Analysis of the Australian wine industry. This report is about contextual analysis of the Australian competitiveness and investment attractiveness of the wine industry.

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Title                        : Analysis of the Australian wine industry

Word Count                : 2301 words


1. Abstract        --------------------------------------------------------------------------------        3

2. Introduction ----------------------------------------------------------------------------        3

3. Part A:

3.1 Porter’s National Diamond        ------------------------------------------------        3

                3.1.1Factor Conditions:        ------------------------------------------------        3

                3.1.2 Related and Supporting Industries ----------------------------        4

                3.1.3 Demand Conditions         -----------------------------------------------        4

                3.1.4 Strategy, Structure and Rivalry ---------------------------------        4

                3.1.5 The role of government ------------------------------------------        5

3.2 Porter’s Five Forces: ---------------------------------------------------------        5

                3.2.1 The threat of the entry of new competitors ----------------        5

                3.2.2 The intensity of competitive rivalry ---------------------------        5

                3.2.3 The threat of substitute products or services --------------        6

                3.2.4 The bargaining power of customers (buyers) --------------        6

                3.2.5 The bargaining power of suppliers- --------------------------        6

4. Part B        

4.1 Critical Evaluation on Australia Wine Industry. -----------------------        7

5. Conclusion: -------------------------------------------------------------------------------        7

6. Reference: --------------------------------------------------------------------------------        8

1. Abstract

This report is about contextual analysis of the Australian competitiveness and investment attractiveness of the wine industry. In this report there are 2 parts, Part 1, which conclude country specific analysis are explained using Porter’s National Diamond and Porter’s Five Factor. The second part of the report include the critical analysis for the Australian wine industry based on the argument of Porter’s National Diamond in Part 1 of this report.

2. Introduction

In early 1970s, with the leading of Europe as the major wine producer, the new word wine is already starting to produce bulk wine in various qualities. The Australian wine industry has experienced remarkable change in the mid-1980s, and that leads to today’s Australia Wine industry, which producing 1,683,643 tonnages of grapes, and ranking world’s sixth largest wine producer, and world fourth largest exporter for wine. Being a large continent with various land and climate, Australia is one of a few who can produce almost all kinds of grapes and process them into wine under one country.

3. Part 1 : Contextual Analysis

3.1 Porter’s National Diamond:

Below are the reports for country specific analysis using Porter’s National Diamond.

3.1.1 Factor Conditions:

Australia’s vineyards are mostly focus on southern part of the continent such as South Australia, New South Wales, Victoria, and Western Australia, where climates are more suitable for planting grapes compare to the tropical climate on the north. There are 62 registered wine regions, with around 172,676 hectares cultivated for wine grapes. The largest area of vineyards falls in South Australia with 75,531 hectares, accounting for 46.5% of the national total vineyard area. Second is New South Wales with 41,889 hectares (25.8% of the total), then follow by Victoria with 30,056 hectares (18.5% of the total vineyard area). The vast continent and multiple climate existed in Australia allows winemakers to plant huge variety grapes and producing, hence allowing production of many varieties such as Shiraz, Cabernet Sauvignon, Merlot as grapes for red wine, and Chardonnay, Sauvignon Blanc, Sémillon, Riesling as grapes for white wine, along with  around 140 other varieties being produce and process into wine. There are approximately 2,300 wine companies and the sector employ around 31,000 people, along with a few main local brand such as Hardys, Banrock Station, Leasingham and Chateau Reynella. Australia currently has Free Trade Agreements (FTAs) with Singapore, New Zealand, Thailand, the US and Chile, addressing both tariff issues and non-tariff barriers such as labeling, product standards and import certification. The availability access to all the rare material for making wine, as well as natural surrounding is one important factor why Australia was able to become one of the top producers of wine.

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3.1.2 Related and Supporting Industries

Agricultural Industry had contributed much towards the development in economic and quality of wine industries in Australia. Nearly $1.5 billion is spent each year alone for agricultural related research in Australia. On 2006-07, Australian farmers had spent over $3 billion on Natural Resource Management (NRM) in managing or preventing weed, pest, land and soil, native vegetation or water-related issues on their properties. More than $2.3 billion was spent on weed and pest management alone, while land and soil-related activities accounted for $649 million of total expenditure. Company in wine industry need to undergo Australian Wine and Brandy Corporation (AWBC, ...

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