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A three-pronged attack of drought, frost and rain is bringing an end to the great Australian wine glut, but early predictions are that New Zealand's wine industry should be safe from newly higher-priced Aussie rivals.
Latest figures from the Australian Wine and Brandy Corporation - a government body set up to provide strategic support to the wine sector across the ditch - show that the 2007 winegrape harvest is expected to be the smallest since 2000 and a third smaller than 2006.
This means Australian winemakers will make 400 million litres less wine than the year before, and their wines should move higher up the price range, potentially conflicting with New Zealand products.
John Barker, manager of policy and membership for NZ Winegrowers, said the effects of the Australian drought and the end of the glut would probably not be big for our industry.
"They have still got quite a lot of wine sloshing around and they probably won't see that as being all used up this year," he said.
"The part of the market that is going to be affected by that is the lower price point. We don't really operate in that part of the market, that is going to be the $10 and sub-$10 brands."
Drought conditions had also contributed to more frosts, which meant fewer grapes growing.
The low-cost wine sector was not an area where New Zealand wine growers either wanted or could operate in, since the cost of land was so expensive here, as was the cost of labour.
Jeff Clarke, chief winemaker at New Zealand's biggest wine producer, Pernod Ricard - whose parent company also owns leading Australian label Jacob's Creek - said the lack of water in the main grape growing regions of Australia was a serious problem.
The Australian industry had been working to eliminate its "wine lake" within two years, before the impact of this current drought.
He endorsed the comments of John Barker, saying that even if Australian wines did start going up in price as a result of the lower harvest, the different varieties and styles meant they would be unlikely to crowd out New Zealand wines. He said the Australians were coming out with a national strategy designed to move "up the market".
Barker said: "They may well be in the same part of the market as us but their products are unique [and] different, because we're not doing that big, rich shiraz type thing that the Aussies are known for, or the lusty chardonnay sort of thing. In some respects they are complementary products.
"Even when we are doing the same variety, our styles are very different."
The Australian Wine and Brandy Corporation expects a return to "supply-demand balance" by either next year or 2009.
