Falling prices at home and abroad have forced McGuigan Simeon Wines to write down the value of its stock by up to A$20m (US$15.2m).

Australia's third-largest wine producer announced the writedown today (31 May) following a record 2006 vintage and an above-forecast vintage in the US.

"Another substantial Australian vintage has significantly increased stocks and will put further pressure on bulk wine prices," said managing director Dane Hudson. "The bottom line is that the market has become much more competitive with bulk wine prices dropping by between AS$0.3 and A$0.4 a litre in the last six months.

"Given the importance of the bulk wine market, the value of our stocks need to reflect this reality."

Hudson said the company expected to post an annual net profit of A$17.5-22.5m for this financial year, before the writedown, which represents less than 9% of total inventory in terms of value.

He added: "Our core business is sound. This stock writedown is a one-off event."