Australia — Australias wine lovers are embracing European bottles as never before, exacerbating a decline in the local industry already suffering from plummeting exports.
With the Australian dollar at record levels against the euro, imported wine has rarely been more affordable. Prices for some labels have dropped by 30 percent. LVMH Moet Hennessy Louis Vuitton SA (MC)s Moet & Chandon Champagne is now sometimes cheaper than the French companys locally produced Domaine Chandon sparkling wine.
Five years ago, Australias wine industry was an international sensation. Driven by signature brands such as Yellow Tail and Jacobs Creek and support from influential critics such as Robert Parker, exports rose more than fourfold in the decade to 2007, when they peaked at 786 million liters. Australia overtook France as the U.K.s top supplier of imported wine in 2005 and was briefly in 2008 the frontrunner in the U.S.
Then things turned. Competition had for years been increasing from other emerging wine areas such as Argentina, Chile and South Africa. A domestic wine glut prompted complaints from Jacobs Creek producer Pernod-Ricard SA (RI) that the image of Australian wine was being damaged by too much low-quality product. In 2009, bushfires swept through the wine country of Victoria state, incinerating vineyards and tainting grapes with smoke. Exports have dropped 11 percent over the past four years, to 703 million liters in 2011.