Wine export values to US down 23pc

The 2008-2009 growing season has presented more challenges for the Australian wine industry than would normally be expected in a generation, according to Rabobank senior analyst Adam Morris.

Today's report from the Australian Wine and Brandy Corporation has forecast the 2009 grape harvest to be 13pc below the 2008 total.

Rabobank says the irony of 2009 will be that although the harvest forecast is being dramatically reduced, the impact of the global economic crisis will mean that the industry is still drastically oversupplied for today's market.

"For the year to January 2009, Australian exports to the UK were down 9.6pc in volume and 17.5pc by value," Mr Morris says.

"Fierce competition in the UK retail market in the wake of the economic slowdown has seen consumer discretionary spending grind to a halt and retailers engaging in deep discounting in order to capture foot traffic in their supermarkets.

"In the US, it is a similar story with export volumes virtually flat but value dropping a massive 23.1pc.

"These two markets account for 66pc of Australia's wine exports by volume, so if these markets do not recover soon the Australian wine industry could be in serious trouble."

Should the global economic crisis start to ease, the long-term forecast looks positive, particularly in the US market.

With growth projections for imported wine in the vicinity of 85 million cases over the next 10 years, it is conceivable that Australia, with market share second only to Italy, will capture a significant portion of this growth.

Those producers capable of cutting costs, gaining access to water and shouldering their interest burden throughout the downturn will emerge in a strong position to capitalise on these longer-term opportunities, the report says.