Constellation Brands, the US parent company of Hardy Wines, has reported a slide in sales of its Australian wines in the face of increased competition because of a massive oversupply of grapes and discount wine, reports The Australian.

Chief Executive Richard Sands said net sales of Hardy wines from Australia and Nobilo wines from New Zealand were down 5% in the three months till May-end, compared to the same period a year earlier. (Constellation has unveiled a 5% rise in net sales to US$1.62 billion for the three months to May 31.)

But the company also said that the grape glut, which has left Australian wine makers with a surplus of 900 million litres, wasn't expected to affect its long-term profitability. "We have seen the most significant impact in the UK and Australia, where some suppliers have discounted their product in an effort to reduce inventory levels," Sands said.

In the US, though, where Australian wine has a market share of about 8% by volume, the oversupply of Australian wines was not having the same impact. "We are not seeing any indication that the excess Australian supply is creating any market volatility," Sands said.

For the complete story, go to www.australian.com

http://www.theaustralian.news.com.au/story/0,20867,19642888-643,00.html