THE soaring Australian dollar is costing major wine exporters millions of dollars

While exports reached a record $3.02 billion last year, experts say a combination of drought, the high dollar and foreign competition means the industry now faces significant challenges.

Bottled wine exports are still growing but at a declining rate and experts believe the growth may stop within two months.

The rising dollar is particularly hitting the price-sensitive cheaper end of the market, as the buoyant Aussie dollar makes exports more expensive.