The strength of the dollar eroded the competitiveness of local wine and fruit producers, and put downward pressure on grape prices.
Melbourne, Australia (PRWEB) January 04, 2014
The Australian Grape Growing industry highly depends on the downstream Wine Production industry, which consumes almost 90.0% of local grape production. The remaining output is sold as table grapes or to dried fruit processors (for sultanas, currants and raisins). The industry is highly volatile, reflecting the uncertainty of future supply and demand conditions, and growing conditions that typically destabilise agricultural industries. According to IBISWorld industry analyst Ryan Lin, “the main issues affecting the industry since the late 2000s have been the availability of water and activity in the downstream wine production and dried fruit markets”.
Grape growers have been hit hard by the slump in Australian wine exports over recent years. “The strength of the Australian dollar has eroded the competitiveness of local wine and dried fruit producers and put significant downward pressure on grape prices,” says Lin. Industry revenue is projected to decline by an annualised 3.2% over the five years through 2013-14 to total $1.1 billion, despite an upswing of 2.3% forecast for 2013-14 due to favourable weather conditions. Prices in some spot markets are below production costs for certain grape varieties, resulting in some growers making large losses. Market concentration in this industry is low, and there are no major players.
The industry depends on downstream wine exports, which contribute about 34.5% of revenue to wine manufacturers each year. Since the global financial crisis, the slowdown in key wine export markets and the high Australian dollar have dampened export demand for Australian wines and dried fruits. The number of industry enterprises has slumped by 12.6% since 2008-09. The Grape Growing industry is projected to continue to face difficult trading conditions over the next five years. The normalisation of weather conditions (particularly rainfall) and the easing exchange rate are projected to improve the industry's production capacity and competitiveness. The demand in key export markets for Australian wine and dried fruit will remain subdued as economic growth in these markets remains sluggish. This will continue to put downward pressure on grape prices paid to local growers.
For more information, visit IBISWorld’s Grape Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
Businesses in the Grape Growing industry primarily grow or sun-dry grapes. Grape growers purchase 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 whole 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
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