This kind of quantity is what makes Australia currently rank number four in the world's wine production stakes, behind Italy, France and Spain. At first sight this should be cause for rejoicing, but as ever, things are never quite as they seem. The problem simply expressed is this: Australia produces a great deal more wine than it drinks.

All through the nineties the problem was easily addressed by exporting the surplus. Throughout that decade Australia's wine exports increased by an incredible 14-fold, which is why you got or see so much it in recent years. Like most explosive growths, this one too was subject to a plateau effect, but in recent years the export trade has been hit hard by the increase in the value of the Australian dollar. In the past three years it has risen 50% against the American dollar, which means that Australian wines have got 50% more expensive for the Americans, and are therefore harder to sell.

Throughout that boom decade many individuals and many corporations bought into the burgeoning wine business. Big corporations bought up wineries all over Australia, concentrating most of the business into four large conglomerates. But many individuals made a life-style change as well, selling large urban houses and buying boutique wineries instead. These are the people who are now feeling the pinch. Exporting is hard and the huge recent harvests have reduced the cost of grapes to just over €300 a ton, less than half the price of two years ago.

Meanwhile, on the other side of the world, Chile and Argentina are the rising stars, in part because their wine is getting better and better, but also because their currency is cheap against the Euro. This point isn't lost on Australia's exporters and through a mixture of marketing, price reductions and cost-cuttings, they're fighting back. Some of Australia's better wines are going into screw-capped bottles: that's partly because it's a more reliable closure than cork, but partly too because it's cheaper by a factor of ten. Even some prestigious wines are being put into three-litre cartons as part of the move to shift the wines into previously unexplored markets.

As a result of all of this you can expect to see some bargains coming your way from Australia's better wine-makers.

Wine of the Week

Chateau Reynella, Basket Pressed Shiraz, 2001

All the elements that make a good wine have gone into this one. Careful selection of parcels of grapes, gentle basket pressing, open fermentation and finally a long maturation of eighteen months in oak. From the moment you uncork it and get the first whiff, you know you have a good wine in your hands. The taste is smooth and approachable, the structure is elegant, there's good fruit and enough back tannin that if you wanted to, you could store this wine for ten years or more.

Available: Joe Kelly's of Phibsborough, The Wine Centre Kilkenny, Ard Keen Stores, Waterford, The Mary B Wine Store, Arklow and O'Brien's Off-licenses. Priced around €23