IS THE WINE MARKET IN TROUBLE DOWN-UNDER?

Australia is experiencing a bit of a wine slump at home. Chalk it up to higher fuel costs or consumption decreases, but wine sales were down 4.2% in 2005. Red and rose wine fell 9.3% over the year while white wine dropped 1.3%. Wine producers are feeling the pain with falling profit margins due the grape glut and a higher Australian dollar. Exports decreased 26.6% while their value dropped 27.8%; however, exports are already on track to breaking the 2004-05 record of $2.7 billion. Brandy sales were down 44.7%, fortified wines decreased 18.4% and vermouth sales dropped 7.1%. Sparkling wine, however, was up 4.5%. Several wine companies have reported lower profits due to poor wine sales and profit margins. McGuigan Simeon Wines was down 51% while Foster’s Group first-half profit fell 62%.