Australian Vintage boss Neil McGuigan has called for an overhaul of the way wine is taxed in Britain, Australia's largest wine export destination.
He said the billion-dollar export industry risked pushing people into ready-to-drink spirits if it could not produce a flavoursome wine with "guts" that was also only 5.5 per cent alcohol.
Mr McGuigan, a former manager of Rothbury Estate and production manager for Australian Vintage before taking on the chief executive role in 2010, said the company was working on a ground-breaking low-alcohol wine for the UK market to benefit from tax breaks on low-strength beverages and bolster the company's offshore earnings.
But he said he had also begun agitating in Britain for a lower-alcohol tax band between 5.5 per cent and 10 per cent that would deliver a full-bodied wine, generate tax revenue for government and also limit alcohol intake.
"We can make very, very good wine at 9 to 10 per cent alcohol [level], white and red, so what that does is actually help everyone," Mr McGuigan told BusinessDay.
"It ticks the box for the anti-alcohol people because we are introducing a product that is at a lower alcohol rate than normal traditionally [made] wine; we are helping the consumer because we are giving them a better beverage at a slightly higher level than 5.5 per cent, tick that box; and third, the government still gets a taxation benefit because we will be selling more of this good-quality wine at a lower tax rate."
Australian Vintage's wine brands include McGuigan, Nepenthe, Tempus Two and Yaldara.
In an attempt to tackle problem drinking and reduce alcohol-related health issues, the UK reduced tax on alcoholic beverages below 5.5 per cent. This benefited segments of the beer market - tailor-made for low-strength beer - but made it tougher for winemakers who typically struggle to create a flavoursome wine with such a low alcohol level.
Mr McGuigan said producing wine under 10 per cent alcohol was something the winemaker was good at, but just as importantly, it was a craft the Australian wine industry needed to perfect to keep consumers loyal to the beverage.
"There is a financial advantage for the consumer to buy the lower-alcohol wine, and we are answering a demand in the marketplace and specifically for the UK market.
"Because, what can we do if we don't get 5.5 per cent alcohol wine correct in a bottle? We might actually force people away from the wine sector."
He said Australian Vintage, formerly McGuigan Simeon and one of the few remaining pure-play winemakers listed on the ASX, had invested $2 million in machinery to create a 5.5 per cent alcohol wine that would also taste great.
"We think we will have the best low-alcohol wine on the market worldwide ... and will have that in the UK market in August."