Australia still has too few vines, KPMG warns

Exaggerated fears of a grape glut could cause Australia to lose its enviable share of the world wine market, consultants KPMG have warned.

Many Australian grape growers have cut back on planting plans, reacting to fears of a global economic slowdown.

The moves are a reaction to years of lavish vine planting, which have resulted in current fears of oversupply.

But KPMG contended that those fears might be misplaced, allowing rival producers to nibble away at Australia's market share.

Australia is currently the world's number-four wine exporter, after France, Italy and Spain.

Losing ground

Australia faces competition from European suppliers and improved quality wines from other new-world producers such as South Africa and Chile, KPMG's Wine Industry Group argued.

"For Australia to really maintain the position it has achieved and to continue to grow, you do need that wine availability going forward," KPMG director Alexandra McPhee said.

"If you don't have it, you will be forfeiting it to another player."

The Australian Bureau of Agricultural and Resource Economics (ABARE), the official forecaster, reckons the 2004 vintage will be 1.8 million tonnes - a crop worth more than 2.9bn Australian dollars (�1.2bn; US$2bn).

But KPMG calculated that it would be no more than 1.6 million tonnes.

The apparent overplanting of the 1990s, the firm said, had yet to make a significant difference to Australian grape supply, since new vines take at least five years to mature.