The world's wine industry will face a surplus of over 100m hl a year by 2005, according to the latest research by Vinexpo, the company that organises the world's biggest wine and spirit show.

The report showed that while 272m hl were produced in 1999, up 18.3% from 1994, an estimated 282m hl of wine will be available for drinking around the world by 2005.

This compares to consumption levels that saw 188.42m hl drunk in 1999, up 8.1% on 1994, but which will only increase 5.1% to 198.1m hl in 2005, creating a surplus close to 100m hl a year.

Chief executive of Vinexpo Robert Beynat said that although some of this excess would go to distillation, the surplus created was one of the biggest challenges facing the global industry in the next five years.

Since 1994 the major sustained increases in production have come from Australia, up 49.1%, North America, up 40.5% and South Africa, also up 40.5%. The only countries to have witnessed a decrease in production were Argentina (-12.6%) and Italy (-1.54%). But Beynat said: "In both cases, this was due to restructuring policies of wine production and a movement away from bulk production to fine, quality wines."

Worryingly for Western Europe, production between 1994 and 1999 continued to increase by 17.3% despite a substantial fall in land under vine across the region. This has prompted many followers to call into question efforts to reduce yields in the area to increase Europe's wine quality.

Over the next five years South Africa and Chile (+33.9% and +33.2% respectively) are likely to see the biggest rise in volumes produced. In Western Europe only Spain is expected to increase volumes (+10%).