One of Australia's largest wine companies says Australian winemakers are producing too much wine because of tax subsidies which are blighting the industry.
Treasury Wine Estates chief executive David Dearie says Australia's Wine Equalisation Tax is widely rorted.
Treasury Wine Estates owns more than 80 brands internationally, including the Penfolds, Lindeman's, Rosemount Estate and Wolf Blass brands in Australia, as well as New Zealand's Matua Valley.
The ABC reports the company recently dumped $A35 million worth of wine from its inventory in the United States as part of a total writedown of $A160 million.
Mr Dearie said Australia's 29% tax on the wholesale price of wine can include rebates of up to $A500,000 for small wineries.
"It is widely rorted, underpins the excess supply that has blighted Australia wine and is enjoyed with relish by our competitors across the Tasman."
Mr Dearie said the rebate cost around $A200 million in 2008 - 2009, the rebate is forecast to hit $A310 million in 2015 - 2016.
He said that should dismay the wine industry and Australian taxpayers.
Instead of subsidies, Mr Dearie said the industry should be working with government to identify new investments to rebuild 'brand Australia' in international markets and entice new consumers to the cellar doors.