An independent economic report produced by AgEconPlus, commissioned by Wine Australia, has revealed that the Australian wine sector (defined as the aggregate of the grapegrowing, winemaking, and wine tourism subsectors) contributes $45.5 billion to the Australian economy each year. This contribution is a 13 per cent increase from the value of $40.2 billion in 2015, an average growth rate of 3 per cent per year. Wages and salaries have increased by 4 per cent per year since 2015 to a combined $12 billion, and value added has increased by 3 per cent per year to $22.5 billion. Employment in the sector declined slightly by 1 per cent per year to 163,790, reflecting ongoing mechanisation in the grapegrowing and winemaking subsectors.
Growth since 2015
This growth in gross output is reflective of the increase in demand for premium Australian wine in overseas markets (see Figures 1 and 2). Exports have risen in value by 36 per cent between the 2016 and 2019 financial years (11 per cent on average per year). The average price of exports has also increased from $2.90 per litre in 2015–16 to $3.58 in 2018–19, an average increase of 7 per cent per year. This has contributed to an increase in total winemaking revenue to $6.3 billion and the average winemaking sector wage to $70,412 (from $65,000 in 2015).
Figure 1: Value growth in Australian wine exports
(Source: Wine Australia)
Figure 2: Growth in wine sector’s gross output
The higher demand for wine has flowed on to increasing grape prices (see Figure 3), increasing the revenue of the grapegrowing subsector. According to the AgEconPlus report, this has dramatically impacted the profitability of grapegrowing in Australia ($125/ha in 2015 compared to $1,394/ha in 2018).
Figure 3: National average winegrape price, National Vintage Report 2018
(Source: Wine Australia)
How does wine compare to other agricultural exports?
The wine sector is not the only agricultural industry contributing significantly to Australia’s economy and rural communities, in fact it is only a small part of a broader family of agricultural export industries (see Figure 4). Wine makes up approximately 9 per cent of Australia’s agricultural exports by value, ranking fifth after beef, wheat, wool and sheep meat. However, there are two key differences between these industries and Australia’s wine sector:
- wine is a sophisticated manufactured product where the processing value is added in Australia (often in the region where the grapes were grown), and
- domestic and international wine-related tourism makes a significant contribution to regional economies. In the year ended March 2019, 8.3 million domestic and international visitors included a winery on their trip, spending $9.3 billion in Australia in the process.
Figure 4: Australia’s top 10 agricultural exports by value – 2018-19 financial year
The report found that, given that the value-add (winemaking, packaging, marketing etc.) largely takes place in Australia, local economies benefit beyond direct employment and output through grapegrowing.
How does wine compare to beer?
Wine and beer have nearly equal share of consumption in Australia (based on pure alcohol consumption, ABS) and the contribution to the Australian economy of the two sectors is also similar. Beer contributes $16.5 billion (Brewers Association of Australia) to the Australian economy, while the winemaking subsector on its own contributes $18.6 billion in output. This excludes the grapegrowing sector with an output of $3.9 billion and the wine tourism sector, which contributes $27.5 billion.
While the direct link between winegrape growing and winemaking is clear, beer production is only one of the uses of barley grown in Australia. The beer industry also does not (yet) have a large tourism component, although this has been changing in recent years due to the rising popularity of visiting craft breweries. Adding these two subsectors to the total wine sector contribution is reflective of what makes the Australian wine community unique in the local economy.
You can read more about the Australian wine sector’s economic contribution here