Australian Vintage, Australia's second largest vineyard owner, is withholding funds from the country's wine trade body and may end its membership altogether due to disagreement on marketing tactics.

Generic body Wine Australia has spent too much of its time and money promoting higher priced wines as part of its 'regionality' drive, Paul Schaafsma, Australian Vintage's UK and Europe general manager, told just-drinks today (18 August).

Australian Vintage, which owns the McGuigan wine label, has temporarily suspended funding for the trade body and is "reviewing" its membership.

The group's move reveals a schism in Australia's wine industry as it attempts to adapt to meet a growing challenge from foreign competitors in its major export markets, the UK and US. Australian wine exports fell in value for the first time in 15 years in 2008.

"Wine Australia is focusing 100% on regionality. It's good to have long-term vision, but don't spend all your time on that and forget the bread and butter," said Schaafsma.

"Yes, regionality is important to the long-term sustainability of the Australian industry, and we do recognise that the premium wine drinker may find regionality of interest, however this is a very narrow segment of the market. At this point in time we need to be engaging with a broader audience of consumer and get back to what has endeared the UK to Australian wine - consistency, value and flavour."

The bulk of Australian Vintage wines are in the so-called commercial wine category, generally priced below GBP5.99, although the company also operates in the higher end of the market and has won several awards for its wines.

Regionality is a key part of Wine Australia's export marketing strategy, designed to show consumers that Australian wine can compete with foreign wines on quality as well as on price.

Lisa McGovern, UK and Ireland director of Wine Australia, told just-drinks today: "Regarding Australian Vintage's recent comments regarding the Wine Australia strategy, we believe the annual promotional programme offers a number of initiatives which speak to their portfolio, and targets both mainstream and fine wine sectors of the UK trade."

She denied that Wine Australia is "exclusively centred on regionality", adding: "We will be highlighting Australia's stylistic evolution at our Annual Trade Tasting next February with a range of focused varietal tastings across all price points."

Commenting on Wine Australia membership numbers, she said: "We are currently tracking above last year in terms of membership renewals, both for the UK programme and globally, which I think signifies the support for our activities from across the industry."

Separately, this week has seen 12 of Australia's top wineries announce the launch of a joint marketing initiative, named Australia's First Families of Wine (AFFW).  

Australian Vintage last week reported a 9% sales rise for the 12 months to 30 June. The company will announce its full-year results on 26 August.