Australian wine has long been the most popular plonk of choice for the British drinker, but its hold on the market may loosen following the country�s worst drought in more than a century.

Australian wine has long been the most popular plonk of choice for the British drinker, but its hold on the market may loosen following the country's worst drought in more than a century.

One in every four bottles of wine sold in Britain is produced in Australia with its popularity fuelled by its mellow flavour and reasonable price, but the cost of a bottle is set to rise after extreme weather wiped out large parts of the 2007 grape harvest.

The success of the Australian wine export has always been buoyed by a surplus in production, leading to cheaper deals overseas, but it is this surplus that has now been damaged.

Production is reported to have dropped from 2.1 billion litres to 1.8 billion litres and the drought that hit the key agricultural lands of the Murray-Darling river basin hard last year, is largely to blame.

Crops of cotton lint and rice have also suffered and it is estimated that the dry spell wiped off 1% from the £391bn economy for 2006-07.

Lawrie Stanford, manager of information and analysis at the government-run industry body Australian Wine and Brandy Corp, said that excess wine would dry up this year with an even lower grape harvest forecast in 2008.

"We expect the price impact will be coming through out of the 2008 harvest," he added, referring to wine released later this year.

"There will be a general trend up in price," said Mr Stanford, who added that he could not predict by how much the cost would rise.

Australian wine has always been competitively priced with brands such as Hardys, Lindemans, Wolf Blass, Xanadu and Jacob's Creek dominating the £5-£10 middle market. Five of the 10 most popular wine brands bought in Britain are Australian. Last year, Britons drank £1.08bn worth of Australian wine.

Melissa Worthington, of the Australian Wine Bureau in London, said: "It is not just the drought which has affected us, but also the impact of higher duties and a general move away from price promotions.

"It has been tough but we are in a good position to move forward.

"We have enjoyed a surplus stock since 2004 and we are looking towards getting back to average vintage yields this year. It is too early to speculate that that will be the case as picking has just got under way in a couple of states, but we are hopeful."

Independent wine trader Peter Goodman, of West End Wines in Glasgow, said that he had confidence that those who preferred Australian wines would still pay for a bottle.

He added that price rises were also expected to hit European wines given the increased cost of transport and glass facing the market.

Mr Goodman said: "Sauvignons and Chardonnays taste different the world over but if you like the taste of a particular Australian wine then I think you will pay a little more for the bottle that you particularly like."