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On 24 June 2012 Professor Kym Anderson spoke at the AAWE-ICABR workshop in Avellino, Italy, entitled Technology and Innovation in the Wine Industry. Professor Anderson talked about the Georgian wine industry in a presentation entitled: ‘Is Georgia the next ‘new’ wine-exporting country? The roles of traditional vs. new technologies and trade alliances’.
Georgia has been producing and exporting wine for thousands of years, and until the trade embargo in 2006, the lion’s share went to Russia. Advantages include low labour and viticultural land costs by Western standards and recognition of Georgian GIs by the EU. The Ukraine is currently the largest importer of Georgian wine but there is potential in the rest of the CIS countries and Europe as well as Asia.
Professor Anderson’s presentation offers great insights into Georgia’s place in the global history of wine markets and its potential. Yet another wine-producing country to watch with interest!
Professor Kym Anderson gave a fascinating and informative presentation at the plenary session of the Crush 2011: The Grape and Wine Science Symposium in Adelaide, entitled ‘Wine’s globalization: New opportunities, new challenges for Australia’.
The Crush 2011 symposium, organised by the Wine Innovation Cluster, brought together top wine and grape researchers from all over Australia and overseas, from universities, research institutes, industry and government to present the latest cutting edge research, to network and to foster future collaborative opportunities. The University of Adelaide had a strong attendance, as did the Australian Wine Research Institute (AWRI), Commonwealth Scientific and Industrial Research Organisation (CSIRO), the University of South Australia, Grape and Wine Research and Development Corporation (GWRDC), South Australian Research and Development Institute (SARDI), and other universities and institutions around Australia and overseas. Inspiring talks were provided in the plenary session at the National Wine Centre by GWRDC Chairman Rory McEwen, Kym Anderson, John Brooks of Zork, Mark Thomas of CSIRO Plant Industry, Keren Bindon of AWRI and Rebekah Richardson of Pernod-Ricard Pacific.
Professor Anderson gave an insightful and concise summary of the challenges facing Australia’s wine industry today, essentially:
• Profits of wineries have nose-dived
• Winegrape prices fell sharply in 2009, 2010 and in 2011
• Bulk wine exports 47% in 2010-11, up from 15% 1996-2003
• Import share of domestic wine sales has risen from 3% in 2001 to 15% in 2010-11 (NZ, France, Italy)
• Volatility of weather is not expected to lessen
Trade is a huge consideration for the Australian wine industry, with 66% of our wine production exported in 2009. Meanwhile the world market for wine has got tougher with the strong Australian dollar, fashion swing away from our wine in the traditional markets (UK, US, Germany), strong competition from other global producers, oversupply of wine in Europe, the growth of supermarket power in wine sales, environmental concerns, and so on. Plus wine is being targeted in a number of countries including Australia with regard to negative health implications, including rising taxes and regulations.
However! Globalisation has a long way to go and there are huge opportunities as wine expenditure grows around the world, particularly in Asia, dominated by China. Furthermore, in terms of the average price of bottled still wine imports, five of top 10 countries globally are Asian so there are profits to be made!
The data behind Kym’s presentation are from a new compendium of global wine statistics, downloadable as a free e-book at www.adelaide.edu.au/press/titles/global-wine or in Excel format at www.adelaide.edu.au/wine-econ.
Details of the Crush 2011 symposium including full programme and abstracts may be found at www.wineinnovationcluster.com/crush2011
Andrew Jefford, wine writer for Decanter magazine, writes about the Wine Economics Research Centre’s recent release, Global Wine Markets, 1961 to 2009, A Statistical Compendium in an article entitled: “Jefford on Monday: All The Figures That’s Fit To Print“.
Jefford picks out juicy snippets from the burgeoning compendium, making you want to delve deeper and questioning your assumptions about the shape of the world wine market.
Full information on the compendium is freely available in pdf or Excel format by chapter here.
On 8 June 2011 Professor Kym Anderson of the Wine Economics Research Centre 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 & 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)
At the University of Adelaide’s Research Tuesday lecture on 8 March 2011, Professor Kym Anderson identified key trends in the global wine industry, using data from the forthcoming University of Adelaide publication Global wine markets 1961 to 2009: a statistical compendium, due for release in April 2011.
The focus of the presentation was to understand how the wine industry has arrived at the situation it now finds itself in, and what the prospects might be for the next two decades out to 2030.
Boom-bust cycles have been a feature of the Australian wine industry since its birth in the mid-1800s. The latest boom period is defined as the period 1987-2004 where Australia fared extremely well both domestically and overseas. Many factors were in its favour. Since then however, a number of factors have come together in a perfect storm to produce this current downswing, including a strong Australian dollar, an increasingly competitive global market, changing market and marketing conditions and consumer preferences, and climactic factors.
Professor Anderson looked at the trends in wine production, consumption and trade in the Old World, New World and ‘rest of the world’ countries, particularly since 1980. The Old World refers to France, Italy, Spain, Portugal and Germany, and the New World refers to the USA, Australia, New Zealand, Argentina, Chile and South Africa. An interesting summary table of developments in shares of global wine production, consumption and trade are shown in the table below.
|Share of global production (%)|
|Old World 5||58||53||50|
|New World 6||18||26||30|
|Rest of the world||34||21||20|
|Share of global consumption (%)|
|Old World 5||53||28||60|
|New World 6||19||21||31|
|Rest of the world||28||41||9|
|Share of global exports (%)|
|Old World 5||76||34||67|
|New World 6||2||26||24|
|Rest of the world||22||40||9|
Professor Anderson discussed the inherent strength of the Australian wine industry and the challenges lying ahead for producers and marketers.
Global wine markets 1961 to 2009: a statistical compendium will be available directly from the University of Adelaide Press (pdf free; paperback $35).
Professor Anderson is the George Gollin Professor of Economics and foundation Executive Director of the Wine Economics Research Centre at the University of Adelaide.