Australia has a wine surplus of 100m cases and the country's wine industry is facing its toughest period for two decades, according to a stark new report by leading industry bodies.

Australia is producing between 20m and 40m cases more than it is selling annually and nearly a fifth (17%) of the country's vineyard area is not profitable, says the report, released to producers this week.

The 'Wine Restructuring Action Agenda', as the report is named, has been compiled by the Winemakers' Federation of Australia, the Australian Wine and Brandy Corporation, Wine Grape Growers Australia and the Grape and Wine Research and Development Corporation.

"Oversupply is having a debilitating impact on Australian wine businesses and restructuring the supply base is both essential and inevitable," said the groups in a joint statement on the report.

Industry leaders, including Australian Vintage and members of the Australian Wine & Brandy Corporation, have warned for more than a year that Australia cannot sustain current production levels.

Action must begin immediately to address the problem, says this week's report.

"The industry must restructure both to reduce capacity and to change its product mix to focus on sales that earn viable margins," the bodies said.

"Bailouts are not an option and neither governments nor industry bodies should be expected to provide the answers; tough, informed decisions must be made by individual growers and wineries, from as early as the 2010 vintage."

Australia's wine exports have fallen by 8m cases and 21% in value since their peak in October 2007, the groups said.

Among the action points put forward is a plan to "refocus" marketing on emerging markets in Asia and consider more attractive exit packages for unprofitable grape growers and winemakers.

For the full statement, published on, click here.

Earlier this year, the head of Australian Vintage declared the end of the "golden age" for Australian wine.