Buried in yesterday’s annual profit announcement from beer and wine group Foster’s was some bad news for Australian wine tipplers – it’s time to stock up.

The booze giant reckons that from around April and May of 2008 onwards, wine prices here are going to rise, with the probable size of the increase put at 20% or more.

Foster’s says that while it has “secured the vast majority of its intake requirements for the drought and frost affected 2007 Australian vintage, lower yields from company vineyards and increases in grape and bulk wine prices will increase the cost of the Australian vintage 2007, before SGARA, by approximately 20% compared to the Australian vintage 2006 which was a very low cost vintage.

“The increased cost of Australian vintage 2007 will be realised in COGS over a number of fiscal years beginning late in fiscal 2008.

“At this early stage the outcome of Australian vintage 2008 remains highly dependant on water availability. Current expectations are for yields similar to vintage 2007 levels.”

The 2007 vintage saw a fall of around 30% or 400 million litres, with yields among the lowest in 30 years. The size of the harvest was the lowest for seven years and Fosters believes that will be repeated in the 2008 harvest.

With substantial price rises forecast, Fosters (which is the biggest wine group in Australia and the second largest in the world) and other producers will be heading for a clash with the big retailers, especially Woolworths and its sprawling liquor empire which sold $4.1 billion worth of grog in the year to June 30.

That’s only $600 million short of Foster’s total sales in Australia and around the world.