Australia suffering from wine glut: industry

(AFP PHOTO/William WEST)

Australian winegrowers have been forced to let their grapes wither on the vine and halt production due to damaging levels of over-supply in the sector, a leading industry body said Sunday.

The country needs to lose 20 percent of its vineyards to counter the glut, which, coupled with a strong Australian dollar, has left the industry facing its worst crisis in decades, the Winemakers' Federation of Australia said.

"The over-supply is in the order of magnitude of about 20 percent of the industry," chief executive Stephen Strachan told AFP.

Strachan said the glut, which is estimated to exceed 100 million cases, had forced vineyards, many of which are not viable businesses, to adapt.

He said there was evidence of significant numbers of vineyards giving up growing vines. "There has also been evidence of a number of vineyards that aren't being watered," he said.

Strachan said it would take years to turn around the situation, which, if production is not halted, would see the amount of unwanted wine more than double within three years.

"What we're saying is that if your vineyard is not viable now, then don't anticipate that things are going to turn around quickly," he said.

Australia was producing too much wine from as far back as 2002, but only in a significant way since 2005, he said, adding that the long-running drought across much of the country had not helped the problem.

While the rise of the Australian dollar has been a major factor, cutting about 30 percent from the country's international competitiveness in recent years, there were simply too many winemakers, he said.

"A lot of people have come into this industry but not everyone gets it right," he said.

"There are a lot of producers who sought to produce high-end wine and who are producing good quality wine but not necessarily high-end. A lot of people are aiming for that top end but not everyone gets there."

Australia's wine exports amount to some 2.8 billion dollars (2.5 billion US) each year, with the United States and Britain the dominant markets.