As part of its results announcement last week, Treasury Wine Estates also issued a global vintage update, detailing growing conditions in Australia, California, New Zealand, France and Italy.
The results showed a strong year for the diversified Treasury Business, with earnings and profit up and Chief Executive Officer, Tim Ford saying the business was well-positioned for growth.
The vintage updates have helped to highlight how the wines the company is making will help to deliver that growth.
The update stated:
Australia
Vintage 2022 industry yield was in line with long-term averages, but significantly below last year’s record crush. It has been a high-quality Shiraz and Cabernet vintage across all regions. TWE proactively took in a smaller 2022 vintage intake as part of its plans to manage its inventory position following the reduction in shipments to Mainland China.
Red wine intake was a highlight, reflecting high-quality fruit and the benefits of the $165m investment in South Australian Luxury winemaking infrastructure, which was completed in-time for vintage 2022 with fruit processed through this new facility achieving exceptional grade conversion outcomes that will support future luxury portfolio growth.
Bulk wine and grape pricing has reduced over the last 18 months driven by a number of factors, including the large vintage 2021 harvest and the significant reduction in demand from Mainland China.
California
Early growing conditions for the 2022 California season are positive. Temperatures for the first half of the season were moderate, ensuring optimal growing conditions in much of California. Above average temperatures are predicted for the second half of the year across most of the state. The expectation across California is that vintage 2022 will be higher yielding than Vintage 2021.
Following two short vintages, increased demand has led to higher prices throughout the grape and bulk wine market.
New Zealand
Vintage 2022 was an excellent vintage in New Zealand, with strong yields across all varietals and regions. The harvest crush for Marlborough Sauvignon Blanc was 51 per cent higher than 2021. Central Otago Pinot Noir had an outstanding vintage with high quality wine and strong yields.
Grape pricing is likely to remain high in the short term, with bulk wine prices easing, but remaining high compared to long term average.
France
France has experienced a challenging growing season to date with a mild to dry winter, early frost in the Bordeaux region and heat waves in all regions. The current heat and sunshine are helping the late varietals such as Cabernet Sauvignon to fully mature.
Expectations are for below average industry intake in vintage 2022. For TWE, intake will be higher due to the acquisition of new vineyards which are providing access to incremental sourcing of Luxury fruit. Luxury grape and bulk wine pricing is largely stable.
Italy
Growing conditions in Italy have been challenging due to hot weather and a lack of rain. This will impact vintage 2022 industry intake, which is expected to be below the long-term average. For TWE, company-owned vineyards are performing well with heat impacting only a small percentage of vines on the properties.
Bulk-wine contracts are in place, albeit at slightly higher prices than vintage 2021, reflecting increased demand for Italian country of origin wine.