If you think of German wine as cheap, sweet and basic, you're in excellent company. When the go-ahead German wine company Zimmermann-Graeff & Müller commissioned market researchers to find out what UK consumers thought of German wine, "cheap, sweet and basic" came the response. Ten years ago, it looked as if Germany was starting to turn a corner. With unlovely lieb at an average price of £2.75 per bottle and shock-horror hock at £2.19, Germany's big producers created New World-style brands like Devil's Rock and Fire Mountain for the new drier styles. Tesco even thought of stocking them in its New World section but felt uncomfortable at the idea of passing Germany off as Australia. What happened to the Devil's Rocks and Fire Mountains? Well, the Devil didn't Rock and the Fire went out on the Mountain as the brands bombed.

"There were just too many brands chasing too few customers," says Johannes Hübinger, MD of ZGM. You may not have heard of ZGM, but the Mosel giant sells every third bottle leaving Germany for the UK. A combination of rising duty, a strengthening euro and the price of bulk wine in Germany doubling has forced Hübinger to keep the price of liebfraumilch and hock artificially low to get a foot in the door with more upmarket brands such as the crisp, apple and pear-flavoured 2007 Palatium Pinot Blanc, £5.99, Tesco, and juicy, off-dry 2006 Tesco Finest Steillage Riesling, £5.99. "Lieb costs £2.27 but would be £3.99 if the big four high-street supermarkets didn't need it as a loss leader to keep their loyal customers," says Hübinger. In an echo of Tesco's idea, he tried getting UK consumers to taste his Zimmermann label side by side with the same wine, but labelled Carpenter from Australia. "They thought the German wine was poor but the 'Australian' very good."

Against such a background of negative perception, it's tough for German wine to extricate itself from the mire. Yet the quality of its trump card, estate-produced riesling, has never been better. Climate change has helped the late-maturing riesling to ripen when once it struggled. According to the Mosel producer Ernst Clüsserath, "young winemakers are increasingly better trained, better educated and concentrate on quality and not quantity". The result is a new style of dry riesling, or trocken, in which the battery acid of yore has been replaced by a richer, rounder, food-friendly style that teeters on the edge of off-dry but retains the natural acidity that makes good German riesling so uniquely appetising. A new complement, the off-dry style called feinherb, is also much better balanced than the sweet and sour rieslings of yesteryear. And from a price perspective, estate riesling has by and large avoided the Bordeaux trap of luxury branding and investment.

Thanks to a string of fine vintages, 2003 and 2005 in particular, Germany's estates are leading a riesling revolution with the latest, 2007, producing wines of great purity, balance and class. 2007 was a particularly good vintage for dry styles from Leitz and Künstler in the Rheingau, Karthäuserhof in the Mosel, Wittmann in the Rheinhessen, Müller-Catoir and Bürklin Wolf and von Buhl in the Rheinpfalz. But it's also a terrific year for the traditional, off-dry spätlese and more delicate auslese wines thanks to their unique combination of intense flavour and potential longevity. For exceptional examples of the juicy spätlese and auslese rieslings, my money, or as much as I can spare at least, is on Schloss Lieser, Robert Weil, Fritz Haag, Selbach-Oster and the great Mosel master, J J Prüm.

Pre-release offers from specialists Howard Ripley (020-8877 3065; www.howardripley.com) and Justerini & Brooks (020-7484 6400; justerinis.com) are a must for all riesling lovers.