SOUTH Australia is still the wine state of Australia, despite a major blunder by national statisticians.

However, drought, lack of irrigation water and the closure of several large wineries have made their mark on the industry, Adelaide Now reports.

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The Australian Bureau of Statistics is to issue an apology for releasing incorrect data about the Australian wine industry.

Annual report revealing NSW had overtaken South Australia as the largest wine producing state in 2009 was incorrect, it said.

South Australia remains the largest wine producer, with 519 million litres compared to 437 million litres by NSW.

The ABS said Victoria remained the third largest wine state, producing 185 million litres, followed, while Western Australia produced only 34 million litres.

South Australia's wine production has dropped from a peak of 733 million litres in 2003-04 and is expected to decline further this year due to a smaller harvest.

A further drop in SA is possible this year, with early estimates indicating the Riverland will produce only 280,000 tonnes of grapes, compared with 397,000 tonnes last year.

The plight of the SA wine sector is shown in the annual Australian Wine and Grape Industry report by the ABS.

The state still grew more grapes (747,592t) than NSW (534,322t) last year and remains the largest exporter, with 448 million litres worth $1.574 billion, compared with NSW with 201 million litres worth $605m.

Riverland Wine Grape Growers Association executive officer Chris Byrne said the closure of three large Riverland wineries and the success of the Riverina's Yellowtail brand have had a significant impact.

"The Riverland's grape growing income will be well below $100m this year, down from $255m in 2002," he said.

The SA Wine Industry Association's immediate past president John Angove said SA should have received a higher share of water to meet the needs of permanent plantings because it is at 48 per cent of its allocation, compared to NSW permanent allocations of 97-100 per cent and Victoria's Murray Valley at 63 per cent.

Penfolds senior white winemaker Kym Schroeter said crops so far harvested this vintage were down in quantity but the quality was pleasing. "We look like seeing really good quality with the Adelaide Hills chardonnay," Mr Schroeter said.

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