Aussie wine cheaper than water

Report: Babs McHugh and Cameron Wilson

In bad news for growers Australian wine has sunk to an all time price low. The industry is finding it hard to shake its international image as cheap and cheerful, and with the wine glut now at its peak, it's facing some tough choices. Some wines are now selling as low as $2 a bottle, which now makes it cheaper than bottled water.

Chief executive of the Wine Makers Federation of Australia Stephen Strachan says some growers now face the real possibility of pulling vines. "If you're a grape grower at the moment and you don't have a contract and you found (that) in 2006 for example that you couldn't sell your fruit then the likelihood of you selling it in 2007 is about zero...(and) it might be a good idea to make a decision to remove that vineyard."

With domestic prices at this level, most in the industry agree that exports markets are the key to moving Australia's wine surplus. But the perception is growing that Australian wine is cheap, not just here but also overseas. Andrew Pirie from the Australian wine industry's Directions Taskforce says we need to be careful the value of Australian exports doesn't fall in the rush to sell the surplus.

Kim Seagram from the Vineyards Association of Tasmania has just returned from Canada where she says the perception has already taken hold that Australian wine as low cost. "The cheap alternative. A lot of both consumers and the trade who are working in the shops were viewing Australia as the cheap and cheerful alternative."

In this report: Stephen Strachan, chief executive, Wine Makers Federation of Australia; Andrew Pirie Australian Wine industry's Directions Taskforce; Kim Seagram, Vineyards Association of Tasmania.