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.
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.
Objectives
The project will:
- Update and revise the database of global beverage markets
- Update and revise the book Which Winegrape Varieties are Grown Where? A Global Empirical Picture
- Provide an economy-wide model for Australia’s wine regions based on the Centre of Policy Studies (CoPS) The Enormous Regional Model (TERM).
- Provide knowledge of the impact of trends in and policies affecting global beverage markets and Australia’s regional grape and wine markets to 2025 or later
Outputs
To view project deliverables, visit:
Background
Given the close link between Australia’s wine export prices and winegrape prices, both grapegrowers and wineries, along with their industry leaders, need to understand the forces altering Australia’s international competitiveness in the world’s wine markets.
These include changing consumer preferences and technological developments in Australia and elsewhere plus macroeconomic shocks to income growth and exchange rates and new/prospective bilateral and regional trade agreements and changes to excise tax and other regulations affecting wine and other alcohol consumption.
The implications of those developments for Australia’s various wine regions also need analysing, along with challenges such as climate change and its effects on irrigation water availability and prices. A model of the Australian economy with pertinent regional detail is required for such analysis.
Approach
The three database and economic model assets will be updated and rebuilt followed by analysis.
A new 2016 global snapshot will be built, plus time series since 2010 (plus production and prices for the few countries where data are available). Updated tables and charts will be developed for the ebook.
The economic model of global wine markets into a global beverage markets model will be revised, updated and expanded by adding beer and spirits (with Professor Glyn Wittwer of the Centre for Policy Studies, Victoria University).
Past global articles on alcohol taxation rates will be updated drawing on the Global Markets compendium of data. Shocks to Australia’s wine trade will be analysed with the updated global model and will provide inputs into scenarios to be analysed with the national model of Australia’s economy and its various wine regions.
Sector benefits
The sector will be provided with up-to-date data and a global model of the worlds wine markets which are essential to adequately analyse developments for Australia’s wine regions, along with analysis of various micro and macro-economic shocks and implications impacting the Australian wine sector.
The input of the industry reference group provides insight and recommendations to ensure the project remains relevant and aligned with changing industry needs. This collaboration plays a key role in shaping the topics for analysis and the success of the project.
The Wine Economics Research Centre project will conclude as scheduled in December 2024.
Wine Australia values the work of the Wine Economics Research Centre. Following the conclusion of this project there may be opportunities to collaborate in the future on industry identified projects; as demonstrated by the work commissioned for Australia’s Wine Industry Crisis and Ways Forward.
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