Demand for Australian wine dries up

Yellow Tail WineThe Australian wine industry is in dire straits and the economic crisis is not the only one to blame. Australia produces too much wine, the Australian dollar is too expensive, the image of Australian wine is damaged by cheap labels such as Yellow Tale and Rosemount and the industry in recent years failed to renew itself or diversify. Nearly 8,000 hectares of vineyards in Australia this year remain fallow. A large number of Australian vineyards receive an another destination or are even developed for houding, as is the case with some famous vineyards in McLaren Vale. According to Mark McKenzie, Director of the Wine Grape Growers Australia , Australia even has 20,000 hectares vineyards in surplus. “The wine industry needs to cut at least 10 per cent of Australia’s 177,000 hectares (437,370 acres) of vineyards from production,” says McKenzie (in Australian wine exports fell to 2.35 billion dollars in the past 12 months from a peak of nearly 3 billion dollars in 2006-2007. The major Australian agricultural investment company Great Southern is virtually bankrupt. A lack of resources have obliged Great Southern to cease to actively farm 750 hectares of agricultural land. Among them are a large number of vineyards. Constellation Wines, one of the major players in the Australian wine industry, has closed the doors of Stonehaven Winery in Padthaway and Leasingham Winery in Clare. Demand for expensive Australian wines abroad had declined sharply. According to Nielsen, the average price of more expensive Australian wines (upwards from 15 dollars) in the U.S. fell by 17 percent. Stephen Strachan, CEO of the Wine Federation of Australia, told an investor conference this week that “we must learn from our mistakes”. Frank Nicholls, president of the Clare Region Wine Growers Association, remains optimistic. “Wine companies restructure, but it is not because some businesses are closed that production stops,” he said in an interview with a local Australian newspaper. “It’s just a matter of supply and demand – there is too much wine that is fighting for shelf space in the home and export markets.” The question is when demand and supply of Australian wine will get back into balance.