Australian wine exports fell in value for the first time in 15 years in 2008, official figures show, underlining the challenge facing the industry.

Wine exports slid 18% by value to A$2.46bn last year, a December report from the Australian Wine and Brandy Corporation said. Exports by volume slipped 11%.

The decline marks the first slip in export volumes since 1995 and the first in value for 15 years.

Peter Bailey, senior analyst at AWBC, said: "A slowdown was not unexpected given such factors as the global financial crisis, exchange rate volatility, continuing intense competition from other suppliers, tightening margins, and an extended drought causing supply uncertainty."

Lawrie Stanford, manager of information and analysis at AWBC, told just-drinks early last month that there was a strong case for "downsizing" the industry. Current sales could still be covered with 16% less vineyard area, he said.

Neil McGuigan, general manager of production and supply at McGuigan Wines, told just-drinks this week: "The short term outlook for the Australian wine industry is going to be tough."

But, he added: "Australians are an innovative lot and will continue to mould our style for the ever changing market, plus experiment with new varieties for Australia that give us a new position."

Australia's wine grape harvest significantly beat expectations in 2008 to reach 1.8m tonnes. AWBC estimates that this year's harvest may rise again to 1.9m tonnes, prompting fears of a glut on the market.

Constellation Brands said in its third quarter results this week that it expected a significant decline in grape prices in Australia following the new harvest - indicating the danger of a wine grape surplus.

Declines in traditional export markets such as the UK and US have hit Australia particularly hard. Exports by value in 2008 fell 26.5% and 18% to the US and UK respectively, AWBC figures show.

Some believe Asia may hold the key to revival, however. Exports in 2008 to Hong Kong, which is positioning itself as the wine hub of Asia and a gateway to China, grew 17% in value terms, AWBC said.