Big companies have bought up water rights to keep Australia's main brands alive - at a cost

Clouds on the horizon for the wine industry? They wish. The inch of rain that fell on the Saturday before Christmas Day in south-east Australia was writ large in newspaper-headline joy. For a short while – until temperatures returned to furnace levels on New Year's Eve – you didn't have to shower with a bucket to keep the flower beds watered or worry that your dog might get a nasty bite from a thirsty snake.

Under the hard glare of an unremitting Australian sun, water available for irrigation in the Murray-Darling basin has increased to around one-fifth of normal. Hardly great news to the beleaguered wine growers; but better than zilch. Yet while the citrus groves are dying in South Australia's Riverland, the vineyards still look green and healthy. The big companies that own or run them have been buying up water rights to keep Australia's big brands alive – at a cost.

Others will be bringing truckloads of grapes from Western Australia to cope with shortages in supply. This isn't new. One of Australia's great strengths has been its ability to blend wine across different regions. What is likely to have a significant impact on a wine industry, whose exports have grown from AU$360m (£160m) to AU$3bn (£1.3bn) a year in just over a decade, is if drought-affected vineyards become a permanent victim of climate change.

Old-timers remember drought like this. It happened in 1944 and again in 1973. They'll also remind you that many of Australia's best wines came from vineyards that were "dry-grown", in other words, relied purely on any rainfall that arrived, or didn't, by the grace of God. This is why Australia's wine community is in two minds about the effects of the drought.

For sure, the latest forecast for an even lower crop in 2008 than the exceptionally small 2007 vintage looks bad. But many of Australia's "cooler", high-quality wine regions like Adelaide Hills, Tasmania, Margaret River and Clare Valley are standing up well. And unnaturally low yields in the irrigated "engine room" of Australian wine production could yet bring a leap in quality.

One unwelcome cloud that recently flickered across the horizon was a speech made by Tesco's wine guru Dan Jago in Melbourne, who took the Australians to task for producing wines he called too alcoholic at 13-14 per cent, and which lacked character. It was a bitter pill for the Aussies to swallow. But Jago was right. Many of Australia's everyday brands have become boring compared with Chile, Argentina, not to mention what's starting to come out of southern France, Spain and Italy.

Yet as Michael Hill-Smith, of the Adelaide Hills winery Shaw and Smith, puts it, "contrary to the stereotype, not all Australian wines are big, high in alcohol and oak". Aromatic rieslings from Clare, Eden and Frankland Valleys continue to grow in stature. Lighter Hunter Valley and Margaret River Semillons and Adelaide Hills and Tasmanian sauvignons are on the up. There is a move away from porty reds to more elegant and drinkable shiraz and cabernet sauvignon along with a growing number of "burgundian" pinot noirs from Yarra Valley, Mornington Peninsula and Tasmania, and the growing popularity of Spanish, Portuguese and Italian wine styles.

The prospect of Australia losing its place to France as the UK's number one importing country is causing further consternation. But why? Wine isn't all about quantity and these difficult times could be just the opportunity Australia needs to demonstrate, as Australia Day looms next Saturday, to re-focus on the variety and quality emerging from its endlessly fascinating wine scene.