Concerns for growers include water availability and growers' relationships with wine manufacturers
Melbourne, Australia (PRWEB) July 13, 2012
Grapes are more than just the sweet snacks in the fruit bowl. According to IBISWorld industry analyst Naren Sivasailam, “the Australian Grape Growing industry is highly dependent on the downstream Wine Manufacturing industry, with a large proportion of production heading that way”. The remaining output is sold as table grapes or dried grapes (e.g. sultanas). The Grape Growing industry is highly volatile due to significant uncertainty surrounding future conditions and its dependence on external variables. The main issues affecting the industry are water availability and rainfall, activity in the downstream markets and wine producers' use of wine grape contracts. In the five years through 2012-13, industry revenue is expected to decrease by an annualised 11.7% to total $1.06 billion.
The Grape Growing industry is dependent on downstream wine exports. Sivasailam adds, “the value of the Australian dollar has therefore played a prominent role in the past five years”. Since the global economic downturn, the rapid rise in the value of the Australian dollar has meant that demand for Australian wines has decreased on the global market. The Grape Growing industry has wavered between conditions of over and under supply due to a number of factors, though largely influenced by the huge number of growers and the onset of drought-ridden growing conditions. Recently, high levels of production caused a glut of wine grapes and put downward pressure on prices. Prices in some spot markets are still below production costs, resulting in some growers making large losses. The combined effect of volatile production levels and changes in downstream wine manufacturing demand is expected to cause industry revenue to decline over the five years through 2017-18.
Industry market share concentration in grape growing is low, and there are no major players in the Grape Growing industry. This excludes enterprises such as Foster's Group Limited that are classified under the Wine Manufacturing industry. There are many small grape growers. Some of Australia's major wine companies have signalled an intention to reduce investment in vineyards due mainly to low margins and relatively little ability to differentiate. Therefore, the preference seems to be that most wine grape production is derived under contract from individual growers.
For more information, visit IBISWorld’s Grape Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
The Grape Growing industry consists of businesses engaged in growing or sun-drying grapes. Grape growers purchase raw materials such as herbicides, pesticides, bird nets and irrigation systems. They grow grapes for crushing for winemaking, which are sold directly to wineries, while also selling table grapes to fruit wholesalers and retailers. Some of the grapes are dehydrated or dried for packaging as sultanas and sold to consumers via grocery distributors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.