Australians to raise prices as wine boom comes to an end

Cheap and cheerful Australian wine could become a thing of the past after the worst crisis to hit the country's industry in the last 50 years led hundreds of growers to quit.

Grape prices plummeted by more than 30 per cent this year to the lowest in living memory and an oversupply after the long drought broke has left 95 million cases of wine sitting unsold in warehouses.

The recession and Australia's strong dollar mean that export revenues have dropped and grape cultivation has become unprofitable with some growers receiving only 16p per bottle.

The surviving growers are now likely to concentrate on producing quality, higher-priced brands, leading to fewer bargain supermarket brands.

Mark McKenzie, the head of Wine Grape Growers Australia, said: "Over time we will see cheap and cheerful wine from Australia drying up in the UK."

Mr McKenzie said the Australian wine industry is at the end of a 15-year boom and that British consumers would notice the difference on their supermarket shelves as the industry focused on "higher margins and more profitable wines".

It would abandon "cleanskin" wines — those sold without labels to dump excess or unwanted stock in a way that avoids discounting existing brands.

He said: "A lot of new investors came in during the boom in the Nineties. The city money decided to get on the bandwagon very late. Some of these people are finding it difficult to find a profitable market and we have already started the removal of vineyards.

"The cleanskins are symptomatic of oversupply, but I don't think we will see the same volume once we get things back into balance in the next three to five years."

In the past 18 months alone, hundreds of growers in New South Wales and South Australia have quit, meaning about 20,000 acres of vines have been removed.