The Wine Industry in Australia Case Study - Management Assignment Help

Assignment Task:

Task:

AUSTRALIAN WINE MAKING INDUSTRY
The wine industry in Australia commenced in 1790 around the coastal areas of Sydney. The industry was further expanded in the mid-1800s with more grape wines planted across the Eastern coast of Australia. By the early 20th century, Australia was producing enough wine to export to the United Kingdom. The industry experienced significant growth at the end of World War II, aided by an influx of migrants from Europe who brought with them their knowledge and taste for wine.

In 2019, the winemaking industry had total revenue of $6.985 billion and contributed 6.34% to the global wine market from only 1.9% of the total vine planting area. As a result, Australia is now the 5th largest producer of wine and 3rd largest wine exporter. The growth in the industry has been created by innovative practices in grape cultivation and wine processing technology with Australian technology and production skills highly sought after internationally. The Australian winemaking industry is at a mature stage and continues to seek new international markets. Despite major growth, there are signs of slowing export and domestic consumption, prices are declined making it hard for small and medium sized producers to compete with larger producers who benefit from economies of scale. Supply is greater than demand putting further pressure on prices.
 

Demand Trends
Consumer preferences have been instrumental in the growth of the industry. This growth has been fuelled by an increase in dining out, demographic and sociological factors (greater participation of women in the workforce and ageing population) and more awareness on health and social responsibility.

Trends
The following factors summarise the trends that will impact the industry in the future:

• The demand for wine is relatively price elastic.
• The effects of substitution between wine and other alcoholic beverages (beer and spirits) is yet to be ascertained.
• Wine consumption has experienced favourable conditions as the price difference between beer and wine is negligible.
• Growth in income and increased living standards has enabled more households to purchase wine. Demand for wine is income elastic.
• Consumer tastes and an increase in disposable income have changed over the last 10 to 15 years. As such, premium products are favoured more, including premium wines.

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