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SYDNEY - A group of small Australian grape growers, who got together in a bid to beat the wine glut, are now turning grapes into cash.
Across the country the grape supply and demand has been out of balance following a succession of bumper harvests for the past three years, and may not return to balance until 2009/10.
The Australian Wine and Brandy Corporation estimated that as of last June, wine stocks were 460 million litres above ideal levels - the equivalent of two-thirds of annual exports and slightly more than Australia's annual domestic consumption.
Industry and market researcher IBISWorld said in a recent wine sector report that it expected smaller wine producers to continue to experience falling profit margins.
But Greatstone Wines disagrees, and says it's working proof that small producers can be successful.
The company was formed by a small group of South Australian wine growers who decided to fight back against this "volatile environment".
The group decided to primarily sell outside Australia and have been successfully exporting to China and Japan.
Two years on, Greatstone has gone from managing, owning and working with 50 acres of grapes to exporting at least one million litres of wine from more than 2000 acres.
General manager Dan Traucki said Greatstone went from exporting zero to 50,000 cases in 12 months, proving its success.
"We're turning grapes into cash," Mr Traucki said.
"Why? Because we looked for new and different markets in new areas, because we're doing things a little bit different and innovational, and we're only getting bigger and stronger.
"The potential is enormously big, because we are not just looking for buyers in Australia but all around the world.
"Our growers have a more positive future than what they would have had."
Mr Traucki said many small wine growers in Australia have no sense of security, with many fighting each other in a bid to be chosen by the big corporations who are bringing profits down.
"It's absolutely disastrous," Mr Traucki said.
"People are selling grapes at below cost, just to get them off the vines, and hoping better things would (come) next season."
Wine Grape Growers Australia has voiced serious concern at the continuation of 'predatory' price offers by some wine processors.
Executive director Mark McKenzie said the continuation of low grape price offers by a number of processors and the refusal by others to openly state their prices showed that some wine producers were still prepared to exploit growers through offering unsustainably low returns despite a marked tightening of wine grape supply.
"It is unacceptable that some processors continue to sell the story to growers that the wine grape market is still on the bottom at the same levels as last year," he said in a statement.
"The spot market has moved off the bottom albeit not back to sustainable prices yet."
David Woods, managing director of Australia's largest wine producer Hardy Wine Company, said it was the spot buyers, not the established producers, that were driving the market down.
"There is no doubt there are a few opportunist companies that swoop in and pick up the excess at very low prices," he said.
"Most have not been in existence very long but saw an opportunity, and that's not good for growth or the rest of the market."
Mr Woods said Hardy had a good relationship with its growers, that was mostly years in making.
"There are going to be good times, bad times and terrific times, but it's about being there for the long term and that's what we're about."
- AAP
