Predictions from the Australian Bureau of Agricultural and Resource Economics suggest that the country's wine exports will be touching the landmark of A$3 billion within 12 months, with volumes growing 17.6% in 2003/2004 to 613m litres.

The figures far exceed industry expectations.

Australian exports reached A$2.5 billion this year and ABARE suggests this figure will jump to $2.9 billion in the coming 12 months, while climbing to A$4.2 billion mark by 2007/08. The industry's own plans are for a more modest A$3.4 billion by 2010.

Lawrie Stanford, manager of information and analysis for the Australian Wine and Brandy Corporation, said yesterday that the figures should act as a huge vote of confidence for the industry. In particular this is because they take into account a number of factors leading to a more competitive environment over the next few years, he added.

"ABARE is saying the industry will be competitive based on improved quality and this vote of confidence also fully recognises that there are quite a few pressures facing the Australian industry at present," he said.

"They included: subdued global demand for wine; an increase in premium wine supply by overseas producers; higher exchange rates; global consolidation by producers and supply chains; and increased subsidies to EU producers to increase their competitiveness based on quality."

ABARE also called on Australian producers to keep improving their productivity to keep grape prices at competitive levels. "As competition increases and other major producing countries strive to increase their share of the premium and super premium wine markets, the Australian industry must ensure that it continues to meet the demands of consumers," ABARE said.

It also said the Australia must continue to respond to consumer preferences. "(This) will be important to the maintenance of Australia's comparative advantage and relative high returns from wine sales."