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Last Updated: Friday, 24 November 2006, 13:48 GMT
Drought boost for Oz wine prices
Wine bottle and glasses
Australian wine prices have been at "rock bottom"
Australia's drought could prove to be a boon for the country's winemakers, by shrinking its wine lake.

The Australian Wine and Brandy Corporation (AWBC) has slashed its forecast for excess wine stocks from 900 million litres to 460 million.

It said drought restrictions and frosts in southern grape-growing areas had cut production, eating into stockpiles.

The industry regulator said the development should "relieve some of the downward pressure" on current prices.

Jim Moularadellis, of Adelaide-based Austwine, said the news would mean an end to "rock bottom" sales which had fallen to as low as 35 Australian cents a litre in some cases.

Philip Laffer of Orlando Wyndham said the revised forecast was good news as it would mean an end to the cheap export of "less than attractive wines" that had been "very, very damaging" to the industry's reputation.


AWBC spokesman Lawrie Stanford said the weather conditions would lead to a 20% cut in the 2007 harvest which could lead to the industry glut being balanced in 2008 - two years early.

"It should relieve some of the downward pressure on prices at the moment," he said.

However, Mr Stanford added some words of caution.

"We also need to recognise that there are individual players within the industry who are not only suffering from lower prices, but this is going to mean that they've got less product to sell," he said.

"So I suppose for some individuals, it may create difficulties."

As for consumers overseas, while a reduction of the wine glut will mean fewer cut price deals, it should be seen as a positive thing, said Richard Halstead, operations director of Wine Intelligence, a marketing strategy consultancy.

"UK consumers might see fewer half-price deals on Aussie wines, but those who like the idea of getting big discounts will still have plenty of wines to choose from," he said.

"The bottom line here is that a financially healthy wine industry is good news for everyone - growers, brand owners and consumers.

"It means that the industry can invest in producing better quality products, and also invest in educating consumers about the vast diversity of great wines that they can now buy."

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