The first bag-in-a-box wine has just been released from Australia’s premier quality wine region – Margaret River.

At the same time some of its premium wine is to be turned into vinegar.

The unprecedented moves – initiated by a group of 17 growers who are unable to sell their red grapes – have been caused by a glut of red wine, the result of record plantings in the late 1990s as enthusiasts and investors cashed in on the area’s fine wine reputation.

Many of Margaret River’s top growers are concerned the region’s reputation will sufffer.

Michael Wright of Voyager Estate said, ‘Half the new vineyards in the area should not have been planted because of sub-standard soils.’

Erl Happ, of Happs said the glut was caused by federal government tax breaks which led to ‘city people with too much money investing in vineyards rather than paying taxes.’

Others, like Stuart Pym of Devil’s Lair and Bill Ullinger of Redgate Wines, called the move ‘short-sighted’, and the result of investors ‘shoving vines into the ground without thinking.’

‘It is potentially damaging to the overall image of Margaret River and not in the long term interests of the cask producers themselves. The district’s reputation is an enormous asset,’ Pym said.

Not all wine professionals in the region are protesting however. Some consider it simple market economics. ‘This is a reality check. Any vehicle to sell wine is fair game. There is no law against it,’ Conor Lagan of Xanadu said.

The new wine, sold in a two-litre cask, is called The Growers’ Garden Premier Release Reserve Dry Red. A cabernet merlot blend, it contains 70% Margaret River wine with the rest from neighbouring regions such as Pemberton and Geographe.

Meanwhile a Fremantle firm plans to produce gourmet vinegars, including balsamic, from the surplus red wine. It has bought fourteen 60-year-old French and American oak vats for the project.

‘Australian wine is rich and intense in flavour and colour that the acid in the vinegar will preserve,’ managing director David Clapin said.

Written by Michael Zekulich