Australia's wine glut could be reversed this year, albeit temprorarily, as heavy rains and flooding in the south-east put crops under threat.
The latest estimates indicate a wine crop that will be shy of 1.4 million tonnes, well short of last year's 1.6 million tonnes - which itself was 7.5 per cent below the 2008-09 vintage. About 20 per cent of the Victorian crop is likely to have been wiped out by recent rains.
Lawrie Stanford from Wine Grape Growers Australia told the ABC that prices could rise this season because of the drop in crop size.
"Given the reduced crop, I would expect there to be an upward pressure on prices," he said, before cautioning that structural problems in the sector would probably see a wine glut persist in coming years.
Mr Stanford advised that disease was a problem that has forced some growers to ditch crops and this could worsen if rainfall continues to be high.
"We may see a downgrading of quality, although thus far downy mildew has been the main issue and downy - being a disease pressure that effects the relatively immature fruit - doesn't have a significant effect on quality. But if we move into powdery, which is the next stage, and certainly there are signs of that starting to appear, we may expect some effect on quality," he said.
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Luke Edwards of Casella Wines, agreed that prices might rise but added that many growers were locked into long-term contracts with wineries ensuring the growth in prices is likely to be marginal. And upward price pressure is unlikely to continue unless there are structural changes in the industry, he advised.
"I wouldn't suggest (the wine glut) is solved," Mr Edwards explained on ABC radio. "I would suggest (this year's reduced crop) probably won't contribute to the oversupply, which is a positive."
"We saw similar conditions in 2007 attributed by drought, where we saw greatly reduced vintage. The follow-on from that in 2008-09 and 2010 obviously showed that if you don't remove the underlying problem, which is overplanting, even short-term fixes don't really help anyone."
He added that many growers had been unable to reach their crops to control some of the disease issues, with the next six weeks in the powerhouse regions within South Australia, Victoria and the Riverland in NSW to be crucial.
Meanwhile, Australian consumers appear to be taking full advantage of the low prices on offer for wine in recent years, with wine making ground on beer as the country's most popular alcoholic beverage.
Figures released by the Australian Bureau of Statistics earlier this week showed wine drinking in the past decade has risen 16 per cent on a per capita basis (37 per cent volume increase), while beer consumption has fallen by 11 per cent in the same period. The trend toward wine has remained strong recently, with domestic sales of Australian wine rising a healthy 4.7 per cent by volume last year, while imported wine sales were up by 3.3 per cent. Yet growth in sales by dollars was comparatively soft, highlighting that current prices are making it a wine lovers market.
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