Oversupply and recession toll wine markets

Australian wine legend Bill Hardy says oversupply and the recession are two main issues affecting the Australian wine industry.

Hardy's Wines is a massive player in the wine industry and owns wineries around the world, including in New Zealand.

But Hardy says there is more wine being produced around the world than being consumed - a problem which countries overseas are trying to address.

"There are structural changes taking place in many markets. The European Union at the moment is just coming out with their solution which involves pulling out a lot of vines," he says.

Hardy says the same approach may need to be taken in new world markets like Australia and New Zealand.

"Whether that'll happen naturally through economic drivers or whether it'll need to be stimulated, I don't know."

Hardy's own view is that vineyards could benefit by pulling back on yields rather than pushing their vines too hard.

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The recession is also impacting customer choice: people are still drinking the same amount, but they are trading down.

"We thought, for example, that things like cleanskins (blank labels) were going out of favour, but in fact we're seeing people slip back into cleanskins, we're seeing people trade down one price category," says Hardy.

Hardy is currently in New Zealand judging chardonnay and offering advice to the New Zealand wine industry.

Click on the WATCH tab to see Bill Hardy's full interview with NZI Business presenter Corin Dann.