AUSTRALIA: Analysts warn of Australian over-supply

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Australian Wine Marketing Conference chairman Paul van der Lee today warned of the quickening over-supply in the industry.

The marketing consultant told the second conference, held in Adelaide, that premium wines were becoming available on the bulk market for the first time. He spoke as the Australian Wine Export Council gave a bullish reading to just released financial year figures showing strong growth in export volumes and value.

By contrast, van der Lee said: "Export growth has slowed to 18% in the past financial year. I think there are some reasons why that growth might drop away further."

No Australian wine region was immune from over-production and international competition would put added pressure on Australian wine styles, he said.

He estimated exports would grow from the A1.61 billion figure of 2000-01 to nearly A$3.5 billion (US$1.8 billion) in 2010. However, this is significantly down on earlier industry projections of a target of sales of A$5 billion.

But the 450 delegates at the meeting also heard from Mr Foale an economist with the ANZ Bank group. "The world is likely to be awash with higher quality bottled wine over the next decade," he said.

Global wine production had shrunk in recent years due to vine uprooting and replacement programmes and the Australian industry had occupied a comfortable niche, shared with the United States and New Zealand.

But he went on: "Now that the other New World (Chile, Argentine and South Africa) and European producers (France, Spain and Italy) are making a concerted effort to increase their quality, competition in the premium and super-premium bottled wine is set to intensify," Mr Foale said.

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