Wine prices may rise due to frost

Wine drinkers could pay more for their favourite tipple after frost damaged the 2014 harvest. Source: AAP

WINE drinkers could pay more for their favourite tipple after frost damaged the 2014 harvest.

Winemaker Australian Vintage, whose brands include McGuigan, Passion Pop and Tempus Two, says the amount of grapes it crushed for the 2014 vintage fell by nearly a fifth as a result of frost late last year.

And it expects the 2014 crush for the whole industry will be down on 2013 because of the damaging frost.

"Whilst this will help the industry's supply and demand position it is likely to lead to higher priced wine due to lower utilisation of the industry's processing assets," Australian Vintage chief executive Neil McGuigan said on Thursday.

"It is quite clear that the industry still has an issue with an overcapacity of processing capability."

Australian Vintage crushed 124,214 tonnes of grapes from the 2014 harvest, compared to 153,000 tonnes last year.

The drop came after frost significantly affected the company's vineyards at Balranald in NSW and near Swan Hill in Victoria.

The two vineyards produced 16,000 fewer tonnes than last year.

The company's Adelaide Hills vineyards were also down by more than a third.

However Australian Vintage believes the quality of the wine from its dry land vineyards looked outstanding and better than the 2013 vintage.

It described the quality of wine from irrigated regions was equal to the outstanding 2013 vintage.

The company still expects its net profit for the 2014 financial year to be significantly better than that of 2013 and in line with previous market guidance, despite overall sales being down on last year by about three per cent.

The decreases in overall sales were mainly due to reduced bulk wine sales in North America and the United Kingdom.

Exchange rates movements had been favourable during the financial year, resulting in an improved margin but some of that had been offset by customers in the United Kingdom demanding lower prices

Shares in Australian Vintage closed one cent lower at 33 cents.

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