The strong Australian dollar, coupled with the aggressive tactics of supermarket giants Coles and Woolworths, has caused a plunge in the price of European wine.

Prices of some European brands have dropped by 30 per cent, with a bottle of French Moet & Chandon now sometimes cheaper than the local version, Domaine Chandon.

Coupled with a cultural cringe that assumes foreign wine must be better, the low prices for obscure European drops have caused a flow of wine into the country - and money out - the local industry is desperate to stem.

''It's absolutely fantastic,'' the Melbourne wine critic Jeremy Oliver said. ''If you have $100 in your pocket, that will get you a top bottle of Australian cabernet or shiraz. Today it also buys you a pretty serious Bordeaux, a very good Italian from any region or a sensational Spanish red.''

The Australian industry's response to the deluge of foreign wine is a new marketing campaign asking consumers to consider patriotism as well as palate.

Wine Australia wants people to stick to local wine on Australia Day and, if they catch anyone drinking an offshore drop, to ''pull down their strides''.

The organisation's regional director, Aaron Brasher, said as well as the high Australian dollar, which was worth about 81 euro cents yesterday compared to about 71¢ a year ago, European producers also benefited from subsidies, economies of scale and lower labour costs.

''If you look at Spain or Italy, their cost of inputs would be lower,'' Mr Brasher said.

Wine has also been caught up in the price wars between Coles and Woolworths, he said.

''Coles and Woolworths are actually importing their own wines now and cutting out the middleman,'' he said. ''Therefore their prices are more competitive.''

The high dollar dealt a double blow to local producers, making exporting more difficult while French and Spanish wines flooded bottle shops.