Wine glut gives Aussies a hangover

SYDNEY - Australia's booming wine industry has become a victim of its own success with the proliferation of new vineyards leading to a chronic oversupply of grapes.

Growers in some of the country's most famous wine regions, including the Hunter Valley, Margaret River and the Barossa Valley, are facing the prospect of watching their grapes wither on the vine because of a lack of buyers.

The popularity of Australian wine overseas encouraged the planting of hundreds of new vineyards from the late 1990s, with most growers opting for red grape varieties such as shiraz and cabernet sauvignon.

Further encouragement was given by the Government, which offered generous tax breaks in order to develop the industry. Two years ago it was reported that a new vineyard was opening in Australia every 36 hours. Australia now has 150,000ha of vineyards, a three-fold increase in a decade.

The glut is expected to last for another two years, after which reduced supply will begin to fall back into line with demand.

But of the two million tonnes of grapes expected to be harvested this season, around 5 per cent will be left to rot.

The problem has been made worse by plentiful harvests in 2002 and 2004, and predictions of another bumper crop this year, due to steady summer rain and prolonged autumn sunshine.

"It really hurts," said Peter Lidgerwood, surveying the ripened bunches of shiraz grapes on his vineyard in Loxton, South Australia. "It means the last 12 months have been a total waste of time."

His entire crop of more than 150 tonnes of grapes, which he had hoped would fetch A$100,000 ($107,000), will now be left to rot on the vine.

Those vineyard owners who have managed to find willing buyers are being paid a pittance because prices have collapsed. In the Riverland region of South Australia growers received up to A$800 a tonne for their grapes last year. This year they are being offered A$150 a tonne.

Wine drinkers hoping that the grape glut will translate to cheaper prices on the supermarket shelves will be disappointed, however. "Consumers are already getting Australian wine at very good value," said Lawrie Stanford, of the Australian Wine and Brandy Corporation. "It would be hard for it to get much cheaper."

Low prices, good quality and cheeky, colourful labelling enabled Australian wine to notch up spectacular growth worldwide in recent years. Two years ago Australian wine overtook French wine as the tipple of choice for British drinkers. More than 40 per cent of Australian wine is now drunk by the British, with around 30 per cent going to the United States.