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Wine Economics Research Centre

Wine Economics Research Program

The Australian wine industry enjoyed spectacular export-oriented output growth for two decades from the early 1990s. Producers in some other Southern Hemisphere countries and North America have also expanded their vineyard areas and upgraded the quality of their products. Meanwhile, Europe has begun to focus much more on what the consumer wants, but the European Union's policies continue to encourage excessive production. This led to a major over-supply situation globally, and a commensurate fall in prices paid to grapegrowers by wineries in numerous countries. What were the key contributors to this extraordinary expansion? How sustainable is the expansion in terms of its demands on water and other resources? What are the relative contributions of factors affecting activities in the vineyards as compared with beyond the vineyard gate? What policy and industry responses are now required? What are the lessons for other agricultural and value-adding primary processing industries seeking to become more internationally competitive in a sustainable way?

The Centre's research program seeks answers to these and related questions from the perspectives of the Australian industry and globally. It uses a combination of analytical economic history (back to 1820 in Australia's case) and formal projections modelling to 2020. Lessons will be sought from previous booms, while model simulation results will show the likely effects of various possible developments in domestic and export markets, and of alternative tax and other policy changes.

Key outcomes from the research from an industry viewpoint include comprehensive data bases on the Australian and global wine markets and on what winegrape varieties are grown in the various wine regions of the world, plus purpose-built models for analysing issues of concern to the industry. Our global wine model is used to examine likely effects of economic growth, structural changes, technological innovations, changes in preferences, vineyard disease outbreaks, movements in real exchange rates, and reforms to wine consumer taxes, producer subsidies, and trade taxes and subsidies in Australia and elsewhere.

Funding for this research program during 2008-2014 has been kindly provided by the Grape and Wine Research and Development Corporation (Project Nos. UA08/04 and UA 1208) and the University of Adelaide's Wine 2030 Research Network.