohol, fueling a boom in nonalcoholic drinks.
Source: Bloomberg
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