Calls to slim down Australia's wine industry are growing louder as the country again faces a glut on the market.

Lawrie Stanford, manager of information and analysis at the Australian Wine and Brandy Corporation (AWBC), told just-drinks today (10 December) that there is now a strong case for "downsizing" the country's wine industry.

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

Shrinking markets in the UK and US caused a 13% drop in exports by volume in the 12 months up to July this year, according to AWBC figures. Value exports slumped by 12% to A$2.6bn (US$2.31bn).

Stanford told just-drinks: "Based on the simple metric of an industry size to 'cover' current sales, I calculate the national vineyard could be around 16% smaller."

He said that the main message from last month's Wine Industry Outlook Conference was "the need for the industry to face the fact that the planned future could not be achieved without a period of painful readjustment and alignment".

He added that Australian wine still has strong long-term potential, if the industry can realise its plan to focus on raising value.  

Some in the industry believe that emerging markets in Asia, and particularly China, could provide an important outlet for Australian wine if volume sales in western markets continue to slow.

The AWBC said in a statement last week: "Australia has manoeuvred itself into a situation where innovation and efficiency of production has outstripped the sector's own ability to manage that capacity."

Expressing confidence in the industry's future, it added: "Australia's competitors should be mindful of hubris as these current market and structural challenges are not exclusive to Australia alone; in fact, they are common to the development cycle of all wine producing countries."