FOR YEARS AUSTRALIA'S wine producers had drought to contend with. This year it was rain. Biblical downpours brought mildew, causing many growers to spend about three times as much as usual on spraying their vineyards. Most growers had hoped that last year would mark the bottom of a cycle. Prices started rising in 1987 and reached a peak in the mid-2000s but then started to fall. Unfortunately, the oversupply of grapes that has been both a cause and a symptom of the recent price decline is set to continue for a sixth season. Worse, the dollar has strengthened again, encouraging Aussies to drink more imported wine and making it even harder to sell their own products in the all-important export market, especially in Britain, the biggest customer.

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Back at the start of the cycle, Australian wine was pretty cheap in Britain, but since then the dollar has appreciated by about 40% against the pound, much more than the currencies of Australia's main wine-making competitors. The huge increase in production that came with the boom has caused a glut: a surplus of 100m cases lies unsold and is growing by 20m-40m a year. In 2009 industry organisations said that at least 20% of the country's vines needed to be uprooted, but only 4.3% had been taken out of production by March 2010, though the grapes in about twice that area were left unharvested last year. Many vineyard owners say they cannot find buyers for their land. Others are simply waiting for better times: surveys suggest that only a quarter of growers depend on grapes for their livelihood.

As a result, cheap Australian wine is now being unloaded in vast quantities: exports of bulk wine selling at under $1 a litre (less than the cost of production) rose by 85% last year, helping to explain why the volume of exports has risen by 10% since 2007 but their value has fallen by some 20%. Australian wine is known abroad for decency and consistency rather than excellence. Now the fear is that it will acquire a reputation for cheapness.

Jacob's Creek, part of Pernod Ricard's Orlando Wines, sells 80% of its production abroad. This year it is reducing the volume that goes to Britain, a large part of its market, while increasing prices. Orlando hopes that Asia, especially China, will take more imports. Like family-owned Yalumba farther up the Barossa valley, it is also trying to satisfy the changing tastes of Australian drinkers who now want lighter, less oaked and less alcoholic wines, and new varieties and sparklers too. But the Australian market is mature and highly competitive. Besides, it takes at least three years, and often five or seven, from planting or grafting a vine to get anything decent from it. In the meantime winemakers need to make profits on their current products.