A shift towards higher-priced and bottled wine exports to China has given a glimmer of hope to beleaguered West Australian wine producers struggling to survive against a wave of cheap imported competition, shrinking markets and cutthroat retailing.
One of the toughest periods in the history of the Australian wine industry has pushed many producers to the brink, with some pouring money in - often from other businesses - to remain afloat in the hope of riding out the storm.
The flicker of hope is that while the total volume of all wine, which includes bulk wine, being sold into China declined in the past 12 months, the volume of bottled wine increased as did the average price per litre. A sustained shift in this direction might just restore some marginal operations to profitability. The problem is that it might not happen quickly enough.
During the past few years, massive volumes of bulk wine have been sent to China, much of it below cost. This has cleared out much of the wine inventory and also helped introduce more Chinese to wine. The key now is to capitalise on this and drive higher-priced product into this receptive market.
However, the promising trend might be too late for some. Many South West vineyards and wineries are listed for sale. Many more would be but sellers know the chances of finding a buyer are slim.
The combination of domestic oversupply, increased competition from cheap imports, the high Australian dollar and declining traditional markets have been too much. Vineyards not able to secure contracts to sell their fruit, mainly white varieties such as semillon and sauvignon blanc, as well as wineries with established brands, are being offered for sale.
Others have been mothballed in the hope that they can be kick-started once the prices for fruit and wine with sustainable markets become economic once more.
Fontys Pool has decided to bale out and concentrate on other more profitable forms of agriculture, although it has not ruled out reactivating its vineyard if things improve.
Wine producer Mike Calneggia, who has just brought some of his red vineyards out of mothballs and back into production, draws parallels with the mining industry.
"There was a period when prices for gold and iron ore made the operations unviable, so they were mothballed until the position changed," he said. "It would be nice to think that a similar thing can happen in the wine industry in the new few years."
He said that while the prices for red grapes and red wine had improved, the position for most whites was weak because of competition from New Zealand sauvignon blanc and a Chinese preference for red wines.
In recent years the WA industry has recalibrated to reduce its production. From a peak of around 11,800ha in 2010, the area of producing vineyards has dropped to around 9000ha.
And this was after many grafted or replanted to more white varieties to take advantage of strong demand for the white blend of semillon or sauvignon blanc. Unfortunately that was before their market was eroded by the flood of cheap New Zealand sauvignon blanc.
One industry expert estimated that since 2007, 4000 tonnes to 5000t of grapes have been made into wine and sold below their real cost.
In the South West, real estate group Acton has 17 properties on its books. Rumours circulate of significant producers doing it tough as established markets shrink and new markets develop.
Acton Real Estate director Brian Moulton said that most interest in properties was coming from Asia, in particular China and Singapore.
"However the problem is that most are seeking red varieties and unfortunately a lot of vineyards still have larger percentages of whites planted," Mr Moulton said.
One of the few success stories has been Great Southern producer Ferngrove, which secured a Chinese owner providing certainty of distribution through Ferngrove-branded stores in China.
Without that, Ferngrove would have struggled to survive this year.
Others have not been as lucky.
Whether that trend to higher-priced wine becomes a fundamental and sustainable shift remains to be seen but the indications anecdotally from speaking to many exporters and in Wine Export Approval figures released recently by Wine Australia paint a brighter picture for WA wine producers.
Some suggest the industry has bottomed. Certainly, if Chinese buying interest continues, things may well be on the up. Huge inventories of excess bulk wine have been sold off and now the Chinese face paying more for that wine or seeking it from other countries.
Last year, Australian wine exports declined by 10 per cent to 703 million litres valued at $1.89 billion. However, for the first time since 2007, the average value of exports rose. Asia was the stand-out region for bottled exports, with a 24 per cent increase to $400 million.
Although the volume of wine exported to China, including bulk wine, fell by 26 per cent over the 12 months, China was still the third-biggest destination for bottled exports with the value of bottled exports increasing by 37 per cent to $184 million.
A 28 per cent increase in volume, to 31 million litres, and a 7 per cent rise in average value to $6.01 a litre, contributed to the growth in value.
China is now the biggest destination for Australian exports priced at more than $7.50 per litre with exports valued at $78 million, ahead of the US and Canada (each with $50 million), Hong Kong ($35 million), the UK ($31 million) and Singapore ($30 million).
Mr Calneggia said many Chinese customers were demanding wine that had been bottled in Australia rather than wine that had been exported in bulk and bottled in China.
"Bottle integrity has become increasingly important in China and we are now receiving special cartons and proprietary bottles for packaging in Australia," he said.
"Specialist stores are being opened at a phenomenal rate to sell imported wines where the bottling integrity can be guaranteed rather than some of the dubious bottling practices with falsified labels."
One retailer had about 200 stores but expected to open another 500 by the end of this year and 1000 in the next few years.
One importer was last year taking 20 containers a month into China, where it was selling distressed stock bought for as little as $3 a bottle (mostly from South Australia) for more than $100.
Bottle integrity has become increasingly important in China." Mike Calneggia,