Melbourne, Australia (PRWEB) April 23, 2014
The Australian Wine Production industry has faced difficult trading conditions over the past five years. Exports have been hurt by volatile economies in key export markets, a soaring Australian dollar (which has made wine exports uncompetitive) and rising competition from new low-cost wine producers. Further, manufacturers are losing bargaining power against the supermarket giants, and consumer preferences are changing. In addition to these factors, an oversupply of wine and wine grapes, has forced down prices, squeezing margins and forcing many producers out of business. However, the emergence of ciders has slightly helped to offset the falling international demand for Australian wines, with domestic demand fuelled by savvy marketing capitalising on the cider trend and Australians' love of a cold beverage on a hot day.
IBISWorld industry analyst Ryan Lin states “having belatedly come to terms with the chronic oversupply of wine in the market, producers have addressed the problem by writing off assets, closing down wineries and destroying vines.” The industry faces a long and painful process before the market returns to balance. Conditions are expected to be less challenging in 2013-14, as the fall in the Australian dollar helps to offset volatile economic conditions in key export markets. Continual discounting and oversupply of wine will still weigh on domestic revenue. IBISWorld estimates industry revenue to have decreased at an annualised 1.9% over the five years through 2013-14, to reach $5.7 billion. However, industry revenue is expected to rebound slightly during 2013-14, posting small growth of 0.7% from the previous year due to recovering economic sentiment and rising consumer confidence. Further growth is forecast for 2014-15, as the Australian dollar is expected to return to parity, while the sluggish global economy gains momentum. Forecast weak price growth will constrain domestic revenue performance and profitability as industry players look to capitalise on domestic consumption. In the two to three years leading up to end of 2018-19, industry operators are expected to shift production towards premium wines, while Asian export markets will play an increasingly important role in the industry's future. According to Lin, “winemakers are likely to work on producing single vineyard wines, while focusing more on cellar-door and online sales.”
The Wine Production industry has a low level of market share concentration. Industry concentration is estimated to have been highest following the acquisition of Southcorp by Foster's Group (now Treasury Wine Estates) during the early 2000s. However, concentration in the industry has changed as major producers have purchased and then divested certain production facilities. Larger industry players are also expected to be the hardest hit due to the oversupply of grapes. The industry’s major players include Treasury Wine Estates Limited, Premium Wine Brands, Accolade Wines Holdings and Casella Wines. For more information, visit IBISWorld’s Wine Production report in Australia industry page.
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IBISWorld industry Report Key Topics
The Australian Wine Production industry purchases grapes and other key ingredients, which are processed into wine, port and wine-based alcoholic beverages. These products are packaged in bottles or casks then sold to wine merchants and retail outlets. This industry also includes other alcoholic beverages not categorised elsewhere.
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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