A WINE glut has driven prices lower than bottled water as the industry faces an unprecedented meltdown and a fire-sale of unprofitable vineyards.
The price collapse and overplanting has forced Australia's biggest winemaker, Foster's, owner of prestigious labels such as Lindemans and Penfolds, to sell 31 vineyards across the country, including 16 in South Australia and nine in New South Wales.
Major wine retailer Dan Murphy's is currently selling cleanskins for $1.99 a bottle - cheaper than some bottled water - due to the oversupply crisis that has led to some vineyard owners leaving grapes to wither on the vine.
"We've seen growers who didn't bother picking their grapes this year," said wine industry critic and judge Stuart Gregor.
"There is a huge oversupply and we have more grapes than we are selling, and prices are being pushed down."
A Dan Murphy's spokeswoman said the company had offered $1.99 bottles for short periods several times due to the supply glut.
A crisis meeting by winemakers concluded that 20 per cent of vines needed to be phased out in the next three years to re-address the imbalance, said Winemakers Federation of Australia director Mitchell Taylor.
About 1.5 million tonnes of grapes are required for the annual vintage, but this year about 1.7 million were harvested while the previous 12 months the harvest was about 1.8 million tonnes, WFA figures show.
Strong export sales led to over-optimistic outlooks for Australia's wine industry and a doubling of vine-producing areas over the past decade. But forecasts of more than $3 billion in export sales by next year have been dashed by overseas competition, an excess of cheaper wines and the global financial crisis.
Apart from Foster's, Constellation Wines Australia, which owns such labels as Houghton and Banrock Station, had two wineries and 16 vineyards left for sale after placing 26 properties on the market last August.
The fire-sale of vineyards and plummeting prices is the reality check the industry had to have, according to leading wine commentator Jeremy Oliver.
He estimated 20 per cent of land under vine in Australia was not needed.
"Some vineyards are just being left. People are walking away, which is leading to concern that disease could take over and spread into other properties," he said.
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