The third-generation family business established in 1928 is not the only Australian wine company to buckle under the weight of the sector's chronic oversupply of grapes that has helped flood the market with cheap product.

The industry is producing a surplus of 100 million cases a year - a figure that is expected to double within two years - while the strengthening Australian dollar is crimping export sales to the key markets of North America and Europe.

Casella Wines, whose Yellow Tail brand took the US by storm, has suffered a near-50 per cent drop in annual profit. Australian Vintage, the group formerly known as McGuigan Simeon, sustained a loss of $123.64 million last financial year after restructuring charges and millions of dollars in write-downs.

De Bortoli Wines, producer of brands such as Noble One, Gulf Station and Windy Peak, reported a net loss of $1.6 million for the year to June 30, a big turnaround from a $20.7 million profit in 2007-08.

According to documents lodged with the Australian Securities and Investments Commission, revenue for the period was slightly down, falling to $197.5 million from $203.4 million. Managing director Darren De Bortoli blamed a litany of structural and macro-economic factors for the loss.

"The consolidated loss has been attributed to declining product margins in a saturated market, investment losses and foreign-currency losses as a result of the slowing economy," Mr De Bortoli commented in the directors' report.

Deloitte Wine Industry group leader Stephen Harvey said the industry needed to make some hard decisions following a near-record grape crush in the 2008 vintage, a fluctuating Australian dollar and thinning margins.

"It's a question of whether we start ripping out vines, and there are some that have got to come out because some vineyards are unsustainable, a lot of them resulting from the tax-driven schemes of the late 1990s," he said.