industry overviewThe wine industry is based on approximately 7000 wine grape growers, who supply nearly 1800 wineries. Wine grapes are grown in all states of Australia, with South Australia, New South Wales and Victoria accounting for most of the production. The inland irrigated regions of the Riverina (New South Wales), Murray Valley (Victoria) and Riverland (South Australia) account for approximately 55 per cent of total wine grape production.

Australia is the world’s sixth largest wine producer and fourth largest wine exporter.

Overview of production and trade – wine grape and wine 1985-86 1995-96 2005-06 World Production – grapes Mt 64.1 59.1 70 Trade – wine Mt 4.2 5.5 8 Australia Bearing area – total grapes ’000 ha 50.4 63 157 Average yield t/ha 9 14 12.2 Grape production – all grapes kt 907 1 095 2 132 – wine making kt 510 883 1 921 – share of world production % 1.4 1.85 3.05 Gross value of production – wine grapes a A$m 230 698 1 181 Domestic consumption – wine ML 325 328 470 Exports of wine – volume ML na 131.2 732 – value a A$m na 603 2 791 Imports ML na 21.1 24 Employment – grape growing ’000 7.3 b 15.5 c – wine manufacturing ’000 8.3 b 14.5 c a In 2005-06 dollars. b ABS (1996). c ABS (2001a). na Not available. Sources: ABARE (2005, 2006); ABS (1990, 1996, 2001a,b).

markets
In farmgate value, 46 per cent of the wine produced on Australian farms in the three years to 2004-05 was exported. In 2005-06, approximately 1.2 billion litres of Australian beverage wine was sold, with 446 million litres sold domestically, an increase of 8 per cent on the record level of the previous year. Exports of Australian wine in 2005-06 were at a record volume of 732 million litres and value of A$2.79 billion.

As recently as 1985-86, Australia imported more wine than it exported. Since then, the trade balance for wine has changed for both quantity and value; by 2002-03, exports exceeded imports by 379 million litres and A$2.3 billion.

Over the past decade, the share of Australian wine exports shipped to the industry’s largest five export markets (the United Kingdom, the United States, Canada, Germany and New Zealand) has increased from 77 per cent to around 84 per cent in volume terms.

The United Kingdom, the United States and Germany are the largest importers of wine, and with Canada and New Zealand are responsible for 55 per cent of total world imports by value and 47 per cent by volume.

Given the strong likelihood that most of the future expansion in Australian wine production will need to go to export markets, the industry faces a complex international marketing challenge. It is against this background that the Australian industry is seeking to diversify into new and emerging markets.

Competition from Chile, the United States, South Africa, Argentina and France, particularly in the UK market, will intensify as new plantings in these countries come into full production.
Although the growth in exports to emerging markets such as Hong Kong, Singapore, Ireland and Sweden has been generally significant, these destinations currently receive only 5 per cent of Australian wine exports.

Growth in Australian wine exports to emerging Asian markets will depend on such factors as the potential for increases in per person consumption from a large population base, rising incomes, and the reduction of at times prohibitively high tariffs, taxes and other barriers to trade.

The success of the Australian wine industry has occurred despite the existence of barriers to trade such as substantial government support to producers in the European Union and high tariff rates in some wine importing countries.