Wine industry drinks to dollar's dive

WHEN Tom Harvey heard the Australian dollar had dropped to under US70c, his mind immediately turned to how many more bottles of his family's Chalk Hill wines he could now get on foreign supermarket shelves.

"Fantastic," he said. "That really just means that these wines are now a whole lot more competitive than what they were two weeks ago."

The falling dollar has been largely welcomed by exporters, and winemakers, who are no exception.

A 12 per cent decline in the volume of wine exported in 2007-08 was blamed on currency appreciation, so a reversal of the dollar's fortunes could have a strong impact on the industry's balance sheet.

Stephen Strachan, chief executive of the Australian Winemakers Federation, said an Australian dollar worth US90c or more had put a lot of pressure on the industry at a time when it was also challenged by oversupply of grapes and, more recently, water issues.

"From the wine industry's perspective, I guess we would be very, very glad to see it stick around where it is now," Mr Strachan said.

The dollar yesterday slumped to US67.7c, its first time below US68c since September 2003.

With his elder brother Jock, Mr Harvey represents the third generation of the Chalk Hill winemaking family, based in McLaren Vale, 40km south of Adelaide.

Chalk Hill exports to Malaysia, Hong Kong, Britain and Ireland, The Netherlands, Russia, the US and Canada, with about 60 per cent of its wine going overseas.

Mr Harvey said the dollar's depreciation would give Australian wines a much-needed edge over other New World wine producers, such as New Zealand, South Africa, Chile and Argentina.

"It's no different from what a consumer would see at the petrol pump, if the price of petrol dropped nearly 25 per cent," he said. "It just means that our customer base -- our export markets -- are able to identify added value in a product that hasn't materially changed, so they go out and buy up big.

"We're able to get a whole lot more into the marketplace."

Mr Harvey, who runs the sales and marketing side of the Chalk Hill wine company, said he was hopeful that the economic crisis, which brought him the devalued dollar, won't mean demand for wine dries up.

"I'm optimistic that people will still be consuming value wines, which is where Australia's bread and butter is," he said. "I don't see the volume decreasing, I just see people trading down, if you like -- still buying a bottle of wine but instead of spending $50, they might be picking them up for $20 or $30."