"Premium white wine grape and premium red wine grape production are both projected to rise over the period to 2006-07," said Dr Brian Fisher, executive director, the Australian ABARE research.
The report, entitled Australian Wine Grape Production: Projections to 2006-07, states that premium white wine grape production is projected to increase by 10 per cent to 724 000 tonnes between 2004-05 and 2006-07. In particular, production of chardonnay is projected to rise by 15 per cent to 423 000 tonnes by 2006-07, with plantings remaining strong.
For premium red wine grape production, slower growth is projected over the outlook period as new plantings of red varieties continued to decline in 2002-03. Premium red grape production is projected to increase by 2.5 per cent between 2004-05 and 2006-07 to 974 000 tonnes.
"After an exceptional year in 2003-04, yields are expected to return to more average levels, with wine grape production forecast to fall slightly to 1.83 million tonnes in 2004-05," explained Dr Fisher.
'South Australia will remain the dominant wine producing state, with production projected to increase by 6 per cent over the outlook period,' he added.
Growth in production is also expected to be strong in the Murray Valley regions of Victoria and New South Wales.
But some industry experts, including analysts at Citigroup, believe that the news might not necessarily be good for the industry. They point out that the current addition of the 2005 red wine vintage, combined with a fall in red wine exports, could lead to excessive supplies once again plaguing the industry.
Statistics released in September showed that exports in 2003 - 2004 only rose by 13 per cent in volume on those in 2002 - 2003. Growth was almost twice as high in the two years previous in which exports grew at 24 per cent each year.
In addition, export growth in 2005 may be limited by the strength of the Australian dollar. The currency has strengthened 6.4 per cent against the US dollar in the past four months as well as 3.3 per cent against the British pound.
However, ABARE says that its research, which was sponsored by the Grape and Wine Research and Development Corporation, indicates that the outlook for the total Australian wine export market looks positive, having increased by 14 per cent to 581 million litres in 2003-04. The United Kingdom remained the largest destination, accounting for around 39 per cent of total Australian wine exports. The second largest destination was the United States, taking around 29 per cent of Australian exports.
Dr Fisher added that exports to China and the Republic of Korea increased markedly in 2003-04.
Growth prospects for Australian wine exports to Asian markets will depend on a number of factors, including the potential for increases in consumption per person from a large population base, rising incomes and the region's proximity to Australian suppliers.