No End Seen To Aussie Wine Glut

Consumers who have been taking advantage of depressed Australian wine prices caused by oversupply can look forward to more of the same.

The latest forecast by the Australian Wine and Brandy Corp. (AWBC) says the excess can last another five years because of a succession of above-average grape yields.

AWBC spokesman Lawrie Stanford said that while the imbalance of supply and demand may not ease before 2010, the industry has already responded to the problem by reducing plantings.

"We're not actually adding to the production significantly but we do have this stock overhang and we need to move it into the markets which currently exist," he said. "Our estimates are that over time, those markets can absorb this, but in addition to this we need to be developing new markets also."

One example of another way to cut into the glut is being seen with McGuigan Simeon Wines. Its report to shareholders says the company will suspend some wine grape grower contracts as a result of the oversupply.

Managing Director Brian McGuigan (above) told shareholders at the annual general meeting in Sydney that the company would prefer to no longer be a purchaser, but a partner with grape growers in wine production to share the risks and benefits over the long-term.

Meanwhile, a Wine Industry Outlook conference in Adelaide was told that slowing exports and a grape glut could see supply outstripping demand until 2010.

Lawrie Stanford, the Australian Wine and Brandy Corp.'s information and analysis manager, said while the red wine grape surplus was likely to ease, white wine grape oversupply would last at least two year: "It's anticipated that the rate of export growth will slow as Australia works off a larger base and competition from overseas wine producers intensifies."

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