Australia - Wine glut again

In the nineties every man and his dog was putting in grape vines. There was one company in the Yarra Valley that had two trucks delivering wooden posts for the vines non stop for two years.

The result was by the year 200 the vines were being ploughed back in, as  the price of the grapes made them more viable left to rot, rather than go to the expense of picking them.

The major bodies representing Australia 's wine producers say a glut is so bad that it is causing structural damage to the industry.

A report jointly compiled by the Winemakers Federation and Grape Growers Association say the industry needs to reduce production by 20 per cent.

It says almost 20 per cent of the industry is uneconomic.

Stephen Strachan from the Federation says the time has come for some growers to start taking tough decisions.

"I think for the majority of producers now it's really difficult for us to see any turnaround in that in the next five years and they need to address a range of potential initiatives to deal with that," he said.

"So I think what we will see and what we've actually started to see and that is there will be growers who make some decisions to remove their vines and we've actually seen that already.

"You can't rely on a silver bullet coming in and saving you. If you're at a point where you're getting extremely low returns you can't, for example just assume that the Chinese market is going to take up all the excess supply from the Australian wine industry.

"We need to be a whole lot more strategic about growing our markets."