Sunday, June 18, 2006

Global Grape Glut continues to be a problem....

Please click on globe to get larger image.

Australia is suffering from an overproduction and growers fear the worst. The great glut is lowering wine prices and is even affecting New Zealand markets. The continued over production in Europe has created an estimated 1.5bn litres of surplus wines. The European comision has dished out millions of Euros bailing out the industry by converting unsold wine into industrial alcohol. It is expected that over 500 million litres of excess wine will be converted to bio-fuel. Sweeping changes, which will include ripping out vineyards are on the horizon. Years of huge production subsidies has created an imbalance between EU wine supply and demand creating excessive surpluses that could not be readily sold. A major shake-up is required.

Australian growers had hoped for a $60 million sbsidy plan but agriculture minister Peter McGauran rejected any bailout for struggling growers or winemakers. Similarly no plan to convert excess wine into ethanol is contemplated. Consumers are celebrating low prices while they last. New markets are needed and Australia may have found help in the new emerging affluent middle class in China. Extensive vineyard plantings in China and India may be the next contributor to another world glut. In the meantime smart marketing but above all good quality wine production is the key to success in getting attention from wine consumers around the globe. As always there is so much good wine and so little time. But I am trying my best. Cheers.

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