Australia’s changing competitiveness in global wine markets

Abstract

Given the close link between Australia’s wine export prices and wine grape prices, both grape growers and wineries, along with their industry leaders and input suppliers, need to understand the developments altering Australia’s international competitiveness in wine markets at home and abroad. The aim of this project was to analyse key market and policy developments and estimate their impacts on Australian grape growers and wine makers and marketers. That required compiling up-to-date data and two bespoke models (of global beverage markets and of the Australian economy focused on wine regions) and then employing them in a range of empirical studies.

Summary

For vignerons to remain profitable, they need to understand the forces altering Australia’s international competitiveness in the world’s wine markets. These include changing consumer tastes and technological developments in Australia and elsewhere plus macroeconomic shocks to income growth, exchange rates, consumer and investor confidence, and new/prospective bilateral and regional trade agreements and changes to excise tax and other regulations affecting wine and other alcohol consumption at home and abroad. 

Up-to-date data on and a global model of those markets are essential to adequately analyse such developments and provide plausible estimates of their likely impacts on Australian grape growers and wine makers, marketers and exporters. In addition, to get insights into the consequences of those national impacts on wine regions within Australia, a model of the Australian economy with a focus on the nation’s wine regions is needed. Furthermore, given the impact of not just market developments but also climate change on the profitability of different winegrape varieties in the various grape-growing regions of the world, up-to-date data on which winegrape varieties are grown where is needed as part of assessing Australia’s changing international competitiveness in producing wine.

The contributions of this project to datasets have far exceeded what was originally planned. The annual Global Wine Markets database was updated each year. The database of Regional, National and Global Winegrape Bearing Areas by Variety was updated in 2020 to the 2015/16 vintage. A new annual database comprising Global Bilateral Beverages Trade, from 1995 was added in 2024. And three annual winegrapes databases covering several decades have been compiled, for Australia, Argentina and California.

The analyses undertaken with the benefit of those databases and the two models developed in this project covered such topics as changes in excise taxes and import tariffs, the growth and slump in China and other parts of Asia, developments in vignerons’ mixes of winegrape varieties, climate change impacts on vineyards, and the causes of the current crisis and ways forward.