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Australian supply will not be in balance until 2010

AWBC chief executive Sam Tolley said: The Australian wine sector clearly continues to face a very challenging period that looks like continuing for a little longer than we'd expected.'

The corporation's information and analysis manager, Lawrie Stanford, said last week at the Wine Industry Outlook Conference in Adelaide that although oversupply of red grapes should ease over the next few years, white grapes, particularly Chardonnay (which until recently had been in deficit), are now entering a period of oversupply.

The current problems are despite Australia's wine exports increasing at a compound rate of 18% over the past five years, reaching 660 million litres and A$2.75 billion dollars in June 2005. For balance to be achieved between supply and demand by 2009-10, exports will need to achieve annual compound growth rates by volume of 10% between 2004/05 and 2009/10: that will require hard work on a sustained basis throughout the period,' said Stanford.

The Australian wine sector has recognised the issues confronting it and has behaved responsibly by greatly reducing the new plantings over the past five years, especially of red grape varieties. The fact we've continued to have a large surplus has been driven by a succession of above-average seasons.'

Stanford added that the industry also faced a structural imbalance' in the availability of cool-climate' fruit - defined as fruit from anywhere that is not part of the warm inland areas - with demand for cool-climate grapes running at 20% of the total, despite accounting for 40% of all production.

Tackling the issue as to whether Australia can continue to post the export growth needed to put supply back in balance with demand, Tolley said: Global competition is increasing all the time, but we are confident that Australia can still attain very respectable export growth in the foreseeable future.'

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