2011, Volume 14, Paper 88

Charting a Course for the Australian Wine Industry: Insights from New England Australia.

Stuart Mounter – School of Business, Economics and Public Policy, University of New England. Email: smounte2@une.edu.au

Introduction

For a period of almost thirty years the Australian wine industry experienced rapid growth and a concurrent expansion in productive capacity, buoyed by higher prices largely attributable to increased export demand. For example, from 1990-91 to 2007-08, production expanded from 346 million litres to 1.25 billion litres per annum, with export volume increasing from 57 million litres to a little over 714 million litres in the same time period (ABS 2009). This expansion saw a marked increase in the number of domestic wineries, from approximately 600 in 1990-91 to almost 1900 in 2004-05. It also witnessed a geographic dispersion of grape growing and wine production; with the Australian Bureau of Agricultural and Resource Economics (ABARE) recently listing no fewer than 86 wine producing regions (Jackson 2009).

However, lately the Australian wine industry has entered far less certain times. In a joint statement released in November 2009, key industry organisations argued that 20 per cent of bearing vines in Australia were surplus to industry requirements (WRAA, 2009). This equates to
a surplus stockpile of 100 million cases set to double in two years if current production is maintained (Gent, 2010, p.2). Ostensibly the industry has been a victim of its own development and success, the consequences of which are oversupplies of both grapes and wine. Other factors cited as contributing to the present adverse market conditions included an increase in global competition, changing consumer preferences in major export markets, a loss of domestic market share to imported wines, increasing input costs (particularly for irrigation water) and a strong Australian currency (Jackson 2009; Gunning-Trant and Kwan 2010) The main conclusions of the joint industry report were that restructuring of the industry is necessary to reduce surplus production and to address issues of competitiveness and profitability (WRAA, 2009).

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