Australian Experience and Perspectives on the Wine Market Crisis

Over the past four decades, all annual indicators of the Australian wine industry’s international competitiveness have traced a steep inverted V. This paper contrasts such indicators with those of other key wine-exporting countries. A series of partial explanations for the industry’s sharp rise and then equally steep fall in its international competitiveness (and its several bumps along the way) are then provided. The New Zealand and Californian wine industry’s prolonged expansions in particular are contrasted with Australia’s. Despite the current downturn in the industry’s fortunes, and notwithstanding the likelihood of further boom-slump cycles in the decades ahead, a return to profitability is possible, but it is likely to require vignerons and wine exporters to raise their current rates of investments in R&D, quality improvements and promotion.