Geography and demography :
Administrative capital : Canberra
Unemployment : 5,1%
8 States : Northern Territory, Western Australia, South Australia, Queensland, New South Wales, Tasmania, Victoria, ACT.

Politics :
Government : Monarchy (Great Britain)
Prime Minister : John Howard (Liberalist)

Economy :
Population : 20 million
GDP/person : 20 674 euros
Currency : Australian dollar (AUD). 1 AUD = €0.58, £0.43, US$0.87
Principal exports :
Minerals (coal, uranium, iron, gold, diamonds), energy (gas) and agriculture (meat, cereal, cotton, wool).

History

The first vines arrived in Australia on the ships of the first colonisers in 1788. John McArthur was the first person to create a commercial vineyard, which was producing around 90,000 litres of wine a year by 1827. Up until the 1850’s, New South Wales was the main grape-growing region. From 1852 the Hunter Valley district was home to the founding father of Australian viticulture, James Busby, who owned land producing some 270,000 litres of wine a year. With the progression of European colonisation, viticulture and oenology concentrated on the production of sweet wines and liqueurs. In the 1960’s the consumption of table wines noticeably increased, and winegrowers replanted many vineyards with more classic grape varieties. They also invested enormously in new technologies. Thus, they discovered the notion of terroir, which allowed them to select land with good potential for viticulture.

Wine-producing regions

South Australia : is the most productive of Australia’s wine growing regions; its temperate climate due to the effect of the sea. The South comprises several wine-growing regions, some of great importance, some less so. Barossa Valley is an old established grape growing district with several terroirs and a temperate climate with dry summers. It is known for its high quality Syrah, as Coonawara is known for its Cabernet Sauvignon. Coonawara possesses a microclimate which enables it to make high quality red wines, as well as white wines from Chardonnay grapes often blended with Riesling and Sauvignon Blanc. The Clare Valley produces elegant Rieslings which are good for laying down. McLaren Vale produces wines from Sauvignon Blanc, Chardonnay and Cabernet Sauvignon. It would be possible to list other areas such as Adelaïde Hills, Eden Valley, Langhorne Creek, Pathaway, Riverland, and so on.

Western Australia : is located between Albany and Perth, and has high winter rainfall and hot summers, which are favourable to the maturity of the grapes. This region makes a lot of white wine, but also sweet natural wines. The Margaret River has a temperate climate, originally recognised as a producer of quality Cabernet Sauvignon, it has since gained a reputation for its white wines too. The Swan Valley has a warm Mediterranean climate, allowing it to produce full bodied white wines from Chardonnay, Verdhelo and Chenin varieties, as well as light red wines. The South West Coastal region is a coastal plain which stretches over 300km. The climate therefore varies from one end to the other but the whole area is influenced by the Indian Ocean. This region’s main asset is its sandy soil which enables light white wines from Chenin, Sémillon, Traminer, Riesling and Chardonnay to be produced. The main red grape varieties are Cabernet Sauvignon and Syrah. Other smaller wine producing regions can also be found, such as Perth Hills, Pemberton, etc.

Victoria : is the smallest state in Australia and is divided into more than 15 sub-regions. A very diverse range of terroirs can be found there. The principal vineyards are as follows: Murray River Irrigation which produces mainly white wines and port. Yarra Valley – a cool region which allows Chardonnay, Syrah, Merlot, Cabernet Sauvignon and Pinot Noir to be grown. Goulburn Valley has a temperate climate which lends itself to the production of both white and red wines. Other wine-producing regions include Gippsland, Pyrenees and King Valley.

Tasmania : is a region where viticulture was thought to be impossible, which has been completely demonstrated since. Indeed, this region possesses a variety of terroirs but remains the least productive (320 hectares). Pinot Noir and Chardonnay are the most common grape varieties, producing sparkling and table wines.

New South Wales : was the first Australian state to begin cultivating vines. Currently, production leans towards Premiun wines made from Sémillon, Chardonnay and Syrah. The Griffith area is the driving force locally, producing more than half of the wine produced in New South Wales (mostly white). Mudgee focuses more on red wines from Syrah and Cabernet Sauvignon. There are many other sub-regions such as Hunter Valley, Orange, Canberra District and so on.

Queensland : has a tropical and sub-tropical climate, with a small grape industry, producing mainly Syrah, Cabernet Sauvignon, Chardonnay and Sémillon.

a- Grape varieties

The trend is towards a slight decrease in reds since 2001, and increased focus on international varieties.

The principle varieties of wine grape grown in Australia are Shiraz, Cabernet Sauvignon, Chardonnay, Merlot and Colombard. With a medium term increase in the production of red grapes, Syrah and Cabernet among the white wines. Looking at the figures for 2006, the production of red wine fell to 1,026,301 or –2.0%, but still represented more than half of all grapes harvested. Moreover, the production of white grapes was 954,897 tonnes, a reduction of 2.5% on the tonnage harvested in 2005.

Drought, frosts and reductions in the amount of water available for irrigation in most grape growing regions in Australia had a significant impact on production in 2006-2007. The wine grape harvest for 2007 is estimated to be 1.3 million tonnes, almost 30% less than in 2006, and the smallest harvest since 2000.

Australia is known for its adaptability in terms of which grape varieties are grown. In effect, the liberal plantation system and exploitation structures react quickly to the demands of the market for economic reasons.

Sources : ABS, Australian Wine Grape Industry, 1329.0 (17/10/07) http://www.abs.gov.au ABARE, Wine Industry: outlook to 2011-2012 (17/10/07) http://www.abareconomics.com

a- Evolution

Australian production has doubled in seven years, following a dynamism which has been noted by the authorities, and exciting performance on the market.

The 2006 harvest
The weight of grapes harvested in 2006 was 1,981,198 tonnes which was a 2.2% decrease on 2005. Red grape production was down 2.0% to 1,026,301 tonnes, but still represented more than half (51.8%) of the total grapes harvested. The production of white grapes was 954,897 tonnes, a 2.5% decrease on the tonnage harvested in 2005.

There were 1,781,668 tonnes of grapes harvested for winemaking, a decrease of 2.0% on the 1,818,426 tonnes harvested in 2005. The production of grapes for drying decreased by 13.0%, to 117,819 tonnes which was almost counter-balanced by the 12.5% increase in the amount of table and other grapes harvested (81,710 tonnes).

Source: 1329.0 - Australian Wine and Grape Industry, 2006 (17/10/07) http://www.abs.gov.au

2007 projection
Preliminary estimates show the total production of grapes for the 2007 harvest decreased by 23% from last year's harvest to stand at 1.5 million tonnes, as a result of drought, frost and reduced availability of irrigation water. The largest producing state, South Australia, recorded the largest decrease in production (down 34% to 582,000 tonnes). New South Wales production decreased by 17% to 423,000 tonnes and Victorian production decreased by 15% to 424,000 tonnes. While wine grape prices are anticipated to rise as some wineries move to secure grape supplies, the impact will not be substantial given that current high stocks mean that there is ample supply to meet market requirements this year.

Source: ABS,1329.0.55.001 - Vineyards Estimates, Australia, Preliminary, 2006-07. (17/10/07) http://www.abs.gov.au

In 2006 Australians drank around 9.84 litres of alcohol per person per year. Beer is the most popular drink, but wine is increasing.

source: ABS, 4307.0.55.001 - Apparent Consumption of Alcohol, Australia, 2005-06 (17/10/07) http://www.abs.gov.au

The domestic wine market is therefore important, and is growing steadily (+25% since 1990), reaching 461.9 million litres in 2005-2006. Even if growth fails, the public still prefers white wine to the red which is making progression in some parts of the market. The domestic market is dominated by boxed wine to more than 50%, but sales of bottles are increasing rapidly.

Australia, which produces and exports its own wine is the country of Asia-Oceania with the highest consumption of wine (20.5 litres/person/year). This market is as yet far from saturation and domestic consumption continues to increase, pushed by local production which is competitive on the global scale.

The price of wine in Australia remains high, due to the deprecation of land value, the youth of property and the recent introduction of a new tax on alcoholic drinks. During the 2003-2004 harvest domestic sales of Australian wine held steady, with a slight increase of 4% compared to the previous year, to reach 417 litres.

T   Table 3	2000- 2001	2001- 2002	2002- 2003	2003- 2004	2004- 2005	2005-2006
Domestic sales of Australian wine (million L)	335	385	403	417	430	431
Domestic sales value of Australian wine ($M)	1 831	1 946	2 098	1 971	2 097	1 900

Source:http://www.abs.gov.au

Australian wine exports have soared over the last ten years, in volume as well as in value, to reach 5,800 hectolitres for 2,500 million AU$ in 2004. Forecasts counted on an increase in volumes until 2002, followed by an increase in values. Increase in value has now began to slow, yet is still proportionate to volume (price per litre stable with slight growth). Until now volume and value of Australian wine has only increased. The future for the industry is focused on export. For the 2005-2006 period, the statistics show a total volume of 722.159 million litres, an increase of 7.8% on the previous year, with a value of 2,757,923 billion AU$.

Source: http://www.abs.gov.au

Australia exports wine to more than 85 countries worldwide, of the UK, the USA, Canada and the countries of Asia are its principal market. Export policy is aggressive, and aims to conquer parts of the market.

Table 4

Principal country /region	Quantity ('000L)	%	Value ($000)	%
New Zealand	26 700	3.7	96 123	3.5
Total Oceania and Antarctica	28 544	4.0	104 559	3.8
Belgium	17 281	2.4	36 204	1.3
Denmark	20 617	2.9	52 235	1.9
France	7 486	1.0	13 781	0.5
Germany	30 049	4.2	63 724	2.3
Ireland	12 271	1.7	56 304	2.0
Netherlands	22 699	3.1	66 673	2.4
Sweden	9 058	1.3	42 339	1.5
United Kingdom	261 511	36.2	945 770	34.3
Total European Union	388 341	53.8	1 302 921	47.2
Switzerland	1 660	0.2	7 605	0.3
Total Europe and Former USSR	394 068	54.6	1 329 496	47.2
Singapore	5 103	0.7	40 449	0.4
Total South East Asia	10 853	1.5	76 475	2.8
Hong Kong	3 514	0.5	23 753	0.9
Japan	8 507	1.2	43 767	1.6
Total North East Asia	27 656	3.8	109 251	4.0
Canada	48 859	6.8	245 715	8.9
USA	204 907	28.4	864 199	31.3
Total Northern America	253 872	35.2	1 110 567	40.3
Total Other Regions	3 909	0.5	15 364	0.6
Total	722 159	100.0	2 757 925	100.0

Source : ABS, Australian Wine and Grape Industry, 1329.0, (17/10/07) p39 http://www.ausstats.abs.gov.au

Factors contributing to a sucessful export market

The Australian wine industry produces premium and labelled wines. A certain stability of price and quality explains the success of Australian wines and their competitiveness on the world market.

The following elements have contributed to their success:

- new and innovative technology
- a climate well suited to viticulture and good management
- research and development
- marketing and promotional campaigns
- the involvement of multinationals capable of adapting to changes in demand
- consolidation allowing a greater selection of wines to be offered

To respond to the increasing demand, the amount of land used for viticulture continues to increase. According to ABS, 3856 hectares were planted in 2006, or 36.7% less than in 2005 when 6093 hectares were planted. The total area of land planted with vines is estimated to be around 168,791 hectares, of which 40,000 hectares were planted between 1999 and 2003. Each region offers grapes with different characteristics which reflect differences in soil and climate.

The demand for premium wine is largely influenced by the lifestyle and income of consumers. Opportunities for Australian wines on key markets is increasing thanks to the following tendencies:

- increase in buying power
- increase in the demand for branded wines
- increase in general promotion campaigns

Other factors contributing to the increase in demand for Australian wines include more disposable income among young adults and the development of the Asian market such as Singapore, Hong Kong, Taiwan, China and India.

The Australian wine industry has put in place infrastructure and modern facilities for vinification, conditioning, storage, labelling and packaging. However, the increase in terms of harvest and wine production represent challenges for the industry – such as the creation of demand and access to new markets. Australian businesses are in the process of forming alliances with foreign partners based on growing markets such as the USA. Partnerships have also been established to investigate countries such as India, China and throughout Asia.

http://www.abs.gov.au

Australia is not a major importer of wine, but the volume and particularly the value of imported wine is increasing. Historically, New Zealand was the chief exporter of wine to Australia, principally its white wines. France is well represented, especially in value. The only other country to export much wine to Australia is Italy.

Volume and value of Principal wine imports from 2003-2004 to 2005-2006

	2003-2004		2004-2005		2005-2006
	Quantity	Value	Quantity	Value	Quantity	Value
	'000L	$'000	'000L	$'000	'000L	$'000
New Zealand	5 629	49 143	9 479	80 088	13 227	108 523
Italy	4 672	22 496	4 937	25 105	5 450	28 290
France	3 064	62 794	3 492	66 690	4 563	79 934
Portugal	621	2 103	418	1 535	894	2 658
Spain	564	2 981	684	3 868	796	3 925
Chile	249	839	387	1 314	476	1 961
Germany	354	1 832	448	1 965	411	2 163
South Africa	132	548	179	779	299	1 175
Greece	313	835	285	817	231	564
USA	2 495	3 651	1 084	1 850	158	790
Argentina	7	36	149	409	105	349
UK	20	323	31	605	73	1 795
Other	r617	r4824	r565	r2951	482	2 068
Total	18 737	152 405	22 139	188 246	27 164	234 196

1) Businesses

There were 7861 wineries in Australia in 2006, and this number increases regularly; there are also mergers and the development of large corporations.

The smaller wineries have their own vineyards, while the larger own premium and strategic vineyards. On the other hand, they buy a large percentage of their grapes from growers under contract. The price of grapes is low for the big companies, about half what the other wineries pay. The big businesses can negotiate lower prices simply because they control more grapes.

Export plays a key role in the growth of all the wineries. The smallesr depend on export for 14% of their revenue. This figure increases to 50% for the big companies. The small wineries are more dependant on on site selling and pre-ordering than other operators. Internet sales are low throughout the sector.

2) Professional Wine Organisations

Winemakers’ Federation of Australia Incorporated
ABARE : Autralian Bureau of Agricultural and Ressource Economics ABARE works for industry and the government and aims to provide the directors of various rural Australian industries resources, forecasts based on market analysis and products. This is the main organisation representing the interests of small, medium and large wine producers. There are also organisations representing producers by state, and an organisation which represents wine merchants.

Wine Industry National Education and Training Advisory Council
Winetac is the main organisation which manages training in the wine industry in Australia. Winetac is financed and managed by the industry, for the industry by a committee of professionals representing all players in the sector.

Cooperative Research Centre for Viticulture
The federal state of Australia has provided a subsidy towards research, over a seven year period, to support four programmes researching the wine industry. This project is focused notably on the effective production of wine products and reducing the use of chemicals in viticulture and oenology.

The Australian Wine Research Institute
Created in 1955, this institute is financed by the Australian wine industry itself. Its purpose is to improve competitiveness of the wine industry by proposing how progress may be made in terms of research and development.

The Australian Society of Viticulture and Oenology
This neutral organisation, which has existed since 1981, serves the interests of vintners and winemakers by encouraging the exchange of technical information. Essentially, it operates through various symposiums and conferences, which provide a forum for the sharing of research and technical developments. The ASVO also supplies grants for research into problems touching the industry.

Trade Start
Trade Start is a national network of offices which, in partnership with the Australian government, advises businesses on export. It proposes a package of free services through the development program “new exporter”, conceived to help small and medium-sized businesses which wish to improve sales abroad.

AWBC: Australian Wine and Brandy Corporation
The Australian Wine and Brandy Corporation was founded in 1981. Its aim is to permit advances in the quality of wine and brandy to take place, and equally to promote sales in Australia and abroad.

Contact details
PO Box 2733
Kent Town SA 5071
Tel: +61 8 8228 2000
Fax: +61 8 8228 2022
E-Mail: awbc@awbc.com.au
Internet: http://www.wineaustralia.com/australia/

AWEC : Australian Wine Export Council
AWEC was founded in 1992 by AWBC. A subsidiary of AWBC, it was created to facilitate the promotion and export of non-branded wines.

Contact details
PO Box 2733
Kent Town SA 5071
Tel: +61882282040
Fax:+61882282048
E-Mail: awec@awec.com.au
Internet: www.awbc.com/awec

ABS : Australian Bureau of Statistics
ABS is the official source of government statistics and is a way of assisting and encouraging decision making.

Contact details
Office Central
Locked Bag 10
Belconnen ACT 2616
E-mail : www.abs.gov.au

ABARE : Autralian Bureau of Agricultural and Ressource Economics
ABARE works for industry and the government and aims to provide the directors of various rural Australian industries resources, forecasts based on market analysis and products.

Contact details
GPO Box 1563
CANBERRA ACT 2601
Téléphone : +61 26272 2000
Fax : + 61 2 6272 2001
E-Mail : l.elliston@abare.gov.au
Internet: http://www.abareconomics.com/

GWRDC : Grape and Wine Research and Development Corporation
The GWRDC funds research and development into viticulture and oenology.

Contact details
PO Box 221
Goodwood SA 5031
E-Mail: gwrdc@gwrdc.com.au
Internet: www.gwrdc.com.au

National Norms

Wines imported into Australia, as well as those produced locally, must conform to national standards outlined in the Food Standards Code, unless the wine in question comes from a country or group of countries with which Australia has signed a bilateral agreement on wine trading. In this case, complying with the Food Standards Code is obligatory only to the extent that norms are not overruled by the provisions of the agreement.

The EU/Australia Wine Agreement
Australia and the European Union have signed an agreement which came into effect in March 1994. This agreement, which is the object of continued negotiation, is geared towards a mutual recognition of oenological practices and norms or both parties, as well as the protection of geographic appellations and traditional descriptions. The text of the agreement is available on the internet site of the delegation of the European Commission in Australia.

Respect for the provisions of the agreement is the responsibility of the Australian Wine and Brandy Corporation, by virtue of the Australian Wine and Brandy Corporation Act of 1980. The functions of the AWBC are as follows:

- to regulate the use of geographic indications relative to traditional wines, sparkling wines and sweet wines;
- to regulate immunity to existing national food standard laws for wines imported into Australia from countries with which Australia has signed an agreement.
- lay down rules governing blending of traditional, sparkling and sweet wines;
- regulate the composition of Australian wine to be exported

According to the bilateral agreement of 1994, the treatments and additives authorized by Australia in the production of wines imported from the European Union are listed.

In all other respects, imported wines must confirm to rules regulating the composition of wine produced in Australia as outlined in the Food Standards Code, which is based on national food norms as outlined by FSAZ/Food Standards Australia New Zealand. The convention governing wine is number 2.7.4. In practice, for European wines, convention 2.7.4 permits the addition of certain additives and the use of certain aids to production which are not mentioned in the agreement.

The implication of the latest changes to the Wine Equalisation Tax (WET)

Recent changes to the WET relieve financial and administrative pressure on certain wineries, according to their size and the reduction of state taxes. For small wineries, the introduction of tax exemption of up to $290,000 will help to minimize the administrative load of the WET, but will not bring fiscal advantages because the liability to the WET will be eliminated by other forms of tax exemption. Wineries with a turnover of between $1m and $10m, who have a negative return should obtain fiscal advantages. These advantages could fall to $100,000 if the state tax exemptions are abolished as suggested and it is possible that the largest wineries will no longer have advantages.

Rate of excise: since 1st August 2000
Beer, spirits, liqueurs and other alcoholic drinks are not subject to the WET, but are subject to an excise duty:
Premium brandy and Spirits: AU$54.83 per litre of alcoholOther: AU$51.58 per litre of alcohol
Wine : custom rights :5% + rights of selling and services of 10%
Beer with alcohol content not exceeding 3.0% AU$41.67 per litre of alcohol
Above 0% but not exceeding 3.5% AU$35.38 per litre of alcohol
More than 3.5% AU$30.46 per litre of alcohol
When alcohol content of beer is below 1.15% these taxes do not apply.

Wine and other such fermented drinks were previously subject to gross sales tax (WST) of 41%. Gross sales tax was abolished on 1st July 2000 and replaced by Wine Equalisation Tax (WET). WET stands at 29% and applies to wine (once customs tax has been added).

a – Progression of Sales

Subsidy program for the development of export markets.This program is the main aid for producers wishing to export. Managed by Austrade, its objective is to encourage small and medium-sized businesses to develop their sales abroad. The program reimburses 50% of the costs associated with export up to 15,000 dollars.

In 2002-2003, 143.8 million dollars were awarded to 3,843 businesses. Two thirds of businesses which had received a subsidy had a turnover of less than 5 million dollars a year.
The Australian government aims to double the number of businesses exporting by 2006.

General Promotion
The Australian Wine Overseas program sends wine to Australian embassies and economic missions, such as the World Bank, in an attempt to promote Australian wine overseas. The Australian Wine Council, which manages general promotion of Australian wines for export, is a branch of the Australian Wine and Brandy Corporation. It has existed since November 1991. It is based in Adelaide, but has offices in London, The Hague, New York, Toronto and Tokyo. It has just closed its offices in Frankfurt. It promotes Australian wine across Europe, Asia and North America. The organization participates at trade fairs, gives public and professional tasting sessions and organizes press tours.

The Domestic Market
During the last ten years little effort has been spent on developing the domestic wine market. In the beginning, the industry concentrated on opening up export markets in response to weak local demand and the discount policies of distributors at the end of the 1980’s. There is significant scope for increasing local consumption: increasing consumer population, more people eating out regularly, popularity of Mediterranean cuisine and increased tourism. However, it is also possible that factors such as pressure from campaigns to reduce alcohol abuse, changes to legislation and the globalization of distribution will have a negative impact on domestic wine markets.

Wine Tourism
The wine and tourist industries have a common objective in developing the market for wine tourism. Between the Baby Boomers who are now retiring and the increasing buying power of Asian consumers, numerous opportunities exist. Currently, wine tourism in Australia has an estimated worth of 400 million Australian dollars with a potential to increase by 110 million Australian dollars. A good part of the income of small wineries comes from sales linked to tourism – on site sales. Strategies for developing wine tourism include working in partnership with all tourist operators, the improvement of tourist services within wineries, and putting in place promotion campaigns with the tourist organization of each state.

b – Wine and Health

The Australian wine industry wishes to promote wine drinking in moderation and has initiated several programs to pursue this object, including the development and promotion of standardized labeling and the promotion of moderate alcohol consumption.This program is supported by a research program and the development of one of the most important databases on wine and health, based in the Institute of Wine Research in Adelaide.

c – Environment

The environmental strategy of the Australian wine industry.“Sustainable success – the environmental strategy of the Australian wine industry” was launched in August 2002. It suggests a strategic, long term plan for the industry for the next 25 years. It deals with questions such as water conservation, waste management, biodiversity and the greenhouse effect.The plan was developed alongside Strategy 2025, to help put in place environmentally acceptable practices and sustainable management techniques from the point of view of the wine industry.

Water Shortages
Concerning the management of natural resources, problems of salinity and other problems relating to water quality are generally recognized as serious issues. In October 2000, the Prime Minister announced a national action plan on salinity and water quality in Australia. It was decided that 1.4 billion dollars would be spent over a period of seven years to resolve these problems. Each state makes a financial contribution to the budget.