Australian wine Essay Example

  • Category:
    Other
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    2083

7AUSTRALIAN WINE

Australian Wine

Introduction

The
viticulture industry in Australia has grown steadily in recent years. This brief intended for academic, commercial, or other appropriate use, provides an overview of key information regarding the industry and its significance in Australia in the coming years as it gets integrated into the Asian century economy. The growth of Asian tigers has brought a lot of benefits to Australia owing to geographical convinience.

Australian Wine sustains the Asian demand

The Australian wine industry has been ranked as the fourth largest worldwide and makes a vital contribution to the Australian economy (Silverman, 2010). Asian econmic growth will drive demand for wine, mineral and energy resources of Australia. Key facts on Australian wine are as follows:

  1. About 40% of Australian wine (530 million liters per year, or 30 liters per capita) is consumed domestically. Annual domestic revenues for Australian wine total AU $2.8 billion (Gibson, 2011).

  2. Approximately 750 million liters are produced annually for the international export market to Asia which has higher demand for more sophisticated cosumer goods (Gibson, 2011).

  3. The five most significant markets for Australian wine exports are the UK, US, China, Canada as well as and Germany (see Table 1)

  4. By the end of the fiscal year 2011, 60% of Australian wine production (730 million liters) was expanded (Gordon, 2010).

  5. Wine is produced in every Australian state, with the 60 designated wine regions totaling approximately 160,000 hectares (Gordon, 2010).

  6. Wine production is mainly concentrated in the cooler southern regions of the country, including South Australia (the country’s largest wine producer), New South Wales, Tasmania, Victoria, Western Australian and Queensland (see Figure 1).

Table 1. Exports of Australian wine to China and others, by principal market and value.

Countries

2,386 100%

2,552 100%

2,748 100%

2,801 100%

2,992 100%

Source: Palmer, Margot, 2007, Australian Wine. An Export Success Story (Sydney)

Main producing regions

Figure 1. Wine-Production Regions in Australia

Australian wine

Source: Australian Government, 2007

Positioning Australian Wine for Asian Century

Australia will have to be positioned to reap advantges of upcoming opportunities after rising through various challenges to reach a period of sustained industrial growth. Success of Australian wine industry is not by chance but choice. Since the early 1980’s the Australian wine industry has interacted with Asian region in a sustained reputation and growth. It becomes known as one of the foremost wine producers to the Asian and world markets. Globally, Australia still holds 4-5% of the wine markets (Merce, 2010). Wine making in Australia started in 1788 in Australia when the first vine cuttings were brought to the Australian shore by Captain Arthur Phillip at Sydney Cove. Australia requires resilience and growth in productivity by creating new ways of connecting and operating in the growing Asian markets.The initial vines were not successful, but many success stories followed later on (Williams, 2007). The wine industry will benefit from Australia’s integration into Asia economically.

The introduction of major growth in the wine industry started with the beginning of European immigrations from Switzerland and Germany (Merce, 2010), which brought the required experience as well as information to begin wine cultivation in the cooler southern regions. This has driven the sales from 3% to 15% from 2009 to 2012. By 2025, Australian vineyards in many of today’s major viticulture areas will be preferred to Asian consumers. The demand was accelerated by Chinese and Japanese demand for Australian wine.

Figure 2. Grape growing areas in Australia

Australian wine 1

Source: Australian Government, 2011

Demand for Wine counters challenges of Viticulture

Though there are various challenges are associated with viticulture the Asian market has brought resilience and growth in this industry. First, the increased pressure and salinity in water resources (Stevens, 2008) particularly in the main grape-production districts of Southern Australia has been a major challenge for the future advancement and viability of all grape industries. Second,
the considerable amount of time and resources required to correct the salinity problem restricts the land and water resources that are usable for viticulture.

Various challenges can also be linked to the table grape industry. First, particularly in North Australia, there is lack of new varieties of grapes to satisfy certain preferences in the Asian market (Oag, 2010).
Second, restricted knowledge of vine performance and physiology presents a challenge. Other issues may include floral initiation, inflorescence, bud fruitfulness, berry growth, dormancy, vine nutrition, and management of the mechanism controlling bud as well as vegetative growth (Benlloch, 2007). In Northern Australia, impediments include a lack of market intelligence, poor Australian contacts, destination markets and a lack of export experience among grape growers.

Outlook of the commodity: Technology

. (White, 2010) On the other hand, since the mid-2000s, better machines have resulted in overproduction and a glut in the industry, resulting in challenges caused by the shocks of demand and supply. (Wongkaew, 2009) have emerged both in Australia and Asia, and small wineries selling cheaper winenternet has been both a challenge and a blessing to the industry. For instance, e-commerce has resulted in lower pricesIbetter machines and the , including The advancement of various technologies in Australia like in Asia

Australian wine prices are favorable to Asian consumers who prefere consistent and quality production capacity. It earlier led to a fall in grape growth as well as prices in the Asian market. Private industries have also grown resulted in a fall in wine prices of wine. In addition, the image of Australian wine affects prices (Bailey, 2011). Wine exports have been hindered by the recession in key export markets, and the Australian dollar has soared, causing wine exports to become uncompetitive (Carroll, 2012). In addition, the industry faces competition from new producers of low-cost wine. Other challenges include changing consumer preferences and a substantial oversupply of wine grapes and wine, which has resulted in lower prices that have put some producers out of business.

To win the Asian market, a number of policy reforms were implemented. The exemption of small wineries from the Australian Governments wine sales tax for own-marketed wines has added to the incentive to explore these new options. Some wineries are also getting involved in tourism, going beyond standard cellar-door activities to restaurant and entertainment services so as to diversify, build economy and improve engagements with Asia.

Outlook: Climatic change

Grape production in the wine regions in Australia particularly the land on the Murray River and Murray Valley in South Australia and on the Murrumbidgee River in New South Wales has been greatly affected by climate change. It has been estimated that by 2030, the regions would be as 2.5 degrees Celsius warmer than the region is at present (Fyfe, 2005). Such climate change results in a change of harvesting season which affects the quality of wine.

Outlook: production

Table 2: Key facts about the Australian wine and grape industry, 2009-10

Area of bearing vines (hectares)

Total wine grape production (tonnes)

1,533,246

Fresh grapes crushed (tonnes)

1,603,012

Beverage wine production (million litres)

Beverage wine inventories (million litres)

Domestic sales of Australian wine (million litres)

Domestic sales value of Australian wine ($ million)

Exports of Australian wine (million litres)

Exports of Australian wine ($ million)

Imports of wine (million litres)

Imports of wine ($ million)

ince the fiscal year 2009-10, vineyards covered an area of 152,000 hectares and produced an average of 10.1

Source: Australian Government, 2009

Stonnes per hectare, resulting in 1.6 million tonnes of grapes that were crushed to produce 1.14 billion litres of wine (Refer to Table 2). A total of 788 million litres (or 69%) of this wine was exported, while only 64 million litres of wine was imported. Therefore, the total domestic sales of wine were recorded to be 470.8 million litres. See Table 2 below for additional information.

Environmental and ethical issues in the industry: Water and Environment

Asia looks at Australia’s future based on the presence and availability of water. For instance, many wine grape producers and wineries rely on irrigation water from the Murray Darling River system, which in November 2007 was recorded as its lowest total volume 1,885 gigalitres since the 1940s (Goudie, 2011). High temperatures are leading to low rainfall. The present low water levels will cause low water availability for irrigation in future growing seasons, thus reducing the availability of wine grapes. Multilateral organizations in Australia and Asia are working side by side to ensure that organic and sodium content of wastewater can be destructive to the environment, the wine industry has also been scrutinized for its treatment of wastewater with the Grape and Wine Research Development Corporation providing financial support to investigate this issue (Bailey, 2011).
This investigation will have increasing consequences for the marketing and operations of wine manufacturing in the domestic and Asian markets.

Figure 3. Australian wine sales 2000-2012

Australian wine 2

Source: Australian Government, 2011

n the fiscal year 2007, the Australian Australian wine 3Iwine export market was worth 2.8 billion Australian dollars (AU$) annually (Refer Figure 3). This means that the industry has grown at 9%pa
of these sales nearly AU$2 billion comes from North America and the UK; the latter has become Australia’s greatest still wine suppliers. In the fiscal year 2007, the North American market statistics in Australian wine recorded for a 17% share of the total value of the wine imported from the U.S. This is behind France with 31% as well as Italy with 28%. Australia’s wine import has lagged behind because of the new marketing strategies that were created for the main UK market (Cholette, 2011).

Figure 4: Austrailian exports including wine to East Asia

Source: Australian Government, 2011

The strategies encouraged consumers to employ premium wine Australian brands. It also helped them be able to maintain the sales of the lower-margin high-volume brands partly because of fluctuations in exchange rate.

Conclusion

Economic integration of Australia into Asia will accelerate and improve its wine sales as it has done over the last four decades. Ways to expand the Australian Wine industry started in the 1970s taking advantage of landmark tariff cuts in 1973 (Fickling 2012). Australia’s wine industry benefits from the comprehensive reforms and frameworks that increased momentum since the mid‑1980s. Australia’s successful response and reforms to the Global Financial Crisis founded a solid base for Australians to take advantage of opportunities emerging from the Asian region. The surge in Asian middle class and resource demand has brought untold gains of success to the entire nation. The Australian wine industry has faced many challenges, including highs and lows in production and quality. However, the approaches used to tackle these issues have helped Australia to become one of the world’s foremost wine producers. The nation has had recent policy reforms in many areas; regulation, tax, resources boom management, skills, school funding, increasing connectivity and infrastructural investment. These are essential components of Australia in the Asian century agenda to additionally reinforce economy’s resilience especially in the wine industry. It also allows for diversity and industrial ability to engage with Asia.

References

Bailey, P., 2011. Australian Wine Industry – State of Play, Sydney: Australian Government.

Benlloch, R., 2007. Floral Initiation and Inflorescence Architecture: A Comparative View, UK: Oxford University Press.

Carroll, J., 2012. Wine Annual, Sydney: Global Agricultural Information Network. Cholette, S., 2011. The Globalization of the Wine Industry, San Francisco: San Francisco State University.

Fickling, D 2012, Treasury Wine Profit Beats Estimates on Higher Asia Sales. Bloomberg.

Fyfe, M., 2005. The murray river; focus — climate change: icons under threat: [First Edition], Melbourne: Fairfax Digital.

Gibson, T.,2010. Global Wine Alliance, Global Wine Assoication, Sydney, viewed 15 August 2013
<http://globalwinealliance.com/wine-region/australia/> Gordon, W., 2010.
Australian wine grape production, Canberra: A.C.T.

Goudie, A., 2011. Water, Climate Institute, Washington <
, viewed 16 August 2013 http://www.climate.org/topics/water.html>

Merce, P., 2010. History of winemaking in Australia, A Nice Drop, Adelaide, viewed 15 August 2013 <
http://www.anicedrop.com/historyofaustralianwine.php> Oag, D., 2010.
Grape production in the Asia-Pacific Region, Queensland: Food and Agriculture Organization of the United Nations.

Palmer, M., 2007. An Export Success Story, Sydney: One World Publication.

Silverman, M., 2010. Competition in the Global Wine Industry. , San Francisco State University, San Francisco, viewed 16 August 2013 <
http://online.sfsu.edu/castaldi/bie/globcase.htm> Stevens, R., 2008.
Vineyard Irrigation, Loxtion: The Australian & New Zealand Grapegrower & Winemaker.

Tony, 2013. Australia’s Best Wine Regions. <
, Wine Stats, Sydney, viewed 14 August 2013http://www.winestats.info/category/vineyard-area/>

White, A., 2010. Overproduction — the Greatest Challenges to the Wine Industry., Articles3k, New Zealand, viewed 15 August 2013 <
http://www.streetdirectory.com/food_editorials/beverages/wine/overproduction_the_ greatest_challenges_to_the_wine_industry.html> Williams, P., 2007.
Proceedings of the thirteenth Australian Wine Industry Technical Conference, Adelaide: Australian Wine Industry Technical Conference Inc.

Wongkaew, S., 2009. An Introduction to Australian and New Zealand Wines. <
, About.com Guide, Sydneyhttp://australianfood.about.com/od/alcoholic/a/WineIntro.htm>
www.theaustralian.com.au/national-affairs/opinion/exports-fa 

www.crikey.com.au/2013/07/30/asian-demand-for-australian-goo