Australia’s Winegrape Production Value Plunges 31% as Industry Faces Deepening Crisis

Australia’s wine industry is facing a sharp downturn, according to the latest Agricultural Commodities Report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). The March quarter 2026 report forecasts a 31% drop in the value of winegrape production for the 2025–26 season, bringing it down to $657 million. This figure is 18% lower than what was projected in December 2025, reflecting both falling prices and reduced domestic output.

The report predicts that the decline will continue into 2026–27, with winegrape production value expected to fall by another 2% to $644 million. Both production and prices are forecast to remain well below historical averages—34% and 33% lower than the past decade’s figures, respectively. Winegrape crush for 2025–26 is expected to decrease by 20% to 1.25 million tonnes, which is also 20% below the ten-year average. This level is projected to hold steady in 2026–27.

Several factors are contributing to this downturn. Higher water prices in the southern Murray-Darling Basin and persistently low grape prices are discouraging growers from maximizing production. Water scarcity is a significant concern, with low storage levels, high temporary water prices, and restricted allocations affecting inland regions where much of Australia’s winegrape production occurs. Recent heat events during summer have further reduced yield potential, especially after a dry winter and spring in major grape-growing areas.

The report also points to vineyard mothballing and removals as limiting the area under vine, particularly in inland regions. These trends are most evident where economic pressures have forced some growers to leave vineyards idle or remove them entirely.

Red winegrape production is expected to be hit especially hard. The value of red varietals such as Shiraz, Cabernet Sauvignon, and Merlot is set to decline significantly in both 2025–26 and 2026–27. ABARES attributes this to excess inventories of red wine, declining global consumption, and limited demand from winemakers. Prices for these red grapes in warm inland regions are forecast to drop by about 20% in the coming year.

White winegrape production is also under pressure. Increased output of white varietals like Chardonnay and Sauvignon Blanc—both domestically and from New Zealand—combined with weak demand from winemakers, is expected to push prices down by between 12% and 17% in warm inland regions during 2025–26. The report notes that rising inventories of white wine, falling domestic demand for wines from cooler regions, and easing global consumption are all contributing factors.

Exports are not immune from these challenges. The value of Australian wine exports is projected to fall by 6% to $2.4 billion in 2025–26, with a further decline of 5% expected in 2026–27, bringing export value down to $2.3 billion. The report identifies reduced shipments to mainland China—following a period of restocking after tariffs were lifted—as a primary cause for the export slump. Weaker export values to the United Kingdom and United States are also contributing.

The global context remains difficult for Australian wine exporters. Cost-of-living pressures worldwide, changing consumer preferences toward lower-alcohol beverages, and higher wholesaler inventories—especially in the U.S.—are all weighing on demand. While export volumes to China increased year-on-year up to 2024–25, they remain 35% below pre-pandemic averages.

Overall export volumes are forecast to decline by 2% each year over the next two years, reaching an estimated 643 million liters in 2025–26 and dropping further to 628 million liters in 2026–27.

The ABARES report paints a challenging picture for Australia’s wine sector over the next two years, with growers and exporters facing a combination of economic, environmental, and market-driven pressures.