The grape glut in Australia could seriously damage the mid-market wine bracket, according to the New South Wales Wine Industry Association.

In a report in Australian newspaper The Daily Telegraph this weekend, senior figures at the association warned that the prices of wines in the country could be slashed by up to a third.

"Wine prices are likely to be their lowest for ten years," Stewart McGrath-Kerr, the chief executive of the association, told the paper. Bottles of wine presently retailing at around A$20 (US$15.08) will fall by A$5, while bottles costing A$15 will be cut to just A$10, the report noted.

Association president David Lowe also told the paper: "Premium wines will not be affected and the low end has no further to fall. The A$15-20 bottles will be cheaper."

Last week, South Australia's state government called for a national summit to deal with the grape glut. According to the Australian Bureau of Statistics, 2005's harvest should match the record 2m tonnes produced in 2004.

In November, Lawrie Stanford, the Australian Wine and Brandy Corporation's information and analysis manager, warned that the country's glut could last for another five years as export growth slows. Stanford said that grape supply could continue to outstrip demand until 2010.