| Australia's worst ever drought could help the wine industry recover from a long-running glut earlier than expected, although a full recovery was still some years away, reports the Age, Australia.
The Australian Wine and Brandy Corporation (AWBC) estimates that as of June 2006, wine stocks were 460 million litres above ideal levels - the equivalent of two-thirds of annual exports and slightly more than Australia's annual domestic consumption.
However, lower grape yields over one or two seasons could reduce stocks faster than previously thought.
'Based on experience over the past 20 years, and the prospect of 2007 being an extreme season, a scenario of a 20 per cent yield reduction is a realistic starting point to assess the impact,' declares AWBC. The 2007 harvest is expected to yield about 1.56 million tons of grapes compared to an average of 1.94 million tonnes.
'Assuming demand growth of around eight per cent per annum versus supply at one per cent it will still be full year 2009 before the industry achieves supply equilibrium,' according to a report by Goldman Sachs.
Industry and market researcher IBIS World said in its recent wine sector report that it expected the industry to grow at an average annual rate of 2.6 per cent in the five-year period to 2011/12, with gross revenue of $5.9 billion. The domestic market is expected to be stagnant while exports would continue to grow, though at a slower rate.
Most export growth would come from the larger winemakers, Foster's and Hardy which have greater economies of scale and can reduce costs, adds the report.
Smaller wine producers are expected to experience falling profit margins, cautions report.
For details, visit
http://www.theage.com.au
We wonder when we shall see a drop in prices on the restaurant or retail price lists in India-editor
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