Australia's wine industry at a crisis crossroad

Mon Jan 19, 2009 7:44pm EST
 
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By Rob Taylor

MURRUMBATEMAN (Reuters) - From a picturesque hill overlooking the hazy distant foothills of Australia's eastern ranges, Bruce March can see a crisis facing the country's A$2.4 billion ($1.6bln) wine export industry with crushing clarity.

March, chief winemaker at Doonkuna Winery, in prize cool climate vine country north of Canberra, had been looking forward to a bumper 2009 harvest, tripling production capacity last year in anticipation of rocketing China demand for his wine.

But the global financial crisis has exploded that interest, bringing with it a soul-searching for Australia's vignerons, ironically when good rains and a late summer are set to bring one of the best harvests for years.

"We set up to produce all this wine. We spent a lot of money, and then bang, the financial crisis hit us," March told Reuters, standing near his largely new winemaking plant. "Our Chinese importer is hoping for a better next year. Right now we're tightening belts and we're into survival mode."

The latest export figures are depressing reading for Australia's wine industry, which for decades led the so-called "New World" challenge to wine's traditional French, German and Italian strongholds.

Australia shipped 11 percent less wine by volume and a whopping 18 percent less by value in 2008, delivering the first setback for 15 years, according to government marketing agency the Australian Wine and Brandy Corporation, or AWBC. The average liter value of wine sold dropped 7.6 percent to A$3.53.

In key British markets, total value slumped 18 percent, while in the United States exports fell over a cliff, slumping 26 percent. Rare bright spots included China, which imported 32 percent more Australian wine by value, off a low base, as well as Hong Kong (up 17 percent) and Japan (up 4.1 percent).

SUNSHINE IN A BOTTLE?   Continued...

 
<p>Workers hand prune Merlot vines on a farm owned by Casella Wines near Griffith, 490km (305miles) west of Sydney, in this August 22, 2007 file photo. The latest export figures are depressing reading for Australia's previously all-conquering wine industry, which for decades led the so-called "New World" challenge to wine's traditional French, German and Italian strongholds. REUTERS/Tim Wimborne/Files</p>