Oz wine production to remain in decline

The decline in Australian wine production is tipped to continue over the next five years but the industry could eventually be more sustainable and profitable as a result.

A new report released in London forecasts Australian production will be down 14.7 per cent over the next five years compared with the previous five.

At the same time world-wide production will decline just 2.3 per cent, according to an International Wine and Spirit Research (IWSR) study commissioned by Vinexpo.

The only top 10 wine-producing country expected to take a bigger hit than sixth-ranked Australia is Italy which is tipped to decline by 16.1 per cent.

Italy is number two on the table behind France and ahead of Spain.

"Australia for two decades has showed incredible growth around the world but is plateauing now and there's an adjustment on the production side which is totally normal," Vinexpo chairman Xavier de Eizaguirre told AAP on Monday.

"It doesn't mean Australia is in trouble in terms of exporting, it just means there's a correction after years and years of spectacular growth."

The IWSR study doesn't include export forecasts but does reveal that between 2007 and 2011 Australian exports declined 13.3 per cent from 89 to 77 million cases.

In the top 10 only Germany and Portugal fared worse.

But in monetary terms the value of Aussie wine exports fell 20.9 per cent to $US1.96 billion ($A1.89 billion). Germany also experienced a fall, but of just 5.1 per cent.

Part of the problem for Aussie exporters is that drinkers in their largest market, the United Kingdom, are increasingly experimenting with Italian and Spanish wines as bars and restaurants from those countries proliferate.

Nevertheless, Mr de Eizaguirre insists the picture is actually positive for the Australian industry.

Local wine makers will move to more specialised or boutique labels which will eventually lead to a more sustainable and profitable sector, he said.

"It will take a while for the Australian industry to adjust to the new trends but it will translate into less volume, better qualities and higher prices."

The Vinexpo chairman said the fact New Zealand wines were going "through the roof" proved the market was ready for more premium wines despite Europe facing an "unprecedented" economic crisis.

The IWSR study reveals Chinese consumption of imported still wines grew by more than 550 per cent in the five years to 2011 by volume.

And it's forecast to expand a further 62.7 per cent by 2016.

Mr de Eizaguirre says Australia should be doing more to push aggressively into the region.

"They are already working hard in the Chinese market," he said.

"(But) it will increase definitely in the next five years."

Vinexpo, the world's biggest wine fair, will be held in Bordeaux in June.

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