The best laid plans, as they say, can go awry. However, for Chris Losh, the Australian wine industry's Direction to 2025 plan has not only been overtaken by events in the country's main markets but was overly optimistic and ill-conceived to begin with.

It's less than two years since I - and about 50 other press and wine trade groupies - sat in a conference room during the London Wine Trade Fair and listened to the Australians unveiling their 'Direction to 2025' plan. It might as well be a lifetime ago...

All the talk was of 'driving value into the sector', of 'segmentation', of 'brand champions' and 'regional heroes'. The optimism was palpable, and there was talk of revising predicted sales projections to expect an extra A$4bn (US$2.66bn) during the five years from 2007 to 2011.

How hopelessly optimistic those plans appear now. The Brand Champions are swaying drunkenly, some of them perilously close to being knocked out, and it's questionable as to whether the Regional Heroes ever even made it out of their castle to ride to the rescue of the markets.

The first generic Australian campaigns were focused on generating volume, on creating a broad, populist base in the supermarkets. They were successful because that was where the market was going. But driving value into retail sectors that had become hopelessly (some might say fatally) addicted to deep-cut discounting was always going to be difficult, not least because much of the damage to consumer attitudes had been inflicted by brands from the same country that was now attempting to reposition itself.

The Australians have learned the hard way that while you can give the market a gentle nudge or run alongside it, you can't hope to find success while swimming against it. For all the talk of adding value to the sector, export revenue in 2008 was down a terrifying 18%. It's the first year since the Australian Wine and Brandy Corporation began recording figures in 1994 that value has decreased.

The Direction to 2025 plan saw the US and the UK as the keys to success. But these top two markets are hurting badly. The UK is down 10% in volume and 18% in value; the US down 5% in volume and fully 26% in value. Not only are these markets drinking less Aussie wine, they're paying ever less for it. The average price per litre on export markets has declined steadily since 2000, and is now back where it was in the mid-1990s.

"Can you have a generic strategy that suits the whole country, from small producer to big? The answer is probably no," says Andrew Hardy, winemaker at Petaluma.

Others think the problem lies less with generic campaigns than in their execution. "As a supplier, I have to ask what does Wine Australia offer me, and sadly the answer is 'not much', because it's such a mess. But that doesn't mean that generic action is worthless," says the UK manager of one Australian wine group. "Look at the impact that Chile has had [with its generic office], and they have far smaller budgets than we do."

Either way, it is clear that 2025 needs revisiting. Its positive 'trade up' theories, predicated on a world of continuously growing wine consumption, were at the rosy end of the spectrum two years ago. Now, post economic meltdown they look hopelessly optimistic.

In fact, you could argue that the Australians are, in any case, looking in the wrong place; that it's impossible to construct a workable business model when your production fundamentals are so dysfunctional.

Australia's chronic - and well-documented - problems of overproduction can ironically be traced back to the initial 2025 plan, drafted in 1996. The strategic blueprint envisaged grape production rising to today's levels by around 2025. Instead, a corybantic planting frenzy saw the vineyard area double in less than a decade. Even in the good times there was no way markets could keep up.

Last year saw a crush of over 1.8m tonnes and 2009 looks like being a similar level. Barring exceptional years like the frost-molested 2007, Australia produces probably 30% too much wine, and has done since the millennium.

Sources suggest Fosters has simply cancelled contracts with growers this year, as Constellation did a few years back, and there's a good chance hundreds of growers will go to the wall as a result.

It will be a painful correction, but you'd have to say a necessary one. No-one can survive by producing a product or service that the market doesn't want. And the market simply doesn't want that much Australian wine.

When global consumption was growing, there was always the possibility of being able to offload some, if not all, of the excess production. Rather like the US mortgage market, a buoyant environment hid a flawed business model. But with volumes tumbling in so many key export markets, Australia's wine companies now look as exposed as the financial institutions did once the dominoes began to fall. Much of the wine that is being sold is being dumped at miniscule or zero profits.

By over-producing a product with little, if any, inherent value, Australia has created a subprime wine culture. And, just like in the financial world, the subsequent crisis of confidence is affecting even good producers with no inherent problems.

Of course, by 2025 things may well all be as rosy as the marketers predicted two years ago. But there'll be plenty of growers and producers whose businesses may well not be around to see it.