Strategy 2025

1. The Australian Wine Revolution 1966-1996
2. The Success Story of Australian Wine
3. 2025 Trends Favour Wine
4. Vision 2025
5. Australian's Wine's Competitive Edge
6. Market Opportunity
7. Resources to Achieve Growth Scenarios
8. Government Partnership Critical to Success
9. Strategies
10. The Next Five Years
11. Implementation of Vision 2025

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The wine industry ... transforms an agricultural commodity into a quality, branded image product which is securing a growing share of the oversupplied and very competitive global wine market.

2. The Success Story of Australian Wine

Although Australia is one of the world's smaller wine producers (2% of world production) and has a relatively low domestic consumption of 18.3 litres per head, it exports more than 27% of its production -- 10% more than the key world wine producing nations of France and Italy. This achievement has come without government subsidy or trade protection measures.

Australia has also developed an industry structure with considerable economy of scale. Despite a large number of wineries (nearly 1000) just ten of those dominate the industry with an 84% share of the national crush. In fact 6% of the labels on the Australian market account for more than 75% of sales. Nevertheless the contribution of small producers to the industry's success has been out of all proportion to their size.

Growth for Australia's wineries has been rapid in the last five years, with the then seven publicly listed wine companies recording a net increase in profits from $55 million in 1992-93 to $87 million in 1994-95. A large part of this success was due to a twentyfold growth in exports in the last ten years, but domestic consumption has also grown slowly -- defying the national trend towards declining alcohol sales.

Increased vineyard plantings of premium grape varieties, especially in NSW and Victoria, have helped to accommodate this growth and a substantial rise in production is already underway as new plantings start to bear.

Consumers in Australia and overseas are 'trading up' to quality alcohol consumption rather than quantity. This is reflected in declining sales of bulk or cask wines and an increase in sales of bottled semi-premium ($7 to $10) and premium ($10 to $15) red and white wine categories. This stronger demand allied with a tightness in supply have increased prices and improved margins.

The wine industry has achieved this success by following a classic value adding model. It transforms an agricultural commodity into a quality, branded image product which is securing a growing share of the oversupplied and very competitive global wine market. The industry adds an estimated $910 million to purchased inputs or seven times farmgate value.

Much of the industry's success can be attributed to a series of human and natural competitive advantages. It is a world leader in innovative technology which ensures cost competitive-high quality grape and wine production; it produces a product with intense flavour; it is flexible in its production structures untrammelled by Old World appellation restrictions and traditions; and it has managed to achieve a value for money reputation across all price points.

Other advantages are its clean, green physical environment, the engaging personality of its winemakers who have featured strongly in promotion, the geographical and technical diversity of its viticulturists and the nation's long viticultural and winemaking heritage.

As a result of this commitment to value adding and its world competitiveness, the wine industry is one of a few genuine national industries concentrated outside the metropolitan areas. It plays a major role in regional development, contributing to employment, business growth, tourism and corporate investment.

The healthy image of wine (supported by recent research on its effects in reducing cardio vascular disease) has distanced it from other alcohol beverages. The industry is also strongly committed to environmentally friendly production.

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