Australian wine industry competitiveness: why so slow to emerge?

Abstract

Despite favourable growing conditions, Australia's production or exports of wine did not become significant until the 1890s. Both grew in the 1920s, but only because of government support. Once that support was removed in the late 1940s, production plateaued and exports diminished: only two per cent of wine production was exported during 1975–1985. Yet over the next two decades, Australia's wine production quadrupled and the share exported rose to two‐thirds – before falling somewhat in the next 10 years. This paper explains why it took so long for Australia's production and competitive advantage in wine to emerge, why it took off spectacularly after the mid‐1980s and why it fell in the 10 years to 2016. It concludes that despite the recent downturn in the industry's fortunes, the country's international competitiveness is now firmly established and commensurate with its ideal wine‐growing climate, notwithstanding the likelihood of further boom‐slump cycles in the decades ahead.

Sparkling Wine International Market Structure and Competitiveness

“…To determine the competitiveness of the international sparkling wine market we used the Revealed Comparative Advantage (RCA) initially developed by Balassa (1965), and later modified by Vollrath (1991) to avoid duplicate registers. This was applied in the wine sector by Anderson (2018), Maté Balogh and Jàmbor (2017), Beluhova-Uzunova and Roycheva (2017), Van Rooyen et al (2010) and Crescimanno and Galati (2014). The index is sustained by exports, revealing the relation between the nation's exported product to its total export flow, and the world's export performance for the same product, in the same period, as follows:…”

“…In addition, since the beginning of the 21st century, the sparkling wine trade has been growing and its structure has been undergoing changes due the new competitive market scenario (Mariani et al, 2012). However, just a few studies analyse the international wine market in a sectioned manner in countries (Anderson, 2018;Beluhova-Uzunova and Roychev, 2018;Corsi, Marinelli and Sottini, 2013) or sets of countries (Fleming, Mounter, Grant, Griffith and Villano, 2014;Lombardi, Dal Bianco, Freda, Caracciolo and Cembalo, 2016), and no study deals with international sparkling wines market. Thus, this paper fills that lack of studies by analyse the sparkling wine market regarding its: (1) international competitiveness; and (2) international market structure.…”

Wine's belated globalization, 1845–2025

“…The acceleration since the 1980s in the volume of wine that crosses national borders is due mostly to the emergence of New World wine exporters. That surge began in Australia from the late 1980s, helped by a very low value of the country's currency at that time (Anderson, 2018). Similarly, New Zealand's currency was very depressed in the early 2000s, while a large real devaluation in late 2001 triggered the export take‐off of Argentina, aided by declining domestic consumption just as in Spain (Anderson & Pinilla, 2018, Chapters 11 and 12).…”

“…Similarly, New Zealand's currency was very depressed in the early 2000s, while a large real devaluation in late 2001 triggered the export take‐off of Argentina, aided by declining domestic consumption just as in Spain (Anderson & Pinilla, 2018, Chapters 11 and 12). Australian wineries' international competitiveness over the decade to 2012 declined because of the real exchange rate appreciation associated with Australia's massive mining investment boom (Anderson, 2018). That appreciation relative to the currencies of other wine‐exporting countries enabled the latter to expand their sales in third countries at Australia's expense (Anderson & Wittwer, 2013).…”

“…The Australian federation and New Zealand imposed nontrivial tariffs on wine imports from the early 1900s too. As well, in 1930 Australia added an excise tax on imported but not locally produced wines, while in 1935 New Zealand increased its wine tariffs and halved the volume of import licenses (Anderson, 2018; Cooper, 1996).…”