Australia’s evolving role in the world’s wine markets

On 8 June 2011 Professor Kym Anderson of the Wine Economics Research Centre of the University of Adelaide spoke to the Barossa Next Crop Leadership Program at the National Wine Centre in Adelaide about Australia’s evolving role in the world’s wine markets. He outlined the main challenges to Australia’s wine industry today – falling winery profits, falling winegrape prices, rising bulk wine exports as a share of the total, and rising imports of wine as a share of domestic sales. He provides great insight into the underlying reasons and looks at the potential for this industry going forward.

Rounding off his presentation, the take-away messages were:

*      Boom/bust/slow-recovery cycles are normal for the wine industry

*      But the present one involved a more sudden and severe downturn than expected due to rapid acreage expansion in previous 15 years plus drought, and then GFC, strong A$, strengthened competition from other wine-exporting countries

*      Vine-grubbing in Australia and the EU is easing the over-supply, and growth in Asian wine imports is boosting demand

*      Climate change may require vignerons to alter their varietal mix and/or moving to higher latitudes and altitudes

*      If Australia switched to volumetric wine tax, expect quality upgrading

*      But climate change and tax change will hurt irrigated areas most, as is greater competition from lower-cost exporting countries

*      Foreign investment could put a floor on vineyard and winery asset values in Australia

*      More investment in innovation is vital (R&D and promotion)

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