How the wine industry’s Vision 2025 affects You

Is the Austalian wine spinning out of control? Hardly a day goes by without news of increasing exports, record crops, record prices and, depending on who you’re reading at the time, either a potential domestic wine glut or an export-driven drought.

To speculate what lies ahead for Australians who drink Australian wine is never an easy thing – given the wine industry’s boom-bust history and the easily overlooked reality that growing grapes is an agricultural activity which relies on sunshine and large measures of other good fortune. But like it or lump it, the wine brands we will be drinking in fifteen years time may have very little in common to those we are enjoying today.

It’s called ‘Welcome to the real world’. Australian wine is fast losing its fuzzy, Johnny-come-lately image, becoming instead a prominent international and corporate player. That’s essentially good news, for although no wine drinker will be unaffected, Australian wine has an opportunity to become a secure, profitable international and global business which will employ many more of us, create significant export income and strongly promote our tourism industries.

Regardless of their price, our wines are enjoying an extended moment in the sun in all its important markets, many of which already cannot get enough. There’s little doubt Australia could already sell overseas our entire output priced at over $25 per bottle.

Yet we have hardly scratched the surface of markets like Asia, itself just waiting to take off. When that happens, look out. It’s not so far fetched for Asians to quickly become major consumers of wine. They already have an elaborate and sophisticated understanding of food and culinary ritual, many Asian countries are already massive consumers of spirits and other alcoholic beverages and they are adopting new western habits every year. They also have the money.

Australian wine believes it can increase its export sales from $500 million per year, the current moving annual total, to around $2.5 billion on current value. More optimistically, it could sell around $3 billion overseas each year, equivalent to around 15 of the world wine export market. The timeframe for these achievements is the year 2025; the vision for this goal is a document by the Australian Wine Foundation called ‘Strategy 2025′.

The industry’s vision is for Australia to become the world’s 5th largest wine producer currently 9th by the year 2025, with domestic sales increasing from $1,150 million to $2 billion, overall sales reaching $4.5 billion and wine tourism generating an additional $700 million.

Strategy 2025 is a multi-levelled blueprint which takes into account expected future global social and economic trends and other factors which affect wine consumption. It analyses the potential of each of our export competitors and arrives at the conclusion that Australia has a gilt-edged opportunity to become the world’s ‘acknowledged leader’ in wine.

The strategy also makes projections concerning where the necessary vines will be planted, the cost of doing so, the expected cropping rates from those vineyards, the environmental impact of the expansion and the expected dollar return per litre.

Strategy 2025 and its supporting rationale suggest a changing set of circumstances facing the domestic Australian wine drinker. One of its most crucial assumptions is that there will be a continued growth in overseas demand for our premium wines which, by their very nature, are limited in production. James Halliday, one of the many architects of the strategy, has little doubt that any Australian wine selling at $30 retail in Australia today would still represent outstanding value around the world at double that price.
More premium Australian wine will be sold overseas as our makers optimise the return on their investment. Ultimately it could cost them opportunity dollars to retain their position in the domestic marketplace. To date, at least, Australians have responded by facing up to some pretty hefty price increases for premium wine, but for how long can we keep on doing it?
Strategy 2025 anticipates an increase in wine imports as cheaper wines from Chile, Argentina and South Africa, not to mention subsidised EU wine, fill the vacuum in lower grades where Australian wines will become less competitive.

For the near future at least, it looks better for drinkers of mid-priced local whites than reds. Although the 1996 vintage broke all expectations and records, the oversupply situation really only affects white wine. The industry is literally praying for a bumper red crop from 1997.

Nothing will stop our premium wines from simultaneously becoming more expensive and harder to find. But as brands become more expensive – witness the incredible price rises of Hill of Grace – opportunities emerge for new brands to fill their former place. The scale of recent plantings in our premium areas like the Yarra Valley and south-east South Australia confirms there is more than enough dynamism and energy within Australia to create the new premiums.

The speed at which the wine industry is moving and the even faster rate at which it wants to move may well be daunting to the Australian drinkers who have supported it and allowed it to grow. Yet there will always be good, sound, well-priced wine for us to enjoy, and I am certain that we will continue to enjoy premium chardonnay, cabernet and shiraz for around $25. The only difference might be that we probably wouldn’t recognise the names on the labels if they were sold to us today. Please login to post comment