Australia's wine industry is looking at India for absorbtion of excess supply

Australia's wine industry, valued at ASD 5 billion, is keenly looking at India to stay afloat at a time when it is going through a crisis due to excess supply, a top official from the sector said here today. All major Australian companies, including the top four, are investigating joint ventures opportunities as also distribution alliances for their wine brands in India.

The Australian wine industry is "undergoing a period of crisis" as there is a supply glut in the domestic market. Over capacity has compelled the Australian wine majors to explore strategic partnerships and distribution network with Indian liquor companies. Australia's top wine producers include, the Fosters, Constellation, Pernod Ricard and Cissallo.

Australia, which is the world's largest exporter of wines, shipped liquor worth ASD 20 million to India in the last fiscal, Griffth said, adding that the companies are looking to expand base in India. In 2009-10, Australian wine producers exported a total of ASD 200 million worth of wine products to China. India in the long-term is a large opportunity for us.

If the Indian government brings down tax barriers, it will be easier for the Australian wine producers to strike deals with Indian companies. Australia and India are working on a Free Trade Agreement, which may see taxes on liquors coming from down. Australia's wine and grapes sector is witnessing over capacity and demand stagnation.

Grapes and wine prices have fallen significantly in the post-Global Financial Crisis (GFC), compelling many to even leave the business. Independent grape producers are the most affected as prices have come down to (Australian) USD 250 per tonne from USD 1,000 per tonne as supply has outstripped demand. The four big players in the industry produce only 10 per cent of the grapes and the rest is bought from independent producers.