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The Consequences of the Australian Wine Glut

January 5, 2010
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The Age newspaper recently summed up the wine oversupply problem facing Australian wine farmers. “Industry experts are warning that the oversupply is not only crippling grape growers and winemakers, but also damaging the international reputation of Australian wine,” the newspaper reported.

Australian wine industry groups believe the country currently has a surplus of at least 100 million cases a year and that surplus will double within two years. An estimated 300,000 tonnes of grapes (or 112 million cases of wine) needs to removed from the national harvest if the glut is to be reversed.

Wine producers like Constellation Wines have terminated growers’ contracts to curtail their inflow of grapes whilst Foster’s will halve the price it pays for chardonnay in 2010. Both put growers under enormous pressure and raised calls that producers must be careful that wine growing industry is not forced “to go broke”.

The Australian Wine and Brandy Corporation said it was also concerned that the glut of cheap Australian wine was damaging the reputation of Australian wines in the eyes of foreign wine connoisseurs.

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