Industry Analysis & Industry Trends
Difficult trading conditions have plagued the Wine Production industry over the past five years. Volatile economies in key export markets, a soaring Australian dollar for much of the period and rising competition from overseas low-cost wine producers have hurt wine exports. In the domestic market, producers have lost bargaining power to the supermarket giants and been forced to contend with changing consumer preferences. Additionally, an oversupply of wine grapes, and the resulting oversupply of wine, has pushed prices downwards, squeezing margins and forcing many producers out of business. The emergence of ciders has helped to offset falling international demand for Australian wines, with savvy marketing driving substantial growth in demand for cider... purchase to read more
Industry Report - Industry Investment Chapter
The Wine Production industry in Australia exhibits a medium level of capital intensity. IBISWorld estimates that for every dollar paid for labour, $0.25 is required to be spent on capital investments. Here wages represent labour cost and depreciation has been used as a proxy for capital investment. Unlike other beverage industries, wine manufacturing requires significantly higher levels of labour in order to pick and process grapes.
The level of vertical integration, particularly backward integration, affects capital intensity. Ownership of vineyards tends to increase capital intensity, as does ownership of winemaking facilities, as winemakers have varying reliance on the use of bulk wine... purchase to read more