In the five years through 2012-13, Australian grape growing industry's revenue is expected to decrease by 11.7% to total $1.06 billion annually.
The industry is unpredictable due to uncertainty surrounding future conditions and its dependence on external variables reports property observer.
The Australian grape growing industry is highly dependent on the winemaking industry as it takes up to 89 per cent of its production.
Issues affecting the industry are water availability, rainfall, activity in the downstream markets and wine producers' use of wine grape contracts.
The industry is highly dependent on downstream wine exports, which contribute over 38% of revenue to wine manufacturers each year.
The high Australian dollar has reduced demand for Australian wines on the global market causing similar difficulties for wine manufacturers and growers.
Australian growers are receiving lower prices considering weaker demand for wine in export markets to countries such as US and the UK.
The industry revenue is expected to increase by only 2.3% in 2012-13.
The industry fluctuates between conditions of over and under supply. Recently, high levels of production caused excessive grape production resulting in downward pressure on prices.
Some spot markets have prices quoted below the manufacturing costs, resulting in some growers making large losses.
Wine manufacturing demand is expected to cause industry revenue to decline annually by 1.8% over the five years through 2017-18, to a total of $967.5 million.