Australian industry delivers crushing blow to growers
November 10, 2009
Chris Snow in Adelaide
Australia has an oversupply of 100 million cases of wine and the country's main industry bodies have put together a plan to correct it.
A new report released by Australia's four main industry organisations says that 17% of vineyards are uneconomical and that there is a surplus of wine equal to 75% total annual production or annual exports to the UK.
The 'Wine Restructuring Action Agenda' - sent to all producers - said that at current production rates, that figure will double within three years.
'Oversupply is having a debilitating impact on Australian wine businesses and restructuring the supply base is both essential and inevitable,' the Agenda says.
The Agenda has been prepared by the Winemakers' Federation of Australia, the Australian Wine and Brandy Corporation, Wine Grape Growers Australia and the Grape and Wine Research and Development Corporation.
The findings are based on detailed national and regional data. This will be presented to each region together with assessment tools to help growers decide whether to stay in the industry, restructure, change their varietal mixes - or quit.
The organisations are not releasing details for specific areas, but all regions are understood to be affected.
The largely self-help Agenda also proposes a renewed marketing push in Asia and in core markets including China, sections of the UK, US and European markets, and in Australia.
But it says that the industry can't trade its way out of the crisis, citing currency rates and increased competition from other new world countries, particularly Chile and Argentina, as key reasons.
The agenda rejects a government bail-out, instead proposing a federal government exit grant.
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I hate to be the one to say "I told you so" so I will not. Fact is Australia you are stuck with a lot of wine. Get it into the export markets using the "Federal Government Exit Grant" money to do so. Sell the wine - that was the intention when you made it - Right?
Focus not on how much you will be paid to tear out vineyards and plant potatoes, most of your ancestors came to Australia because of a potatoes famine. Rather focus on growing and making a new level of quality wines that just can't be duplicated in Chile or Argentina, of France. Bill Williamson
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