Australia's dry threatens wine drought

By Rob Taylor

YENDA, Australia (Reuters) - The winding lines of shipping containers outside Casella Wines may mark the high-point of Australia's A$3 billion (1.2 billion pound) wine export market as drought and possible climate shift bite.

John Casella heads the country's biggest family winery, based 600 km from the coast in the farming town of Yenda, the "enda the earth" jokes Viticultural Manager Kelly Drysdale.

The booming business dispatches 40 containers of wine to the world every day, turning over A$300 million a year, mostly on the back of exports to the United States.

But Casella fears the halcyon days may be past as Australia endures the worst drought in decades and with the spectre of climate change and a hot summer ahead.

"If we don't get rain the budget end of Australian wine will disappear and it will be replaced by budget imported wines, casks, cheap sparklings," he told Reuters in his modest office facing towering wine storage tanks.

"I would say if it does dry significantly, I'd say we will lose two-thirds of our exports."

Casella's budget Yellow Tail tops the U.S. import market. More than 8 million cases made their way to America in 2006, up 7.3 percent and commanding a healthy slice of the 73 million cases imported in the United States.

Australia's wine industry is one of the country's export successes, with sales to China and the U.S. pushing exports worth around A$3.007 billion and 805 million litres in the year to July, according to the Australian Wine and Brandy Corporation.