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Published:  23 July, 2008

In response to the claims of the Chianti Classico Consortium that Australian wine may be sold in certain European markets below cost, I would like to point out the following facts. Australia's total wine exports to Germany remain very small, at just under 21 million litres. Although Australia's exports to Germany rose 83% in volume and 25.7% in value during the 12 months to May 2003, our share of the total German import market remains less than 2%. This would equate to just over 1% of the total German wine market. Italy, in comparison, held over 40% of the German import market in 2002. Clearly, the growth in Australian wine exports to Germany cannot be held accountable for any substantial loss of market share by Italian wine. The principal reason for the drop in average price of Australian wine entering Germany during this period is a substantial increase in the proportion of wine sold in bulk form. In the 12 months to May 2002, bulk wine sales accounted for 16.14% of the volume and 5.27% of the value of Australian wine sold to Germany. In the following 12 months, bulk wine accounted for 41.5% of the volume and 16.25% of the value. The large-scale Australian producers that are accused of operating as a cartel are subject to strict anti-competition legislation that prevents this occurrence. Beyond this legal requirement, anyone familiar with these companies would recognise what a ludicrous statement this is, given the strong competition between major producers. In reviewing the statistics provided by Australian sources, I conclude that the e3.5 claimed to be an average production price is, in fact, the average wholesale price for bottled product. It thus includes a producer profit margin and excludes the figures for bulk wine, which would produce a much lower average cost of production. I invite the Chianti Consortium to contact us to obtain a comprehensive understanding of the Australian wine export statistics.'