KEY POINTS:
The party is over, and a hangover looms for Australia's wine industry.
Years of boom will be followed by gloom as the nation's wine grape vintage plummets next year, a victim of the drought.
The big dry will force as many as 1000 wine grape growers to quit the industry and follows a period of record exports and Australian winemakers being feted on the world stage.
The industry has forecast a vintage of 1.2 million tonnes next year, dropping further to 1.16 million tonnes in 2009 - the average is 1.9 million tonnes.
The drought-affected vintages could force 1000 of the nation's 7500 wine grape growers to leave the industry, many of them among the most renowned in the nation.
Most are from the parched Murray-Darling Basin, which supplies 60 to 70 per cent of Australia's wine grape production.
Growers in Victoria's Murray Valley and South Australia's Riverland have been hardest hit, working with as little as 10 per cent of their water allocations.
Wine Grape Growers Australia executive director Mark McKenzie says between 800 and 1000 of the growers are deemed at immediate risk.
"They're broke," Mr McKenzie says. "They don't have the capacity to buy water and they're at serious risk because their ability to borrow has peaked."
Many growers are simply waiting for their next water entitlement, before selling it and quitting the industry.
"We couldn't possibly underestimate the impact, the reality is they are leaving already," Mr McKenzie says. Only five years of average inflows in the basin would provide a return to adequate water storage levels.
Winemakers Federation of Australia chief executive Stephen Strachan fears the departures could cause a knowledge drain.
"It's going to leave the industry with some of its best growers having to exit the industry."
But the drought has had one positive - it will eliminate the wine surplus in Australia.
Some wine companies are expected to seek to offset next year's vintage shortage by importing bulk wine for products such as cask wines.
The reduced 2008 vintage could also have an impact on Australia's wine exports, which continued to set new records in value and volume terms during this year.
Exports topped A$3 billion ($3.43 billion) in a 12-month period for the first time in the year ended July this year.
Subsequent year-on-year results remained over the A$3 billion milestone mark, with Britain holding its standing as Australia's most lucrative market, followed by the United States, Canada and New Zealand.
The record exports came as winemakers collected a swag of international awards which reinforced Australia's sterling reputation.
Topping the list was South Australian Michael Fragos, who was crowned the world's best winemaker at the International Wine and Spirit Competition in London, regarded as the pinnacle of world wine shows. Mr Fragos is the chief winemaker at McLaren Vale's Chapel Hill winery, a boutique winery which also collected a trophy at the London competition for making the best cabernet sauvignon.
"To take the best winemaker of the show ... I couldn't have guessed that," Mr Fragos said.
His gong followed the crowning of fellow McLaren Vale winemaker Samantha Connew, from Wirra Wirra, as the best international red winemaker at the London competition.
Their triumphs capped a remarkable year for the burgeoning McLaren Vale region, south of Adelaide, with a wine made there collecting Australia's best known wine award - the Jimmy Watson Trophy.
The trophy for the country's best one-year-old red wine was claimed by Scarpantoni Estate's 2006 Brothers Block cabernet sauvignon.
"Everyone is telling us we should triple the price, but it sells for mid to high $20s, and that won't change," said Filipino Scarpantoni, who made the wine with his brother Michael.
"We were awe-struck, we didn't expect to win, because it's the most prestigious wine trophy in Australia."
Scarpantoni's triumph was the second year in a row the coveted Jimmy Watson award went to a McLaren Vale cabernet sauvignon, following Shingleback's 2005 D Block Reserve win last year.
But one trophy the burgeoning McLaren Vale couldn't secure was that for the most outstanding export wine.
The annual trophy, awarded by the Australian Wine and Brandy Corporation, was won by Penfolds' flagship cabernet sauvignon, the 2004 Bin 707.
Penfolds' 2003 RWT shiraz won the award, the George Mackay Memorial Trophy, last year, making the South Australian powerhouse the first winery to win the trophy in consecutive years.
The Bin 707 eclipsed more than 18,000 entries for the annual trophy.
- AAP
