Grenache resurgence continues

Among some wine consumers, Grenache may not be as well-known as Australia’s major red varieties of Shiraz, Cabernet Sauvignon and Merlot. However, Grenache has a distinguished history in world and Australian wine production, and the latest sales data suggest the recent resurgence in its popularity continues.

According to IRI Worldwide, sales of single-variety Grenache in the Australian off-trade market increased by 21 per cent to just over $6 million in the 12 months ended 5 January 2020. Just under two-thirds was Australian Grenache and these sales increased by 27 per cent. By the value of sales, the two key Australian regions for Grenache sales are the Barossa Valley and McLaren Vale while the Rhône in France is the major international region.

The growth for Grenache sales in the Australian off-trade market is coming between $15 and $30 per bottle (see Figure 1). Around a third of the value of sales is at $15–19.99 and just under half is at $20–29.99.

Figure 1: Grenache sales in the Australian off-trade market ($’000)

^{Source: IRI Worldwide}

Grenache is also performing well in the Australian on-trade market. According to Wine Business Solutions, Grenache is the fourth most listed red wine in the on-trade behind Shiraz, Pinot Noir and Cabernet Sauvignon. In 2019, there was a 21 per cent increase in Grenache listings, from a 5.4 per cent share of red wine listings to 6.6 per cent.

Demand for Australian Grenache is growing internationally. Over the past five years, the value of single-variety Grenache exports has more than doubled, from $2.4 million in 2014 to $5.5 million in 2019 (see Figure 2). In 2019, bottled Grenache exports averaged $13.14 per litre, more than double the bottled red wine average value of $5.43.

Figure 2: Value of single-variety Grenache exports over time (A$ million FOB)

^{Source: Wine Australia}

The top five destinations for Australian Grenache exports in 2019 were mainland China, the United States of America (USA), the United Kingdom (UK), Sweden and Canada (see Figure 3). Exports have declined to the UK and Canada but have grown to the other destinations in the top five.

Grenache exports to mainland China have increased nine-fold in the past five years, from $200,000 to $1.8 million. There has also been solid growth to the USA, with exports almost trebling from $400,00 to $1.1 million. The 2 destinations account for a combined 53 per cent of Grenache exports.

Figure 3: Australian Grenache exports by value (A$ million FOB)

^{Source: Wine Australia}

The growth in Grenache exports in the past five years is coming at higher price points, particularly at $10 or more per litre (see figure 4). Exports at $10 or more have grown from $1.2 million in 2014 to almost $4 million in 2019. This segment now accounts 72 per cent of Grenache exports.

Figure 4: Grenache exports by price point (A$ million FOB)

^{Source: Wine Australia}

The growth in demand for Australian Grenache has seen the price of Grenache grapes increase over the past five years. The national average purchase price has risen from $577 per tonne in 2014 to $986 per tonne in 2019.

Figure 5: National average purchase price for Grenache ($ per tonne)

^{Source: Wine Australia}

The increase in the average purchase price for Grenache has occurred in both cool/temperate and inland regions. The cool/temperate average increased from $1259 per tonne in 2014 to $1757 per tonne in 2019 while the average inland price increased from $276 to $522 over the same period.