2007 Drought in Australia

[Chris Amirault]

Flexnews linked to a Reuters report based on a Pernod Ricard this morning stating that the drought in Australia is severe and may have effects past 2007:

Australia's grape harvest is likely to fall at least 30 percent this year because of the country's drought and is unlikely to recover in 2008, wines and spirits group Pernod-Ricard SA said on Friday.

Pernod Ricard Managing Director Pierre Pringuet said the drop was unlikely to have an immediate impact on production of its Jacob's Creek wine, due to stocks built up in recent years, but the future was less clear if reservoirs continued to fall.

[snip]

"The reality is that the Australian market is entering a period, like the 1990s, when demand outstrips supply, and that is rather good news," he added.

I know that Aussie plonk isn't at the top of most wine fans' lists, but it's been my impression that Aussie plonk has helped to transform the low-end wine market in recent years. Makes me wonder what "rather good news" means, exactly.

Thoughts?

[Rebel Rose]

Well, it's rather good news for Pernod-Ricard, at least. Australia has been drowning in a wine glut of millions and millions of gallons, which is the driving force behind the low prices here. A drought, or the rumor thereof, will help to stabilize prices.

It will be sad for the growers there, however, as vineyard owners do not have a "glut" stockpile to draw from, like the wine brokers do. If yields are significantly decreased, they will be hit hard.

Farming is a tough life, and it's not idyllic unless you're making top dollar. I think over the next decade we will see a lot of vineyards there being ripped out to make way for more financially stable crops, perhaps olives.