As a forecasted record vintage by volume gets under way, there is increasing evidence that Australian wine industry is being hit by excess supply.

Official forecasts put this year's grape crop at 1.81 million tonnes, 28% above the drought affected 2003 vintage. But already there is anecdotal evidence that independent grape growers are being confronted by producers' demands for lower prices.

Independent wine merchant Roger Moore of Wine To Go said bulk wine of sound quaffable quality could today be bought for A50c (US$39c) a litre.

New vineyards plantings and storage capacity have added to the problems.

To low growth in home sales is now added a softness in what has been a prolonged export boom. Shipments to Australia's largest markets, the US and UK have softened in the face of competition and a strong Australian dollar.

Outwardly the figures are healthy. Exports rose by 11% by volume last year and compound growth over the past five years is above 20%. But figures show declining prices per litre.

The emergent difficulties are still relative: the industry is buoyant overall. Nonetheless, the cosy assumptions of only a year or so ago have gone and Australian wine is daily becoming more and more a buyer's market.