AUSTRALIAN wine exports have plummeted as wine industry heavyweights hold crisis talks in a desperate bid to tackle the nation's worsening over-supply.

The Winemakers Federation of Australia, Winegrape Growers Australia and the Australian Wine and Brandy Corporation met last week following claims that the industry would need to shrink by 20 per cent.

Wine Grape Growers Australia executive director Mark McKenzie said the group had started a project to investigate the imbalances between supply and demand.

"We're trying to assess, in an accurate way, what the real picture is," Mr Mckenzie said.

"We're taking a more objective and scientific approach to dig into data, look into market segments, look at production and give some direction to the industry."

The meeting came just days prior to the release of Australian Wine and Brandy Corporation figures showing a massive drop in wine exports.

Total wine volume fell 11 per cent last year to 698 million litres, while the value fell 18 per cent to $A2.46 billion.

The average price declined 8 per cent to $A3.53 per litre.

Australian wine exports reached a high of $A3 billion in 2007.

The AWBC Wine Export Approval Report shows during the first half of the year, the strong Australian dollar placed enormous pressure on exports.

A low 2007 harvest and expectations of a similarly small harvest last year, which did not eventuate, placed uncertainty on supply.

During the second half of last year the Australian dollar began sliding, but the global credit crisis started to bite placing additional pressure on exports.

Volume declined for the first time since 1995 and the value fell for the first time in 15 years.

Corporation senior analyst Peter Bailey said the slowdown was not unexpected.

This was due to "such factors as the global financial crisis, exchange rate volatility, continuing intense competition from other suppliers, tightening margins and the extended drought causing initial supply uncertainty", Mr Bailey said.

Mr McKenzie said the positive aspect of the report was the growth in China and Hong Kong.

The value of markets increased by $18 million to $74 million during the past year.

Mr McKenzie said the Chinese market might not feel the effects of the recession as much as other markets.