Wine oversupply in Australia and its New World competitor countries is no longer a possibility but a present reality, according to David Combe, director of the Evans & Tate winery and former senior executive in charge of exports at Southcorp.

Exports alone could not absorb future production levels without risking huge damage to Australia's quality image and carefully nurtured price points, he told an industry conference in Barossa.

Combe said all political parties contesting the impending national general election should be encouraged to commit to a lower wine tax.

The industry he said had created a problem for itself in this respect. Combe explained that while in private it had told governments it needed a tax reduction to boost domestic consumption, in public, driven the by a wish to hike share prices, it had trumpeted only its successes.

Combe also warned that in California wine storage capacity was renting at five times the price of last year and large proportions of Cabernet, Merlot and Chardonnay plantings were not even producing yet. He said US producers had set a target of doubling export sales to US$1.1 billion by 2005.