Australia is facing a red wine glut in 2005, says a recent report.
The report, by market analysts Citigroup Smith Barney, estimates that by June 2005 there will be around 190 megalitres of surplus wine in the industry, of which 80% will be red.
The 2002 and 2004 bumper crops, high prices and the downturn in export growth, from 21% in 2003 to 14% in 2004, are cited as the main factors responsible for the expected glut.
Although decanter.com already reported on similar glut worries in Western Australia, the current fear is on a national scale.
The main culprit is said to be South Australian Cabernet Sauvignon from the McLaren Vale, Langhorne Creek, Coonawarra and Barossa regions.
Cabernet Sauvignon prices in South Australia have already fallen by 15-30% and market insiders expect the trend to continue into 2005. This could have a knock-on effect on UK supermarket shelves.
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