Aussie wines facing tough times

Investment bank Rabobank has said that Australia needs to pull up vines quicker if its wine industry is to rebalance supply and demand.

Australia's wine industry faces a "watershed" moment in its short history, Rabobank said in its quarterly wine market report, published today (21 April).

The Netherlands-based bank and analyst group warned that Australia needs to pick up the pace on reforming its wine sector.

"Growers are beginning to pull out vineyards, which will ease the oversupply situation, but more vineyards must be removed for the industry to return to balance," Rabobank said.

"Furthermore, the pace of vineyard removal in the cool climate regions where the supply/demand imbalance is most acute has been particularly slow, but is expected to increase its pace over the next two years," it said.

Australia's 2010 wine grape harvest is expected to be 15% smaller than 2009, which should help to ease oversupply.

The country had a wine surplus of 1.88bn litres at the end of June 2009, according to the Australian Bureau of Statistics.

Industry leaders have accepted that around 20% of the country's vineyards need to be pulled up in order to balance supply with global demand.