Wine industry data at the regional level have been available from various sources, but the coverage has been sporadic and the regional definitions have varied widely across the different sources and over time. Basic vine area, production and yield data are available by State back to the 1974 (Table 7) and by broad regions back to 1979 (Table 52), but more detailed regional data begin in 2001 (Table 53). The most reliable employment data come from the Australian Bureau of Statistics (ABS) censuses, which are conducted every five years with the most recent ones being for the 2005-06 and 2010-11 financial years (and so covering the 2006 and 2011 vintages). The ABS also conducts annual industry surveys and reports those data the following year in industry and other publications. More detailed data are made available online, including for various levels of regional disaggregation. States are divided into Statistical Divisions, Statistical Sub-Divisions (SSDs), and Statistical Local Areas (SLAs, of which there are just over 1400 nationally). SLA data on vineyards and other agricultural activities as of 2005-06 are available in ABS (2009), for example.

For present purposes we focus initially on 27 Statistical Sub-Divisions (SSDs) as defined by the ABS for ABS data, plus some more disaggregated regions for AGWA data. The 27 SSDs are home to around half of the wine industry's Geographical Indications (GIs), which comprise 65 homogeneous areas legally defined for marketing purposes by AGWA's Geographical Indications Committee (see the map showing all GIs, Chart 56).41 Each of our

40 The beneficial effect of a large diurnal temperature range also was considered, but it did not cause any change to the above classification of regions into hot, warm or cool. A finer classification could identify 'very cool' regions, but to date they comprise only a very small share of Australian winegrape production.

41 For a description of the main wine regions prior to GIs, see, for example, Halliday (1998) and Beeston (1999).

selected 27 SSDs correspond closely to one or more GIs, and the 34 GIs thereby covered (see Table 45) account for all but one-tenth of the nation's vineyard area.42 Those SSDs account for one-ninth of national GDP and population. As well, services associated with the wine industry are important in urban areas, for example in shipping activities at the major ports of Adelaide, Melbourne, Perth and Sydney as well as in the head offices of major wine companies in those cities.

The 2006 ABS census data are incorporated in the database of a regional multisectoral model of the Australian economy known as TERM and developed by Victoria University's Centre of Policy Studies (Horridge and Wittwer 2008).43 That database is the source of comparative information reported below on the industry's contribution to regional employment, gross value of production and value added (GDP). Vine area, grape and wine production quantities, and number of establishments in the grape and wine business are from the latest annual survey data reported in ABS Catalogue No. 1329.0.

The ABS does not publish comprehensive price data, but since 1999 the industry itself has been conducting a series of State-based annual winegrape price and utilization surveys. The average price data and crush volumes from those surveys, and the dispersion of winegrape prices around mean levels in each region, are now made freely available online, in a PDF report and an Excel file, at www.agwa.net.au/winefacts (see AGWA 2014a). In addition, AGWA reports online the distribution of prices for wine exports.

#### **2.3 Regional differences and their contributions**

Changes since 2003 in the major regions' shares of the national vine area are shown in Chart 58. Some areas have increased their share a lot (Coonawarra, Adelaide Hills, Riverina) while others have seen their share fall (most notably the Murray Darling region of Victoria).

The previous chapter provided production details for the various States of Australia, but it does not give precise indications of the climatic differences across Australia's winegrowing regions. Just under one-third of South Australia's winegrape vineyards are in the hot Riverland region. In both NSW and Victoria three-fifths of their areas were in that hot zone (Riverina and Murray Darling/Swan Hill) in 2006 and the combined share had risen to twothirds by 2012. The increase was mostly in the Riverina region of NSW, making possible the huge expansion in sales to the United States and elsewhere of Casella Wines under the Yellowtail label, while in Victoria the hot region area shrunk from 60% to 46%. Together with a small area in southern Queensland and the Swan District near Perth, those hot zones accounted for 48% of the country's winegrape area in 2001, 46% in 2006 and 42% in 2012. Another 42% of the area comprises warm zones. The cool regions, such as the Adelaide Hills, Tasmania, Mornington Peninsula and Yarra Valley, accounted for 12% of the bearing area in

42 Further disaggregation proved to be not sensible for ABS data because the concordance between the other smaller GI regions and one or more SSDs or SLAs is very poor, thanks to overlapping boundaries. Even for the chosen GIs the concordance is not always great. For example, the McLaren Vale GI is a small part of the Southern Adelaide SSD which includes a large and rapidly increasing amount of urban activity. 43 This is a bottom-up regional model. A top-down regional model has also been developed for wine industry

analysis, based on the ORANI-G model (Horridge 2000).

2006, but those regions expanded their plantings by two-fifths over the first decade of this century and comprised 15% of the national area by 2012 (Tables 45 and 50).

Tasmania is the coolest region, and its share of the national winegrape area was less than 0.2% in 1990, but it rose to 0.5% in 2001 and 0.8% by 2012. With less than 1% of Tasmania's crop area devoted to vineyards, it still has enormous potential to expand, should climate change encourage more growers to move to higher latitudes. There is also the option of moving to higher altitudes such as in the Adelaide Hills: by 2008, 30% of that region's crop land was under vines, from virtually zero in the early 1970s. The cool regions' share of winegrape production has grown less rapidly — and been more volatile — than its share of vine area though (Table 54 and Chart 57). This is because yields per hectare typically are lower and more variable in cooler regions: during 2001-12 they averaged 6.9 t/ha (and just 6.0 in Tasmania), compared with 7.3 t/ha in warm regions and 14.8 t/ha in hot regions (Table 55). Higher prices compensate more or less for the lower yields, with Tasmania's average ranging between \$2400/t and \$2600/T between 2005 and 2013 (Table 57). The average grape price for all cool regions in 2008 was one-quarter above that for warm regions and almost three times above that for hot regions (Table 74).44

 Regions vary hugely in the vine intensity of their cropping, defined as the share of vines in the region's total crop area relative to that share nationally. Nationally, vineyards account for just 0.7% of the total crop area at its peak around 2006 and was down to 0.46% by 2012; but in most wine regions the share is at least several percentage points. For the majority of the 27 wine regions it is more than six times the national share (Table 58), and more than 40 times for four regions (McLaren Vale, Yarra Valley, Margaret River and Adelaide Hills). By contrast, the Clare Valley and the Canberra District are even less vine intensive than Tasmania (Chart 599). By State, South Australia has been the most vine intensive since the early 20th century, although Tasmania surpassed it during 2007-10 (Table 5) and may again very soon.45

 Regions also vary hugely in their yields per hectare, with some less than 5 tonnes while others are more than 15 tonnes. In 2012 most regions had lower yields than in 2001 even though the national average yields were almost the same in those two vintages (10.7 and 10.9 tonnes, respectively). That was because a few of the large hot regions had much higher yields per hectare in 2012 than in 2001 (Chart 60).

 Those higher yields have gone at least some way toward offsetting the opposite trend in winegrape prices. Prices were lower in 2013 than a decade earlier in virtually all but the premium cool-climate regions, and the proportional fall was especially large in the four large hot regions (right-hand side of Chart 61). In 2008, the mid-point of that period, two-thirds of all winegrapes were sold in the A\$400 to \$650 per tonne range, but by 2014 most were sold at less than A\$450. In both years, only 2% of sales were above A\$1550 per tonne (Chart 62). The average price in 2014 was A\$441, halfway between the averages for red and white winegrape varieties (A\$540 for reds, A\$340 for whites).

44 The cool regions' share of the national value of grape and wine production was just under one-tenth in 2006, compared with just under one-quarter for the hot regions and two-thirds for the warm regions (Table 69). The hot regions' share would be slightly less if grapes used for non-wine purposes were excluded, since almost all of them are grown there (Tables 75 and 76) and yields are higher for non-wine grapes than for winegrapes (compare Tables 55 and 77). 45 A change in definition of crop area in 2011 led to its measured increase in all states but more so in Tasmania

than other states (see Table A3).

 Despite their low prices, the massive volumes of production in the hot regions are enough to ensure that they comprise four of the top five regions in terms of gross value of winegrape production. The Barossa Valley is ranked third by that criterion, while McLaren Vale and Margaret River take sixth and seventh place (Chart 63).

A similar ranking applies with respect to the contribution of the industry to regional and national employment (Chart 64). The numbers of grapegrowing establishments in each region is shown in Table 62. For almost all regions the industry's share of regional employment is more than twice the national average, and for nearly half of them it is more than ten times (Tables 63 and 67). The share is much higher for employment than for the number of establishments in some regions (Barossa, McLaren Vale, and the region near Mildura in Victoria), where some large wine companies dominate. By contrast, in South Australia's Riverland the industry's regional employment share is much smaller than the establishment shares, reflecting the fact that large vineyards using labour-saving mechanical pruning and harvesting predominate and much of the processing of Riverland grapes is done in the Barossa. These differences in employment and establishment shares also reflects the fact that there is a very uneven distribution of wineries across Australia in terms of tonnes of grapes crushed: in 2012, 70% of wineries crushed less than 25 tonnes each, and only 4% crushed more than 100 tonnes (Table 66 and Chart 43). The same is true of the national share of vine area (Table 65).

 The other resource whose employment varies greatly across regions is irrigated water use. Unfortunately comprehensive data are not yet available at the wine region level, but even at the state level the differences are large. In 2006 vineyards accounted for almost one-quarter of agricultural water use in South Australia but for only 6% nationally and less than 1% in Tasmania and Queensland. When differences in wine production are taken into account, Victoria is a much heavier user than South Australia per litre of wine produced, but perhaps that is because some of the grapes around Mildura are processed in South Australia. When expressed per dollar of gross value of agricultural production, Victoria and South Australia are close to the national average whereas New South Wales is 50% higher while Western Australia and Tasmania are only a small fraction of the national average. Compared with other farm enterprises, water use per litre of production value for grapes is greater than for other fruits or for vegetables, but it is much less than for sugar, cotton, rice or dairying. And in aggregate terms, grapegrowers use less than all those enterprises except vegetable growing. New South Wales is the only state still a significant user of flood irrigation to water vines (Table 68).

 Turning to output contributions of the industry, in 2006 and 2011 grapes accounted for around 1.5% of the gross value of all agricultural value added (GDP), but in wine regions their shares are more than three times larger on average — although much less so in 2011 (a very cool and damp summer and hence a poor vintage) than in 2006 (Table 70 and Chart 65).

 Regions also vary in the extent to which their wineries are export focused. Since 1870 South Australian wineries have always been the most export-focused (Table 14). In recent decades that State has accounted for the processing of around 70% of the country's total export volume, although New South Wales and then Victoria have increased their shares a little since 2000 (Chart 27). Some of South Australia's exported wine is based on grapes grown across the border, however, particularly in the Sunraysia region around Mildura.

Data are available on the distribution of winegrape prices within each region (AGWA 2014a). Those price and quantity data, when multiplied, provide value data too. They are summarized in Tables 72 to 74 by dividing the spectrum of prices in the 2008 vintage into three categories. The non-premium category is defined as grapes purchased at less than \$550/tonne, super-premium as grapes purchased at \$1200/tonne or more, and commercial premium at between \$550 and \$1199/tonne. The majority of regions supply grapes into all three categories, but a few do not supply any of either non-premium (Margaret River, Mornington, Tasmania) or super-premium (Murray Darling, Riverland, Riverina, Swan Hill and Mudgee/Cowra). Evidently, the distribution of prices tends to be further to the right the warmer the climate.

To capture the differences in quality across regions, at least as reflected in prices, a Regional Quality Index has been defined as the average winegrape price in a region across all varieties as a proportion of that average price nationally. The average prices themselves are shown in Tables 56 and 57, and the Regional Quality Indexes are reported in Table 61. The distribution of the share of winegrape production at any one RQI point is shown in Chart 66 for 2001 and 2012. That pair of graphs suggests that over that period the average price dispersion increased substantially, with the right side of that distribution's tail now stretching more. The unweighted mean value of that index rose by one-eighth, from 1.48 to 1.67.

This shift is reflected also in the increase in the coefficient of variation of the RQI across regions, from 0.31 to 0.50 over the 2001 to 2012 period. It is also reflected in the fact that of the 50% of regions whose RQI rose over that 12-year period, two-thirds of them had an index value of greater than 1.6 in 2001 and greater than 2 in 2012. None of them were hot irrigated regions (Murray Darling, Riverland, Riverina and Swan Hill, which comprise nearly three-fifths of the national crush volume). Hence the RQI for hot regions as a group has fallen slightly since the turn of the century, and that of cool climate regions has risen slightly (Chart 68). By 2013, the national average price was one-tenth lower again and price dispersion was even wider, ranging from A\$320-360 in the hot-climate regions to more than seven times that (almost A\$2500) in cool Tasmania and Mornington Peninsula (Chart 67(a)). The dispersion is almost as wide even for just Shiraz winegrapes (Chart 67(b)), suggesting that for versatile varieties it is regional rather than varietal characteristics that determine their quality and price.

A final indicator of the extent to which regions differentiate themselves can be found by focusing on each region's mix of winegrape varieties in their vineyards differs from the global average mix. A so-called Varietal Similarity Index (VSI), to be defined in the next chapter (together with appropriate vine bearing area data), provides such an indicator. The degree of similarity of each region's varietal mix with the global varietal mix is shown in the VSI numbers for 2001 and 2010 reported in Table 169. According to that indicator, there has been a considerable decrease in the diversity of Australia's regions in terms of their vineyards' varietal mix, relative to the global average. This is evident from Chart 69, showing all regions to have a higher VSI in 2010 than in 2001. It is also evident from the slightly narrower range and rightward-shifted distribution of those VSI numbers in 2010 as compared with 2001, depicted in Chart 70.

### **2.4 Are regional differences being recognized in the market?**

Clearly there a great deal of wine regional diversity in Australia in terms of climate and other aspects of terroir and hence in terms of the quality mixes of the winegrapes produced, even if the varietal mix has become less diverse since the turn of the century. That also means regions are affected differently from external shocks, as shown, for example, in a quantitative analysis of the regional impacts of a fall in wine export demand and prospective wine tax changes (Anderson, Valenzuela and Wittwer 2011). This increasing diversity is what one would expect as vignerons become more familiar with the growing characteristics and potential of each region and indeed of each vineyard.

But are consumers recognizing this in terms of being willing to pay higher prices from regions that are promoted as being of higher quality? Some years ago an econometric study was undertaken to address this question (Schamel and Anderson 2003). Many consumers, especially when they are new to or inexperienced with wine, seek guidance before purchasing, for example from published ratings of wine experts. So how have expert ratings affected what consumers are willing to pay for such things as the reputation of the producing region as distinct from corporate brand reputation, or grape variety reputation, or the published ratings of wine writers/judges/critics?

The Schamel and Anderson (2003) study uses a hedonic pricing model to estimate price functions for premium wine from Australia (and New Zealand), differentiating implicit prices for sensory quality ratings, wine varieties, and regional as well as winery brand reputations over the vintages 1992 to 2000. The results show regional reputations became increasingly differentiated through time (although less so for New Zealand). In particular, during that decade cool-climate regions became increasingly preferred over other regions in Australia. The results are therefore consistent with the view that price premia can be generated through regional promotion, which suggests that the European tradition of emphasizing region in addition to nation of origin was gradually taking hold in Australia as it headed into the new millennium.

### **2.5 Which regions have adjusted most since the latest downturn?**

Australia's winegrape bearing area peaked in 2008 before shrinking gradually under the adverse economic conditions since then. Between 2001 and 2008 the cool and warm regions had the highest rates of vine area expansion (Chart 71). Cool-climate regions of other countries also expanded in the first decade of this century: in the US, the vine area increased 55% in Sonoma County of California, 108% in Oregon State, and 158% in Washington State, while New Zealand's area grew 220% (Anderson and Aryal 2013a,b). Presumably a similar force was at work in all three New World countries, namely, an increasing appreciation for finer wines as incomes and familiarity with wine grew.

By 2012, however, when Australia had almost 21,000 fewer hectares than in 2008, every State except Tasmania had seen its area shrink (Table 49). The shrinkage was least in South Australia (a 1% drop to 70,000 ha) and greatest in Victoria (a one-third drop to 24,700 ha, all but 4% of which was it its hot irrigated regions). Western Australia had a one-fifth

drop to 10,300 ha, and New South Wales had a one-tenth drop to 38,300 ha. Almost none of falls were in cool climate regions, and the 9% drop in warm regions was only half as large as the 19% drop in hot regions (bottom of Table 49).

 Within each of the climatic regions the change was far from uniform though. Eight cool-climate regions shrank, offsetting smaller gains in ten other cool regions (Chart 72(a)). In the hot regions, Riverina and Lower Murray had gains but they only slightly offset the losses, which were largest in the big irrigated regions along the rest of the Murray River (Chart 72(b)). As for the warm regions, the biggest losses in New South Wales were in the Hunter, Mudgee and Cowra with only a slight offset in Orange; in South Australia the adjoining regions of Langhorne Creek and Currency Creek had the largest losses (Chart 72(c)). These adjustments suggest that while climate change may have driven part of that adjustment, some was also the result of having planted in less than optimal places during the immediately preceding boom period. The lack of area reduction in regions near cities also probably reflects the fact that many small producers there are enjoying the lifestyle of being a vigneron and are willing to finance that indulgence with off-farm income or assets acquired elsewhere. The rebate on the Wine Equalization Tax of 29% on the first A\$1.7 million of sales each year also has helped small wineries to stay in business.

# **Chapter 3:**

# **Varietal developments since the 1950s**

#### **3.1 Introduction**

Traditionally the Old World has emphasized regional differences and has restricted both the range of varieties grown in each region and the use of varietal labeling on bottles. In Australia and other New World countries, by contrast, differentiation had been mainly through varietal labeling, although gradually more emphasis has been given also to regional labeling. In both parts of the world, though, producers are also well aware of the impact climate changes (higher temperatures, more extreme weather events) are having on their winegrapes. Adaptation strategies include switching to warmer-climate or more resilient grape varieties, and sourcing more from regions with a higher latitude or altitude to retain the firm's current mix of grape varieties. Especially in recently established regions and sites whose varietal comparative advantages are still unclear, winegrowers are continually searching for attractive and profitable varieties that do well in climates similar to what they expect theirs to become in the future. Where affordable water availability is becoming a more important issue, the drought tolerance of varieties also is influencing varietal (and rootstock) choices.

These marketing and climate/environment adaptation needs are generating a rapidly growing demand for information on what winegrape varieties are grown where and how those patterns are changing over time. Certainly there are great books available on both the varieties and wine regions of major supplying countries, including the latest seminal ones by Robinson, Harding and Vouillamoz (2012) and Johnson and Robinson (2013). Yet none of those resources provides enough empirical information to get a clear view of the relative importance of the various regions and their winegrape varieties in the global vineyard and their changes over time. To respond to the need for more comprehensive empirical information, a global database for 2000 and 2010 was recently compiled (Anderson and Aryal 2013a). The database includes more than 640 regions in 48 countries that together cover 99 percent of global wine production; and it includes more than 2,000 varieties, of which more than 1,500 are 'primes' and the rest are their synonyms (according to Robinson, Harding and Vouillamoz 2012).

This chapter draws on that newly compiled global database plus additional new Australian data to generate several indicators that capture changes over the first decade or so of this century in the varietal mix in Australia and its wine regions vis-à-vis the rest of the world. The indicators reveal that the varietal distinctiveness of Australia vis-à-vis the rest of the world, and the varietal differentiation between regions within the country, are far less than for other countries. This pattern — which has been noted several times since World War II (Hickinbotham 1947, Dry and Smart 1980) — is one that has become even more pronounced since 2000.

## **3.2 Evolution of winegrape varietal mix**

As a prelude to putting Australia in that global context, it is helpful to examine the evolution of Australia's winegrape varietal mix. Annual data for the country as a whole are available from 1956.46 The hectares of bearing area of each variety are compiled in Tables 122 to 126, and Tables 127-131 express them as shares of the national bearing area. Those data reveal the swings away from reds in the latter 1950s, then towards reds from the mid-1960s to the early 1980s, and again from the late 1990s (Chart 73(a)). They also reveal the move from nonpremium to premium varieties:47 the latter were barely 20% of the total bearing area in the 1950s, but since the turn of the century they have accounted for more than 90% (Chart 73(b) and Table 132).

The red and white split is shown in Chart 74 by main variety. Among the reds, the initial dominance of Garnache (Grenache) for port production has been gradually eclipsed first by Syrah and then also Cabernet Sauvignon, plus Merlot from the late 1990s. Among the whites, the varieties of importance for sherries, muscats and tokays dominated in the 1950s and 1960s along with Semillon. The fortified focus (and the use of multi-purpose grapes such as Sultana) was gradually supplemented with Riesling from the 1970s to the early 1990s, while Chardonnay — today's dominant white — began to make its mark only from the 1980s.

This dramatic change in the varietal mix in Australia's vineyards is reflected in the change in the country of origin of the varieties being made into wine. In the 1950s Spanish varieties made up about half of the area and French varieties just one-fifth. Today, by contrast, French varieties account for all but one-tenth of the area and Spanish varieties comprise less than 3% (Chart 75 and Table 133).

Australia was not unfamiliar with the noble varieties in earlier decades though. Prior to the subsidies and preferential tariffs into the British market provided for fortified wines in the inter-war period, the colonies had seen a wide range of traditional French varieties being introduced, first by Macarthur and very importantly in the early 1830s by Busby, and then by others. Kelly (1861) compiled a list of the main ones that were growing as of 1860 (see Table 134).

# **3.3 Emerging varieties in Australia**

What about the increased plantings of so-called emerging or alternative varieties that are diversifying Australia's vineyards? Of those varieties not in the world's top 20 list and which have expanded from less than 200 bearing hectares in Australia in 2000, there are ten whose areas have grown significantly since then. But in aggregate those ten raised their share of Australia's total winegrape area between 2001 and 2010 by only 1.7% (Table 135). The eight

46 There is a data gap for the years 1967 to 1972, so trend values have been inserted for graphing purposes in the charts that follow.

47 The listing of varieties in those categories is shown in Table 36.

varieties whose area in Australia expanded most over the first decade of this century are, apart from Viognier, all in the top 20 globally (Chart 76).

Since there is a total of less than 50 varieties separately identified in the Australian official data though, that list in columns 1 and 2 of Table 135 excludes many of the small emerging varieties that are hidden in a residual 'Others' category. Even so, that 'Others' category accounted for just 5% of Australia's total area in 2000 and for only 1.6% by 2010, which means the main varieties have expanded much more than lesser alternative ones. The share for Syrah alone rose 6 percentage points over that decade, while Chardonnay's rose 5 points and the shares of Sauvignon Blanc and Pinot Gris each rose 2 points.

Fortunately, the Phylloxera and Grape Board of South Australia has a much more detailed dataset for that state (Phylloxera Board 2013), and it reveals another dozen varieties that have shown some growth between 2006 and 2012. The ABS (2012) also has provided some more varieties in its release of 2012 data. These data, shown on the right-hand side of Table 135, refer to planted area rather than bearing area, and so provide a better indicator of recent changes since newly planted vines take three years to bear. But even these data reveal that emerging varieties make up only a small fraction of 1% of the national area. The total number of varieties in South Australia with more than 0.5 hectares rose by only 20 between 2006 and 2012, from 91 to 111.48

Not surprisingly, however, these emerging varieties are being displayed on wine labels as soon as possible by producers seeking to differentiate themselves in novel ways. Hence seven of the ten varieties listed in the first two columns of Table 135, and four of those listed on the right-hand side of Table 135, are also listed by Winetitles (2014) as among the 35 most frequently mentioned varieties on Australian bottles sold — even though those 11 varieties in aggregate accounted for only 1.4% of the value of winegrape production in 2012 (Table 136).

Thus, despite this flurry of new varieties appearing on Australian wine labels, the increase in varietal diversity of Australia's vineyards between 1956 and 1984 had reversed considerably by 2012, as shown in the cumulative graphs in Chart 77. By then there were just 25 varieties that had shares of national area and production greater than 0.2% (Chart 78).

#### **3.4 Indicators of varietal mix and quality distinctiveness**

In addition to bearing area data, the volumes of production by variety over the past six decades, and their shares of total winegrape production, are shown for each variety in Tables 137 to 141 and Tables 142-46, respectively, and their yields per hectare are reported in Tables 147 to 151. Price data by variety, available from 1999 to 2013, are reported in Tables 152 and 153, from which their value of national production is calculated (Tables 154 and 155). Those five variables by variety also are available for each Australian region, but that mega table is too large for this book and so has been made freely available online at www.adelaide.edu.au/wine-econ/databases. Also compiled are the area, production volume

48 For more on these and other emerging varieties in Australia, and on which firms have planted them, see Higgs (2010) and his updates at www.vinodiversity.com. Winetitles (2014) also maintains a list of the varieties included on Australian wine labels, which in 2013 amounted to 144 varieties.

and yield per hectare of each of the main varieties produced in the cool, warm and hot regions (Tables 156 to 164).

It is helpful to summarize these data through calculating various indexes. In addition to regional and varietal shares, a varietal intensity index and a varietal similarity index, suggested by Anderson (2010a, 2013), are defined here. Also defined is a varietal quality index, using winegrape price as a proxy for quality.

# *3.4.1 Varietal Intensity Index (VII)*

The Varietal Intensity Index is defined as a variety's share of a region's winegrape area divided by that variety's share of the global winegrape bearing area. The Varietal Intensity Index is thus a complement to share information in that it indicates the importance of a variety in a region not relative to other varieties in that region but rather relative to that variety in the world.

Specifically, define *fim* as the proportion of bearing area of grape variety *m* in the total winegrape bearing area in region or country *i* such that the proportions fall between zero and one and sum to one (i.e., there is a total of *M* different grape varieties across the world, and 0 ≤ *fim* ≤1 and Σ*m fim* = 1). For the world as a whole, *fm* is the bearing area of grape variety *m* as a proportion of the total global winegrape area, and 0 ≤ *fm* ≤1 and Σ*m fm* = 1. Then the Varietal Intensity Index, V*im* for variety *m* in region *i*, is:

(1) V*im* = *fim*/ *fm*

# *3.4.2 Varietal Similarity Index (VSI)*

An Index of Varietal Similarity has been defined by Anderson (2010a) to measure the extent to which the varietal mix of one region or country matches that of another region or country or the world. It can also be used to compare the varietal mix of a region or country over time.

The mix of grape varieties is a form of revealed preference or judgement by vignerons about what is best to grow in their region. That judgement is affected by not only terroir but also past and present economic considerations, including current expectations about future price trends plus the sunk cost that would be involved in grafting new varieties onto existing rootstocks or grubbing out and replacing existing varieties.

The index, defined in the Technical Notes on page xxiii, will be zero for pairs of regions with no overlap in their grape varietal mix, and one for pairs of regions with an identical varietal mix. For cases in between those two extremes, the index will be between zero and one. It is conceptually similar to a correlation coefficient. Like a correlation coefficient, it is completely symmetric. Thus the results can be summarized in a symmetric matrix with values of 1 on the diagonal, plus a vector that reports the index for each region relative to the global varietal mix.

The VSI, and the VII, could have been based on production rather than area data, but their comparisons over time would have been less reliable because of year-to-year variations in yield per hectare. In any case production data by variety are less commonly available than data on bearing area.

# *3.4.3 Varietal Quality Index (VQI)*

To capture differences in the quality of the grapes delivered, which reflect consumers' and thus winemakers' willingness to pay as well as growers' willingness to accept, we generate a price-based index on the assumption that prices indicate quality. The simplest index of quality of different varieties is the ratio of the national average price for variety m to the national average price of all winegrape varieties. That has been called the Varietal Quality Index, VQIm, where

$$\text{(3)}\qquad \text{V}\,\text{Q}\mathbf{I}\_{\text{m}} = \text{(P}\_{\text{m}}\text{/P}).$$

#### **3.5 The global data**

To calculate the Varietal Intensity and Similarity Indexes, data on bearing area of winegrapes are needed for the world. Such data were compiled recently by Anderson and Aryal (2013a). In the case of the European Union countries, plantings in several member countries are available from one source (Eurostat 2013), while for other countries they are typically available online from a national wine industry body or national statistical agency. The United States and Canada are key exceptions, where data are collected at the state/provincial level and only for those with significant wine production. The years included in Anderson and Aryal (2013a) correspond to the most recent decadal agricultural census periods of the European Union, which were 1999 or 2000 and 2009 or 2010. For the non-EU countries data have been sought for the earlier year in the northern hemisphere and the latter year in the southern hemisphere. Inevitably not all other countries or regions had data for exactly those vintages, but in most cases the data refer to vintages that were only six months apart.

Using those raw data, the Varietal Intensity and Similarity Indexes have been assembled in comprehensive tables and figures in Anderson (2013). With the supplementary data for Australia on production volume and average price by variety and region, we are also able to calculate the Varietal Quality Index.

#### **3.6 Australia's varietal distinctiveness globally**

It is possible to draw distinctions in terms of the varietal distinctiveness of Australia's vineyard bearing area vis-à-vis the rest of the world's, and the varietal differences between regions within the country and their changing varietal intensities.

### *3.6.1 National varietal distinctiveness*

The Varietal Similarity Index or VSI between Australia and the world was 0.45 in 2000, but it rose to 0.62 by 2010 (Table 165), indicating a substantial drift in Australia's varietal mix toward the world aggregate mix over that decade. Meanwhile, the average of the VSIs for all other countries in the sample is much lower and hardly changed, at 0.35. In other words, Australia was much less distinct than the average country in its varietal mix in 2000, and its

distinctiveness became even less so by 2010.49 Since France is the country whose varietal mix is most similar to the world mix, this means in effect that Australia has become more like France: the two countries had a VSI of 0.47 in 2000 and 0.58 in 2010.

A key reason for Australia's varietal mix becoming more like the global mix has to do with Shiraz, or Syrah, as it is called in most other parts of the world. The popularity which Australia brought to Syrah in the 1990s has led to many other countries expanding their plantings of this variety. In 1990 there were barely 35,000 bearing hectares, making it 35th in the area ranking of all winegrape varieties globally. But by 2000 there were 102,000 hectares, and by 2010 that had risen to 186,000, bringing Syrah to the sixth position on that global ladder and less than one-third below the areas of the two now most widespread varieties, namely Cabernet Sauvignon and Merlot. Over the decade to 2010, the Syrah area grew more than either Cabernet or Merlot — in fact only Tempranillo expanded faster globally (Chart 80). Certainly Australia contributed to that expanding area of Syrah, but expansion was even greater in France and Spain. There were also large plantings in other key New World wine countries, and in Italy and Portugal (Chart 81). As a result, Australia is no longer as globally dominant in this variety: its share of the global Syrah area has dropped from 29% in 2000 to 23% in 2010 — even though Syrah has increased its share of Australia's own vineyards over that decade, from 22% to 28% (the next-nearest countries being South Africa and France, with 10% and 8% of their vineyards under Syrah, respectively).

A further reason Australia's varietal mix has become more like the world's has to do with the large declines in some of the main varieties traditionally used for producing nonpremium wines in the Old World (Airen, Grasevina, Mazuelo), the first two of which are not grown in Australia and Mazuelo (locally known as Carignan Noir) has had only a tiny presence. Three other low-valued traditional varieties that have declined globally, Garnacha Tinta, Sultaniye and Trebbiano, have declined in Australia also, again contributing to Australia's lack of distinctiveness vis-à-vis the rest of the world.50

In 2000, Australia had a higher share of its winegrapes under varieties of French origin than any country other than New Zealand and South Africa (74%), and in 2010 its share was even higher at 88%, just below China, Chile and New Zealand. (Between 2000 and 2010 the winegrape area devoted to varieties of French origin rose from 26% to 36% globally: from 20% to 27% in the Old World and from 53% to 67% in the New World's vineyards — see Anderson 2013, Tables 21 and 22.)

 This is not to say that Australia is not highly ranked in terms of the global bearing area of certain varieties. On the contrary, in addition to some unique varieties developed in this country such as Tarrango, Table 166 reveals that among the varieties whose share of winegrape area in Australia exceeds that of the world (i.e., they have a VII > 1), there are ten in which Australia ranks second, five in which it ranks third, and three in which it ranks fourth globally. Australia also ranks in the top five for a further eight varieties whose VII is less than one.51 But other key wine-producing countries also rank highly for handfuls of varieties, so Australia is not unusual in this respect either. Details of the VII for each region are presented in Table 167 based on area and Table 168 based on production volume.

49 New Zealand, by contrast, had a VSI with the world of 0.34 in 2000, which fell to 0.30 by 2010. 50 Two-thirds of what has disappeared as a winegrape in Australia since 2000 is Sultaniye (Sultana), whose area

globally fell by three-quarters over the 2000-10 period. 51 Dolcetto (2nd), Nebbiolo and Monastrell (3rd), Touriga Nacional and Tribidrag (4th), and Chenin Blanc, Cot

and Tempranillo (5th).

#### *3.6.2 Regional differences in the varietal mix within Australia*

Varietal differences between regions within Australia are more muted than is the case within other countries — notwithstanding the very large differences in growing conditions across Australia. Bear in mind that it is possible for the VSI for a country vis-à-vis the world to be high but the VSI of each region in that country vis-à-vis the world to be low. In France, for example, where each region is required by law to grow only a small number of varieties that have been designated as most suitable for that region, the average of its regional VSIs of 0.29 is well below France's national VSI in 2010 of 0.72 vis-à-vis the world's varietal mix (which is the highest in the world, because so many other countries have adopted varieties from France's various diverse regions). In Australia, however, the average of its regional VSIs in 2010 of 0.53 is not much below Australia's national VSI of 0.62 (Table 169), and it is almost double the average regional VSI of other countries in the sample (including New Zealand's, which is 0.37). Moreover, in 2010, of the 3 most similar regions in the world to each of Australia's 94 regions according to the VSI, less than 7% were non-Australian regions (Table 170). In New Zealand, by contrast, more than two-thirds of the 3 most similar regions to each of its ten regions were in other countries.

It is true that some regions in Australia have managed to pull away from the pack and so are more differentiated from the national mix now than in 2000. However, a little over one-fifth of Australia's 74 regions in the global database, comprising 40% of the national winegrape area in 2010, changed their varietal mix hardly at all (the VSI of their mix in 2010 vis-à-vis 2000 was 0.97 or higher). For another one-fifth of Australia's regions, accounting for 22% of the national area, their VSI was 0.95 or 0.96; and for yet another one-fifth (18 percent of the area) their VSI was between 0.91 and 0.94. Thus it was for just Australia's remaining regions (slightly less than one-fifth of the total number and the national area) that the VSI between their varietal mix in 2000 and 2010 was less than 0.91.

The Varietal Intensity Index or VII provides another way to check on the altered varietal distinctiveness of regions. That index is the ratio of the regional to global shares of the area under a particular variety. Charts 82 and 83 show for each of three red and three white varieties the five Australian regions with the highest VIIs. In the case of red varieties, for example, the five most intense regions all have VIIs above 3, but they are all lower in 2010 than in 2000. In the case of whites there are a few regions where the VII has risen, but certainly not a majority. For Australia as a whole, for all the varieties that had a VII above one in 2010, as many as two-thirds of them had a higher VII in 2000 (Table 171).

#### **3.7 Varietal quality differences within Australia**

Given that different varieties grow better in some regions than others, and that consumer tastes differ across varieties and over time, it is not surprising that there is also considerable dispersion in the national average prices by variety. In 2001, the difference between the lowest and highest varietal prices was more than six-fold, and it shrunk very little by 2010 despite the two-fifths fall in the nominal average price for all varieties. The ranking from lowest- to highest-priced varieties changes a lot over that decade though (Tables 172 to 174). This reflects the fact that the mixes of varieties in all three climate zones in Australia have

altered considerably. Chart 84 shows that the range in 2013 from lowest-priced to highestpriced, even for just the main varieties, was four-fold, but it is six-fold if minor varieties such as Pinot Meunier are included. Moreover, for each variety there is a wide spectrum of prices across and even within regions. As Chart 67 reveals, the cross-regional range for Shiraz prices is almost as large as that for the all-variety average regional prices, even though data are not available for including some of the highest-priced cool regions with emerging Shiraz vineyards. Over the past 15 years there has been a move away from producing the lowestquality wines though. That has caused the shift away from the left in varietal price dispersion between 1999 and 2012, which is clearly visible in the histograms for the Varietal Quality Index in Chart 85.

#### **3.8 Varietal prices and summer temperatures**

In the northern hemisphere it is common to observe an inverted U-shape relationship between the price of winegrapes and the summer temperature (Jones et al. 2005, 2012). Across Australia's regions, by contrast, that relationship tends to be only negative for observed temperatures (Chart 86). As the number of cool-climate regions expands that relationship in future years may become a little more like Europe's, but that tendency may be offset by the fact that Australia's climate continues to warm and January mean temperatures are becoming higher and bringing forward the harvest date (Webb 2006, Anderson et al. 2008). The current pattern of prices being lower in warmer regions is likely to mean that climate change will lower Australia's average winegrape price, unless vignerons switch to Southern European varieties more suited to our relatively warm climate. Indeed more than six decades ago Hickinbotham (1947) believed that Australia's hot regions were too narrowly focused on varieties from France rather than from warmer parts of Europe. Dry and Smart (1980) suggested that if acid addition had been outlawed in Australia, the hot regions would have been forced to at least add 'improver' varieties to their varietal mix.

# **Chapter 4:**

# **Where to from here?**

# **4.1 Market prospects**

The Australian wine industry is not alone in feeling challenged during the past few years. Common contributors include the following:

On top of those common challenges, Australian producers have had to deal also with such things as:

Symptoms of those difficulties for the Australian industry include large declines in winery profits, the cut in winegrape prices particularly in the hot irrigation areas, more than 15% of domestic sales being supplied by imports (compared with just 3% at the start of the millennium), and almost three-fifths of Australia's wine exports in 2014 being in bulk containers (compared with 15% in 1996-2003).

Climate change also is likely to be a bigger challenge for Australia than for many other wine-producing countries. The majority of Australia's winegrapes are produced in the hot irrigated regions around the Murray and Murrumbidgee Rivers (see Chapter 2). Those regions, like most of southern Australia, are becoming warmer and drier, and have seen a slowdown in river flows. There is also an increasing demand from the community for a larger share of those reduced river volumes to be saved for environmental flows and urban uses, so there will be less scope in the future for irrigation to compensate for reduced precipitation. The quality of the main international winegrape varieties currently grown in that region deteriorates as the growing temperature rises (Webb, Whetton and Barlow 2008, Anderson et al. 2008), so producers are having to go to the expense of searching for and planting or grafting alternative varieties that will be more suitable. By contrast, in much of temperate Europe global warming will improve the quality of winegrapes. Ashenfelter and Storchmann (2010a, b) estimate that in the Mosel region of Germany, for example, an increase of 3o C would improve winegrape quality so much as to double the value of vineyards there.

 Daunting though the above lists of challenges looks, some of those adverse developments are only short term. Also, there are several positive signs already emerging. One is the cautious optimism of economic recovery that is showing up in the United States and parts of the recessed economies of Europe.

A second encouraging sign was the substantial take-up of the European Union's offer to pay winegrape growers to grub up vines during 2009-11. There has also been some grubbing out of unprofitable vineyards in the hot irrigated areas of California in recent years, as well as in Australia.

Thirdly, a recent assessment of the impact of expected demographic changes in the United States over the next two decades suggests wine consumption there will grow considerably faster than overall population: as the age and ethnic profiles alter, Lapsley (2010) concludes that wine sales could rise from 280 million cases in 2009 to around 400 million by 2030.

Fourthly, the Asian market is promising to grow steadily. Its population is expected to rise by about 750 million people by 2030, and its share of global income (ignoring Japan) is expected to double, to around 23%. Already the middle classes in those emerging economies are importing popular and fine wines — and with China producing more wine locally, often by firms partly owned by producers in the Old or New World with best-practice technical and marketing knowledge, that is adding to their consumers' interest in the product.

Not only are Asian incomes growing very rapidly and their preferences becoming more westernized, but also they are seeking relatively high-priced imported wines. In China, for example, wine from grapes in recent years has accounted for just 2% of the volume of alcohol consumption but for 8% of the value of alcohol sales.

The Asian region shows great promise for Australian wineries in particular: the market is relatively close and in the same time zone, Australia already has a strong trade and investment presence there in other product areas, and the number of alumni returning there from Australian educational institutions is growing rapidly. The region accounted for barely 4-5% of Australia's wine exports in the early 2000s, but since then its share has more than doubled (Table 16(i)). Australia is a close second to France in supplying imported wines to China, which is now Australia's third biggest market in value terms, ahead of Canada and New Zealand. Moreover, those exports are not just bulk wine used for blending with Chinese juice. Indeed their unit value was more than twice the average for all Australian wine exports in 2012-14. Australia's exports to other Asian countries enjoy substantial premia, too, earning almost three times Australia's average export price in 2012-14. Five of the East Asian countries shown in Table 16(j) are now among the top dozen destinations for Australian

wine, having grown far faster than sales to the rest of the world. With per capita consumption still very low in Asia, the potential for steady long-term growth in demand and in returns from marketing investments there, even if not instantaneous, is very considerable. This is clear in the high average unit value of wine exports to all East Asian countries from Australia: during 2011-14 it averaged \$6.40 per litre, compared with less than \$2.20 to all other destinations, and for exports to China (by far the biggest Asian wine market) the average price was more than \$5.70 (Chart 55). In fact, 90 percent of Australia's exports of wines priced at over \$50/litre went to Asia in 2014, at the same time as Australia grew its \$2.50-\$5.00 per litre sales to China. The recent completion of bilateral preferential trade agreements with Korea, Japan and most recently China will help to rebuild market share Australia lost to Chile and others who signed earlier agreement in Asia.

A recent global economic modelling study by Anderson and Wittwer (2013a, c, 2014a, b) projected impacts of market changes on domestic wine production, consumption and trade in key wine-producing and -consuming countries by 2018 under various growth and real exchange rate (RER) assumptions. If RERs in 2018 were to be the same as in 2011, Australia's non-premium grape and wine prices would be even lower than in 2011 while super-premium and iconic still wine prices would be more than 40 percent higher.52 If, on the other hand, RERs were to return half-way toward what they were in 2009 — which is what had happened by the end of 2014 — and China's imports continued to grow rapidly, real producer prices in Australia would be above 2011 levels for most grape and wine types, especially for super-premium+ wines. The extent of those rises would be somewhat but not substantially less if China's import growth were to be slower.53

With that reversal in RER trends, Australia is projected to expand its output by 2018 for all wine types except non-premium, with commercial-premium and super-premium increases of one-eighth and one-sixth, respectively. The projected upgrading of qualities demanded in most markets means that China accounts for only about one-third of the projected growth (by about one-sixth) in the value of global imports.

Australia's export prospects depend very much on the exchange rate scenario though. If RERs were the same in 2018 as in 2011, Australia's exports to all destinations other than Asia are projected to decline, and in aggregate volume would be no more than in 2011. By contrast, if exchange rates settled at half-way back to those of 2009 — as has since happened — Australian total annual export volumes are projected to increase to become as much as one-eighth more than in 2011 (or somewhat less under slower import growth by China). Within that growth, however, Australian exports of non-premium wines are projected to fall.

Finally on market prospects, it needs to be kept in mind that Australia's per capita income growth is slowing and may even decline as the latest mining investment boom comes to an end, depending on how well the government is able to deal with the political difficulties of balancing the federal budget (Garnaut 2013). This will slow the growth in domestic

52 Commercial-premium still wines are defined to be those between US\$2.50 and 7.50 per litre pre-tax at a country's border or wholesale. Non-premium wines are defined as those below US\$2.50 per litre and superpremium wines are defined as those greater than 7.50 per litre. The sparkling wine category in the model covers all price points. 53 The lower Chinese import growth scenario assumes the growth in disposable incomes in China is one-quarter

less than in the high-growth scenario, its RER ceases to appreciate, and capital investments in domestic grape and wine production grow twice as fast as in the base scenario.

demand. How much it slows the growth in Australian wine sales at home will also depend on the impact of RER changes on competition in the domestic market from imports.

### **4.2 What about the varietal mix across regions?**

The data reviewed in Chapter 3 reveal three things about Australia's vineyard. First, Australia's mix of winegrape varieties is not very different from the rest of the world's and, since 2000, it has become even less differentiated. One reason is that even though Australia's signature variety, Shiraz, has expanded its share of the national vineyard, the importance of that variety has expanded even faster in numerous other countries. Australia's mix is now closer to that of France, since France is the closest to the global mix. Whether that is a good thing commercially is unclear, especially for Australia's hottest regions. Do Australian producers benefit enough by emulating France's varietal mix to offset any economic downsides, for example from being less differentiated from the world mix, or from growing varieties that may be less than ideal for the terroir of Australia's various regions?

Second, even though there are very large differences in growing conditions and especially climates across Australia, cross-regional varietal differences within Australia are much less than is the case within other countries. Perhaps this is a consequence of producers finding it easier to market well known 'international' (mostly French) varieties than trying to differentiate their offering and region with less familiar varieties. But it does suggest there is plenty of scope to explore alternative varieties in the various regions of Australia — which is something grapegrowers are doing in any case as they consider ways to adapt to climate change.

And third, Australia's various regions to date have made only a little headway in diversifying their vineyards — despite much discussion of alternative or emerging varieties in the media and at conferences.

This leaves open the question of *why* particular varieties have been produced at various times in Australia's various regions. To what extent is the varietal mix driven by what grows best in each location (the terroir explanation)? Gergaud and Ginsburgh (2008) argue that terroir has not been the main explanation even in Bordeaux. Is the increasing concentration on major 'international' varieties partly a result of producers in newly expanding wine-producing regions finding it easier to market them because of France's strong reputation with those varieties? Might part of the explanation also be that those key varieties do well in a wide range of growing environments, or have been found to be desirable for blending with other varieties that grow well in the same regions?

These and other centripetal forces during the first decade of this century apparently have dominated possible centrifugal forces such as intensifying competition from abroad and consumer demand for novel offerings. It remains to be seen as to whether the latter are strong enough to dominate the former over the coming years so as to differentiate Australia's regions more and thereby reverse the trend of this century's first decade.

### **4.3. Policy and institutional implications**

How might Australia strengthen its competitive edge over the next decade or so? Looking beyond the immediate difficulties, there are reasons to be cautiously optimistic about the Australian wine industry's future. Recovery will not be easy, and may not be as quick as the resurgence from its mid-1980s slump. Certainly major adjustments will be required for many participants. However, to the extent there is a willingness to continue to invest for the long term (rather than just focusing on quarterly returns to shareholders), and if the earlier spirit of collaboration within the industry can be re-invigorated, a return to at least normal levels of profitability should be possible before long.

 One adjustment already under way is in marketing. The earlier emphasis in generic marketing by the Australian Wine and Brandy Corporation on Brand Australia, of providing sunshine in a bottle, has switched to a marketing strategy that places far more emphasis on regional characteristics and higher quality wines. Wine Australia also initiated a website allowing individual producers of fine wines to tell a story about their wines (www.australiaplus.com).

That idea was taken further with the creation in 2009, by a dozen long-established, mid-sized, quality-driven, high-profile, family-owned Australian wineries, of the First Families of Wine: together they represent 16 Australian regions across four states, and between them they have more than 1200 years of winemaking experience (www.australiasfirstfamiliesofwine.com.au).

Following the merger of Wine Australia and GWRDC on 1 July 2014 to form the Australia Grape and Wine Authority, the industry is now developing its next five-year strategic plan. Its Discussion Paper (AGWA 2014b) reveals that there will be a stronger focus on building and promoting the country's fine wine offering. The aim is to go beyond offering good value wine to making the world aware Australia also has great wine, and indeed has the potential to be one of the greatest wine-producing nations in the world, given its wide range of climates and terroir.54 Getting that message across in not only Australia's traditional markets but also in Asia will require a larger budget than AGWA's predecessor organizations have had in the past though, especially given the commitment by the European Union to more than double its generic promotion expenditure over the next five years (European Court of Auditors 2014).

In terms of private-sector promotion by individual large wine companies, they already have well-recognized labels, including five of the top dozen wine brands globally plus Penfolds (Table 27). The first four represent rather low bottle prices though (Hardy's at number four, Yellowtail at six, Jacob's Creek at nine and Lindemans at ten), while Wolf Blass is ranked twelve. Most of those labels have been selling wine in the key UK supermarkets at less than £4 a bottle over recent years, which is almost certainly not sustainable in the long run. Since competition from Argentina, Chile and South Africa at that non-premium commodity end of the wine quality spectrum is strengthening, improved profit margins require graduation to higher quality, more differentiated wines of place. One step in

54 That Australia can produce the equivalent of Bordeaux first-growth wines is beyond dispute, even if they have yet to reach the same stratospheric prices. And the characterists of what it takes to produce them are also reasonably well known. In the case of weather variables, they have virtually the same influence on Australian iconic wines as those in Bordeaux (Wood and Anderson 2006).

that direction was the decision a few years ago by Treasury Wine Estates to abandon cask (bag-in-box) wine and thus to not renew contracts with growers of non-premium fruit. Another example is the greater emphasis being given by Pernod Ricard Australia to their Regional Reserve range of Jacob's Creek wines. Other examples are the purchase in late 2014 of Peter Lehmann Wines by Casella and Grant Burge Wines by Accolade (see Tables 22 and 23). Also helpful is the embracing of environmental stewardship by an ever-larger number of Australian producers, in the expectation that retailers and their consumers will be increasingly looking for evidence at all stages of production of sustainable use of natural resources. Numerous high-end wineries also have embraced organic and biodynamic methods in their vineyards, believing that they result in better wines that will attract higher prices, even when those methods are not advertised on the bottle label (Allen 2010).

As for the R&D portfolio of AGWA and private firms, the returns from such investments have been shown to be very high in the past. Returns in the next two decades are likely to be even higher, bearing in mind marketplace changes and long-term uncertainties such as climate change, water and other environmental policy reforms, and prospective alcohol tax changes at home and abroad. Transgenic biotechnology offers much promise for accelerating the research discovery process (Pretorius and Hoj 2005), and consumer resistance to genetic engineering is likely to gradually fade over time and thus reduce its constraint on exploiting that opportunity. The scope for collaboration across scientific disciplines could be exploited more, as could the scope for collaboration between scientists at the basic and applied ends of the spectrum, and between scientists in various countries.

As with generic promotion though, the returns to the various players along the value chain and to different types of producers and different regions from R&D investments will not be equal of course. And they will vary across the adoption time period as well, rewarding most those producers able to adopt a new technology fastest before it is mainstreamed by others nearby and abroad (Zhao, Anderson and Wittwer 2003). Ex ante economic analysis of the likely effects is one way for AGWA to anticipate the possible distributional impacts of its various strategic choices. Ideally such analysis would be undertaken with a model of global markets and not just the national market, taking into account the efforts also being considered in other key countries, for example recent innovative efforts in Chile (Dutz, O'Connell and Troncoso 2014) and proposals under consideration in Europe (Cogea 2014).

Policy reforms could contribute to the transition to higher-quality wine production. The gradual creation of better property rights for water and the increasing opportunities for them to be tradable is allowing irrigation water to be attracted to its most profitable uses. Within agriculture, vineyards have been among the more profitable crops to irrigate, so when prices for water rise in drier years vignerons will be able to out-compete other users for the available allocations.

On domestic wine taxation, if Australia were to switch from an ad valorem to a volumetric tax, as recommended by the Henry Review of Taxation (Henry 2009) and as used in most other countries, it would encourage the transition to finer wines (and it would weaken the case by anti-alcohol lobbies for a higher *rate* of taxation of wine). In particular, it would make it easier for smaller fine-wine producers to sell all their product on the domestic market, thereby avoiding the high fixed costs of breaking into new export markets (bearing in mind that successful exporting firms typically are larger and more productive — see Bernard et al.

2007, 2012).55 There is the risk that any change to the method of taxing wine consumers will be accompanied by a hike in the extent of taxation to bring it up to at least the beer rate if not the higher spirits rate. Argumentation to that effect would need to be robustly countered by the argument that moderate wine consumption can have net positive health and social externalities rather than negative externalities on society associated with excessive alcohol consumption and especially binge drinking. According to that argument the volumetric tax on wine should be lower than that for other alcohols and potentially zero (Anderson 2010b), as it is in the major wine-producing countries of the world (Charts 45 and 46).

Advocacy by the industry on wine tax policy and myriad other issues is likely to be more successful the more the industry can speak with a united voice. That is no small task for an industry that is even more widely spread geographically and more diverse in terms of firm size and product quality than it was at the start of the present cycle a generation ago. The industry has managed recently to join its generic promotion and R&D bodies, but it still has two advocacy groups (the Winemakers' Federation of Australia, www.wfa.org.au, and Wine Grape Growers Australia, www.wgga.com.au). Independent grapegrowers and winemakers inevitably find it more difficult to see eye to eye on every issue when profits are low or negative, but that is also when the stakes in advocacy may be highest. It remains to be seen whether the strength of industry leadership that was so abundant in the 1990s can be garnered again for this second and more challenging half of the present cycle.

# **4.4 Some lessons from history**

What lessons can be learnt from the past which are pertinent to the industry's current and prospective opportunities and challenges? For brevity's sake, these are laid out as dot-point responses to a series of questions that have arisen in the course of the present study.

*Why did the Australian wine industry not take off in the latter half of the 19th century when Europe's wine industry was being ravaged by phylloxera and mildew?*

*Why did the industry grow so slowly during most of 20th century?*

55 However, a move to a volumetric tax on wine consumption — like climate change — would harm hot winegrape regions more than those in the higher latitudes and altitudes, and more so the higher is that volumetric tax rate (Anderson, Valenzuela and Wittwer 2011).

international competition and slowed innovation and hence productivity and income growth.

# *How important were macroeconomic conditions to the industry's cycles*?

# *How important were the fortunes of other sectors of the Australian economy to the industry's development?*

# *How have successful investors in the wine industry behaved in past cycles?*

• Cycles are inevitable for perennial crop industries, so canny investors with finance and market outlets have bought assets in slumps, giving them a reasonable return on those low-priced assets and readying them for take-off in the next boom when they can sell those assets at higher prices and lower their capital base to concentrate on brand investment.

# *Why was there such a sharp downturn in the present cycle?*

• It was affected by a perfect storm of coincident influences: the biggest and longest demand-driven mining investment boom and hence RER appreciation in Australia's history, the deepest global recession since the early 1930s, coming at the end of one of Australia's longest droughts followed by floods, and at a time of rapid wine export expansion in other New World countries.

### **4.4 Conclusion**

What can be done to shorten the current slump and reduce the amplitude of future cycles? Firms have numerous strategies. Those that have been long-established know that cycles are normal and recoveries tend to be slow, so they preserve some earnings from high-profit booms to carry them through the long periods of low returns that tend to follow. In this era of flexible and volatile exchange rates, they also hedge against currency fluctuations. They also use the slump period when asset prices are low to shift new investments from low-return to prospectively higher-return regions and even to other countries, so as to also hedge against macroeconomic shocks and improve access to more market and technical knowledge.

The industry as a whole needs to invest more in at least four areas: generic promotion; technical, policy and market research; data on industry developments; and collaborating better on these and other issues including advocacy. Had better and more timely data been available in the latter 1990s, there may have been fewer inappropriate investments in vineyard expansion. The Australian Bureau of Statistics has been scaling back its collection of data in recent years, and it expects the industry to fully cover the cost of collecting extra data. A new strategy for data collection and its analysis is therefore needed, and its implementation will require more industry resources than have hitherto been made available in this area if the government continues to cut back on public data collecting.

One of the clearest lessons from the past 170 years is that distortionary government policies tend to exacerbate rather than smooth adjustments in the industry as it goes through each cycle. An ongoing objective of the industry should be to keep governments out of markets and confine their activities to generating public goods and overcoming market failures such as the free-rider problem of collecting levies for generic promotion and R&D.

# **References**

Anderson, K. and S. Nelgen (2011), *Global Wine Markets, 1961 to 2009: A Statistical Compendium*, Adelaide: University of Adelaide Press. www.adelaide.edu.au/press/titles/global-wine Excel files are freely available at www.adelaide.edu.au/wine-econ/databases/GWM

	- http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search\_database

# **Grape and wine market developments in 86 charts**

**Section I — Charts:**

**Australian Grape and Wine Production, Consumption and Trade**

1. Bearing area of vineyards, wine production, and wine exports, 1986 to 2013

2. Volume, average A\$ price and value of export sales of Australian wine, 1990 to 2013

3. Value of wine exports, Australia and other New World countries, 1995 to 2014 (US\$ '000)

4. Index of revealed comparative advantage in wine, Australia and other key exporters, 1986 to 2012 (1.0 = world)

5. a Wine's share of a country's exports divided by wine's share of global exports.

5. Bearing area of vineyards, Australia and South Australia, 1843 to 2013 (ha) (a) Regular scale

7. Volume of Australian wine exports to United Kingdom and world, 1854 to 2013 (kl) (a)Regular scale

(b) Log-linear scale

8. Exports as % of wine production and imports as % of apparent wine consumption, 1843 to 2013 (%, 3-year moving average)

9. Vine area, wine production, and wine exports, 1843 to 2013 (log-linear scale)

10. Indexes of vine area, wine production, and wine exports, per capita, 1843 to 2013 (2007 = 100)

11. Vine area as a percentage of total crop area, and wine production per \$ of real GDP, 1843 to 2013 (2007 = 100)

12. States' shares of Australian vine area, 1843 to 2013 (%)

13. Vine's share of total cropped area, by State, 1843 to 2013 (%, 5-year averages)

# 14. Wine production per capita, by State, 1843 to 1913 (litres/year) (a) New South Wales, South Australia and Victoria, annual

(b) NSW, SA, Vic and WA, 5-year averages

15. Share of wine production exported, and all merchandise exports as a share of GDP, 1856 to 2013 (5-year moving average)

16. Volume and value shares of exports in sales of Australian wine, 1984 to 2013 (%)

17. Average A\$ price of winegrapes and of exports, and vine area, 1986 to 2014

18. Volumes of wine exports by A\$ price segment, 2000 to 2014 (litres)

19. Unit value of wine exports, Australia and other New World countries, 1990 to 2013 (US\$/litre)

20. Winegrape price, and volume and value of winegrape production, 1999 to 2014

21. Volume and value shares of imports in wine consumption in Australia, 1984 to 2013 (%)

22. Number of wineries in Australia, 1985 to 2013

23. Real exchange rate, 1970 to 2013 and international terms of trade, 1871 to 2013 (a) AUD real exchange rate, trade-weighted average

(b) Australia's international terms of trade

24. Indexes of real international prices of food, energy raw materials and minerals, 1960 to 2014 (US\$, 2005 = 100)

25. Mining share of merchandise value added and vine area per capita, 1972 to 2013 (% of GDP excluding services, and hectares)

26. Share of bulk wine in volume of exports, Australia and other key exporters, 2000 to 2013 (%)

27. Shares of wine exports, by State of processing, 1995 to 2011 (%)

28. Total value of wine imports, by source, 1999 to 2014 (A\$)

29. Unit value of wine imports, by source, 2001 to 2011 (US\$/litre)

30. Closing stock and stocks-to-sales ratio, 1971 to 2013

31. Shares of wine production destined for table wine, fortified wine and distillation, 1923 to 2013 (%)

32. Gender ratio, 1820 to 1950 (males per female)

33. Per capita production of beer, table wine, fortified wine, and brandy, 1923 to 2012 (litres of alcohol, 3-year moving average)

34. Per capita consumption of alcohol as wine, beer and spirits, 1843 to 2013 (litres of alcohol, 3-year moving average)

35. Shares of wine, beer and spirits in alcohol consumption, 1843 to 2013 (% alcohol, 3-year moving average)

36. Late colonial per capita consumption of wine, beer and spirits, 1896 (a) Relative to Australian average (%)

(b) Litres of alcohol

# 37. Wine and total alcohol consumption per \$ of real GDP, 1860 to 2013 (litres of alcohol per \$million of GDP at 2010-11 prices)

38. Wine consumption and real GDP, per capita, 1860 to 2013 (log-linear scale, polynomial fitted lines)

(b) Brandy exports as % of production, imports as % of consumption, and self-sufficiency in brandy

(b) Shares of winegrape area, premium and non-premium whites and reds

41. Shares of domestic wine sales, by container type, 1978 to 2013 (%)

42. R&D investment, total and as a percentage of wine sales, 1984 to 2013

43. Number of producers and total output, by volume of grapes crushed, 2012 (a) Number of producers

(b) Winegrape production (kt of grapes crushed)

44. National shares of global wine production volume, 1907 to 2007 (%)

45. National shares of global wine export volumes, 1927 to 2013 (%)

a Algeria is not shown: its shares were 57% in 1907, 40% in 1957 and 0% in 2007 and 2013

46. Wine production per capita, main Old and New World countries, 1840 to 2013 (litres/year, 5-year averages around year shown except '2012' = 2010-13) (a) France, Italy, Portugal and Spaina

a Algeria is not shown: its production was more than 150 litres/capita during the 1950s but was only 30 in the 1970s, eight in the 1980s, and has been less than two since then.

(b) Argentina, Australia, Chile, New Zealand, South Africa, and United States

47. Vine area as a share of total crop area (%), main Old and New World countries, 1961 to 2011

(a) Main Old World countriesa

a Shares for Moldova averaged 7% over the 2000-09 period, the same as Spain.

(b) Main New World countries

48. Wine production volume per \$ of real GDP, main Old and New World countries, 1908 to 2008 (kl per million 1990 International Geary-Khamis dollars)

49. Wine production value as a share of GDP, main Old and New World countries, 2009 (%)

50. Wine exports per capita, main Old and New World countries, 1840 to 2013 (litres/year, 5-year averages around year shown except '2012' = 2010-13)

(a) France, Italy, Portugal and Spaina

a Algeria is not shown: it exported more than 100 litres per capita per year during 1900-60 but only six litres in the 1980s and less than 0.5 litre since then.

(b) Argentina, Australia, Chile, New Zealand, South Africa, and United States

51. Wine comparative advantage index,a 1961 to 2013 (a) Main Old World countries, 1961 to 2011b

b Algeria, Tunisia, Georgia and Moldova are not shown: the indexes for Algeria and Tunisia in 1961-64 were 118 and 49, but were <0.5 from 1980; the indexes for Georgia and Moldova were 43 and 100 in 2000-04 and 14 and 42 in 2010-11.

**0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 New Zealand Chile Argentina South Africa Australia United States 1961-64 1980-84 2000-04 2010-13**

Index is the share of wine in national merchandise exports divided by wine's share of global exports.

a

52. Share of volume of global wine exports, key Mediterranean countries, 1861 to 2011 (%, 5-year moving average)

53. Nominal rates of assistance to grape growing, winemaking, all agriculture, and all manufacturing, 1904 to 2013

54. Ad valorem consumer tax equivalent of excise in commercial premium wines, various countries, 2012 and 2014

55. Total and unit value of Australia's wine export to Asia, 2011to 2014 (A\$m/year and A\$/litre, July 2011 to June 2014)

**Section II — Charts:**

**Regional grape and wine developments from the late 20th century**

# 56. Map of Australia's 65 wine regions

Source: Australian Grape and Wine Authority

57. Winegrape bearing area and winegrape production, by climate zone, 2001 to 2012 (a) Bearing area (ha)

(b) Winegrape production (tonnes)

58. Regional shares of national winegrape bearing area, 2003 and 2012 (%)

59. Regional diversity in terms of vine intensity of cropping, 2006

61. Average price of winegrapes, by region, 2003, 2008 and 2013 (A\$/tonne)

62. Distribution of winegrape prices across price points nationally, 2008 and 2014 (% of total tonnes crushed, from AGWA (2014) and the earlier 2008 report)

62 (cont.) Distribution of winegrape prices across price points nationally, 2008 and 2014 (% of total tonnes crushed, from AGWA (2014))

(c) 2014, white varieties

63. Regional shares of national winegrape production value, 2003 and 2012 (%)

64. Regional diversity in terms of grape and wine industry employment, 2006 and 2011 (a) Grape and wine intensity of regional employment (1 = national average)

(b) Regional shares of national grape and wine employment (%)

65. Regional diversity in terms of grape and wine value added, 2006 and 2011 (a) Grape and wine share of value added of regional economy (%)

(b) Region's share of national grape and wine value added (%)

66. Regional Quality Indexa dispersion, 2001 and 2012

a Regional Quality Index is defined as the ratio of the regional average price for all varieties to the national average price for all winegrapes.

68. Regional Quality Index diversity across climate zones, 1999 to 2012

70. Varietal Similarity Indexa dispersion, 2001 and 2010

71. Percentage change in winegrape bearing area, by region, 2001 to 2008 (%)

(b) Hot regions

**Section III — Charts:**

**Winegrape varietal developments since the mid-1950s**

73. Shares of Australian winegrape area, by varietal colour and quality, 1956 to 2012 (a) Red and white, total

(b) Red and white, premium and non-premium

# 74. Shares of winegrape bearing area, by variety, 1956 to 2012 (%, 3-year moving average)

75. Shares of winegrape bearing area, by varietal country of origin, 1956 to 2012 (%)

76. Change in bearing area for most expanded varieties, Australia, 2001 to 2012 (ha)

77. Cumulative shares of Australian winegrape area, by main varieties, 1956, 1984 and 2012 (%)

78. Shares of national wine area, production and exports of key varieties, and yield per ha, 2012

79. Angular separation between two regions, each growing two grape varieties

80. World's top 35 varieties in 2010, compared with 1990 and 2000 (hectares)

81. Bearing area of Syrah, key producing countries, 2000 and 2010 (hectares)

82. Australian regions with largest Varietal Intensity Index relative to global average, key red varieties, 2001 and 2010

83. Australian regions with largest Varietal Intensity Index relative to global average, key white varieties, 2000 and 2010

#### 84. National average prices of main winegrape varieties,a 2013 (A\$/tonne)

a These are the varieties with the largest bearing area in Australia, using the varietal names most commonly used in Australia (as distinct from the prime varietal names used above).

85. Varietal Quality Indexa dispersion, Australia, 1999 and 2012

a The Varietal Quality Index is defined as the ratio of the national average price for a variety to the national average price of all winegrape varieties.

(b) Key white varieties

Winegrape Price (\$ A/tonne)

Winegrape Price (\$ A/tonne)

Winegrape Price (\$ A/tonne)

Winegrape Price (\$ A/tonne)

# **Table Sections**

**Section I — Tables: Grape and Wine Production, Consumption and Trade since 1843**

ͨ2007-2013

ᵇ 157-year from 1854 to 2010 inclusive

Table 2 : Grapevine bearing area, by State, 1843 to 2013 (ha)

Table 2 (cont.) Grapevine bearing area, by State, 1843 to 2013 (ha)

Table 2 (cont.) Grapevine bearing area, by State, 1843 to 2013 (ha)

Table 2 (cont.) Grapevine bearing area, by State, 1843 to 2013 (ha)

Table 3: Share of national grapevine bearing area, by State, 1843 to 2013 (%)

Table 3 (cont.) Share of national grapevine bearing area, by State, 1843 to 2013 (%)

Table 3 (cont.) Share of national grapevine bearing area, by State, 1843 to 2013 (%)

Table 3 (cont.) Share of national grapevine bearing area, by State, 1843 to 2013 (%)

Table 4: Grapevine bearing area as a share of total crop area, by State, 1843 to 2013 (%)

Table 4 (cont.) Grapevine bearing area as a share of total crop area, by State, 1843 to 2013 (%)

Table 4 (cont.) Grapevine bearing area as a share of total crop area, by State, 1843 to 2013 (%)

Table 5 : Vine intensity of cropping, by State relative to nation, 1843 to 2013 (%)

Table 5 (cont.) Vine intensity of cropping, by State relative to nation, 1843 to 2013 (%)

Table 5 (cont.) Vine intensity of cropping, by State relative to nation, 1843 to 2013 (%)

Table 6: Grapevine area per capita, by State, 1843 to 2013 (hectares per thousand people)

Table 6 (cont.) Grapevine area per capita, by State, 1843 to 2013 (hectares per thousand people)

Table 6 (cont.) Grapevine area per capita, by State, 1843 to 2013 (hectares per thousand people)

Table 6 (cont.) Grapevine area per capita, by State, 1843 to 2013 (hectares per thousand people)

Table 7: Winegrape area, production, and yield/ha, and share of total vine area, by State, 1974 to 2013

**WA Qld Tas Australia** Table 7 (cont.): Winegrape area, production, and yield/ha, and share of total vine area, by State, 1974 to 2013

Table 8: Volume and share of grape production for winemaking and other uses, by State, 1937 to 2013

Table 8 (cont.): Volume and share of grape production for winemaking and other uses, by State, 1937 to 2013

Table 8 (cont.): Volume and share of grape production for winemaking and other uses, by State, 1937 to 2013

Table 8 (cont.): Volume and share of grape production for winemaking and other uses, by State, 1937 to 2013

Table 9: Wine production volume, by State, 1843 to 2013 (kl)

Table 9 (cont.) Wine production volume, by State, 1843 to 2013 (kl)

Table 9 (cont.) Wine production volume, by State, 1843 to 2013 (kl)

Table 9 (cont.) Wine production volume, by State, 1843 to 2013 (kl)

Table 10: Wine production volume per capita, by State, 1843 to 2013 (litres)

Table 10 (cont.) Wine production volume per capita, by State, 1843 to 2013 (litres)

Table 10 (cont.) Wine production volume per capita, by State, 1843 to 2013 (litres)

Table 11: Volume of Australian wine sold domestically, wine exports, and exports to the United Kingdom, 1854 to 2013 (kl)

Table 11 (cont.) Volume of Australian wine sold domestically, wine exports, and exports to the United Kingdom, 1854 to 2013 (kl)

Table 11 (cont.) Volume of Australian wine sold domestically, wine exports, and exports to the United Kingdom, 1854 to 2013 (kl)

ᵃUK data prior to 1946 are imports by the UK from Australia, and in years when they are above recorded Austalian exports the UK share is set at 100%

Year Apparent cons. (kl) Per capita (litres) Per adult (litres) 2343 9.3 826 3.1 1841 6.6 2488 8.5 2346 7.6 3658 11.0 3556 9.5 3049 7.5 3412 7.8 4324 8.4 9150 15.2 6015 8.7 6723 8.5 7244 8.3 8108 8.4 5254 5.0 5180 4.7 4363 3.9 4623 4.0 7.1 6040 5.1 5268 4.3 4699 3.6 4437 3.3 7729 5.5 7320 5.0 7431 4.9 8120 5.2 8235 5.1 8061 4.8 8.4 8009 4.7 10178 5.8 10499 5.8 11178 6.0 10027 5.2 10022 5.0 8532 4.1 9392 4.4 8369 3.8 8733 3.8 6.4 9041 3.9 10589 4.3 9324 3.6 11469 4.3 11223 4.1 12899 4.6 13340 4.6

Table 12: Volume of wine apparent consumption, total, per capita and per adult, 1843 to 2013

Table 12 (cont.) Volume of wine apparent consumption, total, per capita and per adult, 1843 to 2013

Table 12 (cont.) Volume of wine apparent consumption, total, per capita and per adult, 1843 to 2013

Table 12 (cont.) Volume of wine apparent consumption, total, per capita and per adult, 1843 to 2013

Table 14: Wine trade volume indicators, by State, 1852 to 1913

Table 14 (cont.) Wine trade volume indicators, by State, 1852 to 1913

Table 14 (cont.) Wine trade volume indicators, by State, 1852 to 1913

*Year*

*consm. (kl)*

*Per capita consm. (litre) Prod'n (kl)*

*Exports (kl)*

*Imports (kl)*

*Net exports of wine (kl)*

*Exported share of wine prod'n(%)*

*Imported share of consm. (%)*

*sufficiency (%)*

*specialization index*

*industry trade*

*(%)*

Table 15: Total and unit value of wine exports and imports, 1901 to 2013

114521 46871 67650 293 481

Table 15 (cont.) Total and unit value of wine exports and imports, 1901 to 2013

Table 15 (cont.) Total and unit value of wine exports and imports, 1901 to 2013

Table 16: Volume, value, unit value and shares of Australia's wine exports to key regions, 1990 to 2009

Table 16 (cont.) Volume, value, unit value and shares of wine exports to key regions, 1990 to 2009

Table 16 (cont.) Volume, value, unit value and shares of wine exports to key regions, 1990 to 2009

*(h) Shares in volume of Australian wine exports to various regions (%)*

*(i) Shares in value of Australian wine exports to various regions (%)*

*(j) Total and unit value and volume of Australian wine exports to key Asian markets (AUD and litres)*

Table 18: Wine import tariffs, by Colony, 1852 to 1900, and interstate trade in wine, 1906 (a) Import tariffs, still wine/sparkling wine (cents per litre)

(b) Interstate trade in wine, 1906 (kl)

Table 19: Tax revenue from customs and excise duties and sales taxes on wine, beer and spirits, 1858 to 1988

Table 19 (cont.) Tax revenue from customs and excise duties and sales taxes on wine, beer and spirits, 1858 to 1988

Table 19 (cont.) Tax revenue from customs and excise duties and sales taxes on wine, beer and spirits , 1902 to 1985 (A\$'000)

Table 21 (cont.) Number of wineries, by State and crush size, 1978 to 2014

c) Number of wineries by tonnes crushed, 1998 to 2014

d) Percent of winery number, grape crush and wine production, by tonnes crushed, 1978 to 2014

Table 22: Ranking of largest 30 wine companies by various criteria, 2013

\* One of the top 100 Australian wineries (according to Halliday 2014). Casella Family Wines purchased Peter Lehmann Wines at the end of 2014

\*\*Member of Australia's First Families of Wine, www.australiasfirstfamiliesofwine.com.au

Table 23: History of brands, mergers and acquisitions

(a) Mergers and acquisitions during 1965-76 (4th boom)

Table 23 (cont) History of brands, mergers and acquisitions

(b) acquisitions by Australia's three largest wineries by 2014

\* One of the top 100 Australian wineries, according to Halliday, J. (2014), *Top 100 Australian Wineries.*

a Previously also absorbed Clarevale Co-op (1930) and the Emu Wine Co. (1862), and is expected to buy Grant Burge Wines (1865) in 2015. Current brands also include Eddystone Point, Omni, and Rhine Castle.

b Previously known as Orlando Wyndham Group, Orlando Wines, Reckitt and Colman, and Wyndham Estate. Previously also absorbed the following companies/brands: Amberton (1975), Craigmoor (1859), Elliot (1999), Montrose (1974), Quelltaler (1863), Saxonvale (1970), and Wickam Hill (1970). Current brands also include Carrington, Gramps, Jacaranda Ridge, Lawson's, Poets Corner, Richmond Grove, Russet Ridge, and Trilogy.

c Previously known as Foster's, Southcorp and Mildara Blass and previously some were part of Adelaide Steamship Co., Dalgety Estates, Lindeman's Phillip Morris, Reed Consolidated, Rothmans UK, SA Brewing Co., Tooheys Brewery, and Tooth Brewery (see Table 23(a)). Previously also absorbed the following companies/brands whose establishment dates are in parentheses: Andrew Garrett (1983), Auldana (1854), Balgownie (1969), Dorrien (1982), Glenloth (1960s), Hungerford Hill (1967), Kaiser Stuhl (1958), Krondorf (1978), Loxton Co-op (1953), Maglieri (1972), Mathew Lang (1883), Middlebrook (1947), Queen Adelaide Woodley (1858), Quelltaler (1892), Riddoch (1891), Richard Hamilton (1845), Rouge Homme (1908), Ryecroft (1884), Stonyfell (1858), Tim Knappstein (1895), Tisdell (1971), and Tolley (1888).

Table 24: First Family wine companies and others established more than 100 years ago but not in or part of Australia's largest 30 wine companies, 2013

\*One of the top 100 wineries, according to Halliday, J. (2014), *Top 100 Australian Wineries*.

\*\*Member of Australia's First Families of Wine, www.australiasfirstfamiliesofwine.com.au

# Now owned by descendants of Brown Brothers, one of Australia's First Families of Wine

Table 25: Other wineries ranked among Australia's top 100,a 2013

Table 25 (cont.): Other wineries ranked among Australia's top 100,a 2013

a Wineries less than 100 years old that are not in or part of Australia's largest 30 wine companies nor a First Family wine company, hence not in Tables 22-24.

Table 26: Shares of Australia's 2,573 wine companies as of 2014, by period of establishment

Table 27: Australia's six most-powerful still wine brands and global ranking of owners, 2014

\* Penfolds was ranked 15th in 2013

Table 28: Production of wine, brandy and other grape spirit, 1907 to 2013 (kl alc.)

Table 29: Shares of wine production for table wine, fortified wine and distillation, 1923 to 2013 (%)

Table 29 (cont.) Shares of wine production for table wine, fortified wine and distillation, 1923 to 2013 (%)

Table 30: Per capita production of table wine, fortified wine, brandy and beer, 1923 to 2013 (litres of alcohol, 3-year moving average)

Table 30 (cont.) Per capita production of table wine, fortified wine, brandy and beer, 1923 to 2013 (litres of alcohol, 3-year moving average)

Table 31: Consumption of domestic and imported brandy, and production and exports of brandy, 1907 to 2013 (kl alc. and %)

Table 31 (cont.) Consumption of domestic and imported brandy, and production and exports of brandy, 1907 to 2013 (kl alc. and %)

Table 32: Per capita consumption of wine, beer, spirits, and shares of total alcohol consumption, 1843 to 2013 (litres of alcohol and %)

Table 32 (cont.) Per capita consumption of wine, beer, spirits, and shares of total alcohol consumption, 1843 to 2013 (litres of alcohol and %)

Table 32 (cont.) Per capita consumption of wine, beer, spirits, and shares of total alcohol consumption, 1843 to 2013 (litres of alcohol and %)

Table 32 (cont.) Per capita consumption of wine, beer, spirits, and shares of total alcohol consumption, 1843 to 2013 (litres of alcohol and %)

Table 33: Consumption of wine, beer, spirits, and all alcohol, litres of alcohol per million dollars of real GDP, 1843 to 2013 (in 2010-11 prices)

Table 33 (cont.) Consumption of wine, beer, spirits, and all alcohol, litres of alcohol per million dollars of real GDP, 1843 to 2013

Table 33 (cont.) Consumption of wine, beer, spirits, and all alcohol, litres of alcohol per million dollars of real GDP, 1843 to 2013

Table 33 (cont.) Consumption of wine, beer, spirits, and all alcohol, litres of alcohol per million dollars of real GDP, 1843 to 2013

Table 34: Domestic, export and total sales of Australian wine, by colour and container type, 1968 to 2013

Table 34 (cont.) Domestic, export and total sales of Australian wine, by colour and container type, 1968 to 2013

Table 34 (cont.) Domestic, export and total sales of Australian wine, by colour and container type, 1968 to 2013

Table 34 (cont.) Domestic, export and total sales of Australian wine, by colour and container type, 1968 to 2013 **d) Domestic sales by container type**

Table 35: Premium and non-premium red and white winegrape area, production and yield, 1956 to 2013

Table 35 (cont.) Premium and non-premium red and white winegrape area, production and yield, 1956 to

Table 35 (cont.) Premium and non-premium red and white winegrape area, production and yield, 1956 to

Table 35 (cont.) Premium and non-premium red and white winegrape area, production and yield, 1956 to

Table 35 (cont.) Premium and non-premium red and white winegrape area, production and yield, 1956 to

Table 35 (cont.) Premium and non-premium red and white winegrape area, production and yield, 1956 to

Table 36: Listing of premium and non-premium red and white winegrape varieties

Table 37: Winegrape price, volume and value of production, 1985 to

Table 38: Value of total grape production, share from winegrapes , and value of wine sales 1971 to 2013

Table 40: Beverage wine stocks and stock-tosales ratio, 1971 to 2013

#### Table 41: Investment in grape and wine research, 1956 to 2014 (\$'000 and %)

# Table 41 (cont.) Investment in grape and wine research, 1956 to 2014 (\$'000 and %)

Table 42: Wine research publications a , 1992 to 2006

a No adjustment is made for the quality or relevance of publications (as measured by, for example, citations). The source includes predominantly English-language

#### Table 43: Consumer taxes on wines, beers and spirits, various countries, 2012

(a) Ad valorem rate, % of the wholesale wholesale pre-tax prices per litre shown in column head

Table 44 (cont.) Consumer taxes on wines, beers and spirits, various countries, 2014 (b) Per standard drink, cents at wholesale pre-tax price per litre shown in column head

**Section II — Tables:**

**Regional Wine Developments from the late 20th Century**

Table 45: Key GI regions and their corresponding ABS Statistical Sub-divisions, 2006 and 2012

Table 45 (cont.) Key GI regions and their corresponding ABS Statistical Sub-divisions, 2006 and 2012

aHot zone: Mean January and February temperatures each above 23oC and Growing Degree Days above 2200; Cool zone: Mean January and February temperatures each below 20oC and Growing Degree Days below 1550. The beneficial effect of a large diurnal temperature range also was considered, but it did not cause any change to the above classification of regions into H, W and C.

278

Padthaway 2.5 2.9 2.4 2.3 2.6 3.3 3.4 3.0 3.3 3.2 Southern Fleurieu 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.3 Southern Flinders Ranges 0.1 0.1 0.2 0.1 0.1 0.1 0.1 The Peninsulas 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0

Table 53: Winegrape production volume, by state and region, 2001 to 2012 (tonnes)

Table 55: Winegrape yield per hectare, by State and region, 2001 to 2012 (t/ha)

Table 55 (cont.) Winegrape yield per hectare, by State and region, 2001 to 2012 (t/ha)

Table 55 (cont.) Winegrape yield per hectare, by State and region, 2001 to 2012 (t/ha)

Table 56: Winegrape price, by state and region, 1999 to 2005 (\$/t)

*State/region 1999 2000 2001 2002 2003 2004 2005* **Victoria** Alpine Valleys Alpine Valleys/Beechworth 1172 1058 989 931 918 872 Beechworth Bendigo 1368 1656 875 Central Victoria - other 1416 1352 992 Central Victoria Zone 1424 1088 1268 1558 Geelong Gippsland 1634 1132 1192 1525 1179 1376 1699 Glenrowan Goulburn Valley Goulburn Valley/Upper Goulburn 1068 1126 877 Grampians 1542 Heathcote 1368 Henty King Valley 960 779 Macedon Ranges 1494 Mornington Peninsula 1790 1842 1756 1658 1575 1529 1660 North East Victoria - other 1014 1387 537 North East Victoria Zone 1346 North West Victoria - other Northern Rivers Zone 1213 946 1002 Port Phillip - other 1803 1664 1769 1630 1573 1718 1152 Pyrenees 1697 Rutherglen Rutherglen/Glenrowan 1115 1307 1224 1339 996 1094 Strathbogie Ranges Upper Goulburn Western Victoria - other Western Victoria Zone 1254 1349 1346 1439 1553 1629 1458 Yarra Valley 1906 1721 1654 1762 1698 1721 1529 **Western Australia** Blackwood Valley 1452 1379 1147 1193 Geographe 1442 1180 1176 1057 Great Southern 1335 1444 1492 1456 1535 1328 Manjimup 1406 1352 1400 1323 1306 1367 Margaret River 1136 1399 1525 1459 1585 1438 Peel 1107 954 Pemberton 1520 1421 1486 1405 Perth Hills<PHONE_NUMBER><PHONE_NUMBER> South West Australia - other Swan District 845 898 916 783 851 898 WA - other 1112 857 1196<PHONE_NUMBER> **Tasmania 2359 2303 2416 Queensland**  Granite Belt 1049 931 930 Queensland - other 928 694 990 Queensland Zone 978 972 South Burnett<PHONE_NUMBER> **ACT+NT** *1536*

Table 56 (cont.) Winegrape price, by state and region, 1999 to 2005 (\$/t)

Table 57: Winegrape price, by state and region, 2006 to 2013 (\$/t)

Table 57 (cont.) Winegrape price, by state and region, 2006 to 2013 (\$/t)

Table 58: Vine intensity of cropping, by State and region, 2006

Table 64 (cont.) Number of independent and winemaker grape-growing establishments, by State and region, 2012

Table 65 (cont.) Vine bearing area of independent and winemaker growers, by State and region, 2012 (ha)

Table 65 (cont.): Vine bearing area of independent and winemaker growers, by State and region, 2012 (ha)

Table 67: Grape and wine employment intensity, by region, 2006 and 2011

### Table 68: Irrigation water use for vineyards and winemaking, by State, 2006 and 2011

(a)Water use in grapegrowing and winemaking, 2006

(b)Irrigation water use intensity, 2006

Table 68 (cont.) Irrigation water use for vineyards and winemaking, by State, 2006 and 2011

Table 68 (cont.) Irrigation water use for vineyards and winemaking, by State, 2006 and 2011

Table 70 (cont.) Winegrape and wine value added (GDP), and shares of national total, by State and region, 2006 and 2011

Table 71: Intensity of grape and wine output and value added (GDP), by region, 2006

340

Table 72: Non-premium, commercial premium and super-premium shares in regional winegrape production volume,a and share of national volume, by State and region, 2008 (%)

a Non-premium category is defined as grapes purchased at less than \$550/tonne, super-premium as grapes purchased at \$1200/tonne or more, and commercial premium at between \$550 and \$1199/tonne. With that \$550 break point, the non-premium winegrape share of 30.3 percent is very close to the 29.3 percent of non-premium wine share we derived from ABS statistics assuming the domestic component of that is the softpack share, the export component is two-thirds of the '<\$2.50/litre' share, and the average price of non-premium wine in domestic and export markets is one-quarter of the domestic price of premium wines.

Table 73: Non-premium, commercial premium and super-premium shares in regional winegrape production value,a and share of national value, by State and region, 2008 (%)

a Non-premium category is defined as grapes purchased at less than \$550/tonne, super-premium as

grapes purchased at \$1200/tonne or more, and commercial premium at between \$550 and \$1199/tonne.

Table 74: Average price of non-premium, commercial premium and super-premium winegrapes,a and weighted average, by region, 2008 (A\$/tonne)

a Non-premium category is defined as grapes purchased at less than \$550/tonne, super-premium as grapes purchased at \$1200/tonne or more, and commercial premium at between \$550 and \$1199/tonne.

Table 76: Winegrape and other grape production volume, and shares of national

total, by State and region, 2008 (tonnes and percent)

Table 77: Grape yield per hectare, winegrapes and other grapes, in tonnes and relative to the national average, by State and region, 2006 and 2008

Table 79: Grape and wine data, Barossa/Eden Valley (warm)

Ratio of regional to national share of total employment in grape growing and winemaking\* 24.05

Table 80: Grape and wine data, Clare Valley (warm)

Table 81: Grape and wine data, Coonawarra (cool)

Ratio of regional to national share of agric employment in grape growing\* 5.12 Ratio of regional to national share of total employment in grape growing and winemaking\* 11.7

Table 82: Grape and wine data, Langhorne/Currency Creek (warm)

Table 83: Grape and wine data, McLaren Vale (warm)

Table 86: Grape and wine data, SA Other (warm)

Table 87: Grape and wine data, SA Total

Series 2008a Area of total vineyards for wine (ha) 362 Volume of production of winegrapes (T) 2036 Yield per hectare of bearing winegrape vines 5.84 Number of grapegrowing establishments, total 81 Number of winemaking establishments, total 81 Number employed in grapegrowing, persons\* 66 Number employed in winemaking, persons\* 52 Share of national winegrape vines area, (%) 0.21 Grape's share total cropped area, (%)\* 0.57 Grape share of total ag output value, (%)\* 1.02 Grape share of total value added in ag., (%)\* 0.87 0.36 0.33 0.41 Grape share of regional ag employment, (%)\* 1.53 Grape and wine share of regional total employment, (%)\* 0.39 82.6 Share of winegrape production volume that is super-premium (%) 0 Share of winegrape production value that is commercial premium (%) 88.8 Share of winegrape production value that is super-premium (%) 0 Ratio of regional to national share of cropped area under vine\* 0.82 Ratio of regional to national winegrape yield per ha 0.53 Ratio of regional to national share of agric employment in grape growing\* 0.37 Ratio of regional to national share of total employment in grape growing and winemaking\* 1.24 Grape and wine share of value added in total economy, (%)\* Region's share of national grape and wine value added, (%)\* Region's share of national grape and wine employment, (%)\* Share of winegrape production volume that is commercial premium (%)

Table 88: Grape and wine data, Canberra District (cool)

Table 89: Grape and wine data, Hunter (warm)

Table 91: Grape and wine data, Murray Darling NSW (hot)

Table 92: Grape and wine data, Orange (warm)

Table 93: Grape and wine data, Riverina (hot)

Table 95: Grape and wine data, NSW Total

Table 96: Grape and wine data, Alpine V/Beech (cool)

Table 97: Grape and wine data, Goulburn Valley (warm)

Table 98: Grape and wine data, Mornington Peninsula (cool)

Table 99: Grape and wine data, Murray Darling, Victoria (hot)

Table 101: Grape and wine data, Swan Hill, Victoria (hot)

Table 102: Grape and wine data, West/Central Highlands (cool)

Table 103: Grape and wine data, Yarra Valley (cool)

Table 105: Grape and wine data, Victoria Total

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Volume of winegrape production (kt) 197 210 225 235 211 266 290.4 279 217 266 Share of national volume of winegrape product (%) 17.8 18.6 16.5 15.7 15.6 15.2 15.7 15.1 16.2 15.1 Average price of winegrapes (\$/t) 744 713 767 726 768 773 625 559 521 770 Value of winegrapes (\$ millions) 147 150 172 171 162 205 181.6 156 113 205 Share of national value of winegrape production 15 16.5 13.6 13.5 13.9 14.8 13.8 14 13.2 14.2 Ratio of regional to national winegrape price per tonne 0.84 0.89 0.82 0.86 0.89 0.97 0.88 0.93 0.82 0.94

Table 107: Grape and wine data, Margaret River (warm)

Table 109: Grape and wine data, WA Other (warm)

Table 111: Grape and wine data, Tasmania (cool)

380

Table 113: Grape and wine data, Qld Other (hot)

Table 114: Grape and wine data, Qld Total

Table 115: Grape and wine data, NT and ACT (warm)

Table 116: Grape and wine data, Total regions studied

Total 117: Grape and wine data, Total other regions

Table 119: Grape and wine data, Hot climate

### Table 120: Grape and wine data, Warm climate

Table 121: Grape and wine data, Cool climate

**Section III — Tables:**

**Varietal Developments since the 1950s**

Table 122: Winegrape area, by variety, 1956 to 1966 (ha)

Table 123: Winegrape area, by variety, 1973 to 1982 (ha)

Table 124: Winegrape area, by variety, 1983 to 1992 (ha)

Table 125: Winegrape area, by variety, 1993 to 2002 (ha)

Table 126: Winegrape area, by variety, 2003 to 2012 (ha)

Table 127: Varietal shares of national winegrape area, 1956 to 1966 (%)

Table 129: Varietal shares of national winegrape area, 1983 to 1992 (%)

Table 130: Varietal shares of national winegrape area, 1993 to 2002 (%)

Table 131: Varietal shares of national winegrape area, 2003 to 2012 (%)

Table 132: Shares of national winegrape area premium/non-premium red and white, 1956 to 2012 (%)

Table 133: Shares of national winegrape area by varietal country of origin, 1956 to 2012 (%)

Table 133 (cont.) Shares of national winegrape area by varietal country of origin, 1956 to 2012 (%)

Table 134 : Varieties most-commonly planted in Australia in 1860 and their likely prime names

Source: Kelly, A.C. (1861), *The Vine in Australia,* Sydney: Sands and Kenny, Ch. 12. Prime names derived from Robinson, Harding and Vouillamoz (2012) or VIVC. Thanks for suggesting some possibilities go to Peter Dry, who drew on, among other sources, Antcliff A.J. (1977), 'Variety Identification in Australia', *Australian Grapegrower and Winemaker* 160: 82-88, April.

### Table 135: Emerging winegrape varieties, 2001 to 2012

\* Blank spaces mean data are unavailable, and not necessarily zero.

Table 136: Frequency of varietal names on Australian wine bottle labels, 2013, shares of bearing area and production, and average price, 2012

Table 138: National winegrape production volume, by variety, 1973 to 1982 (tonnes)

410

Table 139: National winegrape production volume, by variety, 1983 to 1992 (tonnes)

Table 140: National winegrape production volume, by variety, 1993 to 2002 (tonnes)

Table 142: Varietal shares of national winegrape production volume, 1956 to 1966 (%)

Table 144: Varietal shares of national winegrape production volume, 1983 to 1992 (%)

Table 147: National winegrape yield per hectare, by variety, 1973 to 1980 (t/ha)

Table 148: National winegrape yield per hectare, by variety, 1981 to 1988 (t/ha)

Table 150: National winegrape yield per hectare, by variety, 1997 to 2004 (t/ha)

Table 151: National winegrape yield per hectare, by variety, 2005 to 2012 (t/ha)

Table 152: National winegrape price, by variety, 1999 to 2005 (\$/t)

Table 153: National winegrape price, by variety, 2006 to 2013 (\$/t)

#### Table 165: Winegrape Varietal Similarity Index, 1990, 2000 and 2010

#### (a) Australia relative to the world

#### (b) Australia relative to France

#### (c) Australia relative to a decade earlier

aIncludes all varieties in Australia that had a VII above one in 2010

Table 167: Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 167 (cont.) Winegrape Varietal Intensity Index based on area, five highest in each

Table 168: Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Ruby Cabernet 2.3 3.0 3.4 Arneis 1.7 Marsanne 3.9 3.7 3.3 Muscat of Alexandria 2.1 1.7 1.4

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001,

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 168 (cont.) Winegrape Varietal Intensity Index based on production volume, five highest in each region, 2001, 2006 and 2012 (Ranked according to the Intensity Index in 2012)

Table 169: Winegrape Varietal Similarity Index, by region, relative to the world, 2001 and 2010

Table 170: Each region's three most similar winegrape regions in the world according to the Varietal Similarity Index, 2001 and 2010

Table 170 (cont.) Each Australian region's 3 most similar winegrape regions in the world according to the Varietal Similarity Index, 2001 and 2010

**2010 (cont.)**

Great Southern 0.97 AUBlackwood Valley 0.97 AUGeographe 0.95 AUMargaret River Greater Per. Other 0.92 AUBarossa Valley 0.92 AUMt LoftyRgsOther 0.92 AUBarossa other Gundagai 0.98 AUMcLaren Vale 0.97 AUBendigo 0.97 AUSouthern Fleurieu Hastings River 0.89 AUShoalhaven Coast 0.81 AUNthn Rivers other 0.72 NZAuckland Heathcote 0.99 AUGrampians 0.99 AUCentral Vic Other 0.98 AUBarossa other Henty 0.97 AUTasmania 0.96 AUMornington Pen. 0.95 NZCanterbury Hilltops 0.99 AULanghorne Creek 0.98 AUFleurieu other 0.97 AUCurrency Creek Hunter 0.96 AURiverina 0.94 AUSouth Coast other 0.91 AUWest Plains Other Hunter Vall.Other 0.98 AUCowra 0.97 USTehama 0.94 FRYonne Kangaroo Island 0.99 AUCurrency Creek 0.98 AUFar North Other 0.98 AUFleurieu other KingValley 0.93 AUAlpine Valleys 0.89 AUStrathbogie Rgs 0.87 CABritish Colombia Langhorne Creek 0.99 AUHilltops 0.98 AUFleurieu other 0.98 AUCurrency Creek Limestone C.Other 0.97 AUWrattonbully 0.96 AUCoonawarra 0.94 AUHilltops Lower Murr. Other 0.98 AUPerricoota 0.98 AURiverland 0.96 AUGundagai Macedon Ranges 0.99 AUGippsland 0.99 AUPort Phillip other 0.98 USSanta Cruz Manjimup 0.88 USSacramento 0.88 AUSW Australia Other 0.87 AUMargaret River Margaret River 0.98 AUGeographe 0.97 AUBlackwood Valley 0.95 AUGreat Southern McLaren Vale 0.99 AUMt LoftyRgsOther 0.99 AUBarossa Valley 0.99 AUBendigo Mornington Pen. 0.97 USSanta Cruz 0.96 AUTasmania 0.96 AUHenty Mount Benson 0.97 AUGeographe 0.96 AUOrange 0.96 AUBlackwood Valley Mt Lofty Rgs Other 0.99 AUBarossa Valley 0.99 AUMcLaren Vale 0.99 AUBendigo Mudgee 0.98 AUPadthaway 0.98 AUOrange 0.98 AULanghorne Creek Murray Dar. NSW 0.97 AUMurray Dar. VIC 0.97 AUBig Rivers other 0.95 AUSwan Hill VIC Murray Dar. VIC 0.97 AUMurray Dar. NSW 0.95 AURiverland 0.95 AUSwan Hill VIC N. E. Vic Other 0.96 USHorse Heaven Hills 0.94 USWahluke Slope 0.93 USSan Luis Obispo N. W. Vic Other 0.93 AUSwanHill NSW 0.93 AURiverland 0.92 AUMudgee New England 0.79 AUHunter 0.74 AURiverina 0.72 AUCowra Nthn Rivers other 0.87 NZGisborne 0.87 AUHunter Vall.Other 0.85 USTehama Nthn Slopes Other 0.97 AUMudgee 0.96 AUOrange 0.96 AUPadthaway Orange 0.98 AUPadthaway 0.98 AUGoulburn Valley 0.98 AUMudgee Padthaway 0.98 AUMudgee 0.98 AUOrange 0.98 AULanghorne Creek Peel 0.96 AUHilltops 0.95 AUPadthaway 0.95 AULanghorne Creek Pemberton 0.96 CLValparaiso 0.92 AUAdelaide Hills 0.91 AUSW Australia Other Perricoota 0.98 AURiverland 0.98 AULower Murr.Other 0.96 AUPadthaway Perth Hills 0.95 AUSwan District 0.87 AUWest Plains Other 0.86 AUSouth Coast other Pt Phillip Other 0.99 AUMacedon Ranges 0.99 AUGippsland 0.96 USSanta Cruz Pyrenees 0.96 AUBendigo 0.95 AUMcLaren Vale 0.95 AUMt LoftyRgsOther Queensland Other 0.95 AUSouth Burnett 0.94 AUSwan Hill NSW 0.94 AUSouthern Fleurieu Riverina 0.96 AUHunter 0.94 AUSouth Coast other 0.94 AUSwan Hill VIC Riverland 0.98 AUPerricoota 0.98 AULower Murr.Other 0.96 AUSwan Hill VIC Robe 0.97 AUPadthaway 0.96 AUPerricoota 0.96 AURiverland Rutherglen 0.95 AUMt LoftyRgsOther 0.95 AUGrampians 0.95 AUBendigo Shoalhaven Coast 0.89 AUHastings River 0.81 AUSouth Coast other 0.77 AUNthn Rivers other South Burnett 0.97 AUMudgee 0.96 AUSouthern Fleurieu 0.95 AUQueensland other South Coast other 0.94 AUHunter 0.94 AURiverina 0.91 AUSwan Hill VIC Southern Fleurieu 0.97 AUAdelaidePlains 0.97 AUGundagai 0.97 AUMcLaren Vale Southern Highlands 0.90 AUStrathbogie Rgs 0.89 AUAdelaide Hills 0.88 AUUpper Goulburn Sthn NSW Other 0.86 AUAdelaide Plains 0.83 AUGoulburn Valley 0.82 AUSouthern Fleurieu Sthn Flinders 1.00 AUBarossa other 0.99 USVentura 0.99 AUGrampians Strathbogie Rgs 0.97 AUUpper Goulburn 0.96 AUAdelaide Hills 0.90 AUAlpine Valleys Sunbury 0.94 AUAdelaidePlains 0.93 AUSouthern Fleurieu 0.92 AUSE Coastal WA SW Australia Other 0.92 AUBlackwood Valley 0.92 AUMargaret River 0.91 AUPemberton Swan District 0.95 AUPerthHills 0.84 AUEastern Plains Inland Nth WA0.82 AUQueensland other Swan Hill NSW 0.96 AUSouthern Fleurieu 0.95 AUMudgee 0.95 AUSouth Burnett

West Plains Other 0.96 AUSE Coastal WA 0.95 AULower Murr.Other 0.95 AUGundagai West Vic Other 0.94 AUCanberra NSW 0.93 AULanghorne Creek 0.93 AUHilltops Wrattonbully 0.98 AUCoonawarra 0.97 AULimestone C.Other 0.95 AUHilltops

Table 170 (cont.) Each Australian region's 3 most similar winegrape regions in the world according to the Varietal Similarity Index, 2001 and 2010

Country codes are Algeria(DZ), Argentina(AR), Armenia(AM), Australia(AU), Austria(AT), Brazil(BR), Bulgaria(BG), Canada(CA), Chile(CL), China(CN), Croatia(HR), Cyprus(CY), Czech Rep.(CZ), France(FR), Georgia(GE), Germany(DE), Greece(EL), Hungary(HU), Italy(IT), Japan(JP), Kazakhstan(KZ), Luxembourg(LU), Mexico(MX), Moldova(MD), Morocco(MA), Myanmar(MM), New Zealand(NZ), Peru(PE), Portugal(PT), Romania(RO), Russia(RU), Serbia(RS), Slovakia(SK), Slovenia(SI), South Africa(ZA), Spain(ES), Switzerland(CH), Thailand(TH), Tunisia(TN), Turkey(TR), Ukraine(UA), United Kingdom(UK), United States(US), and Uruguay(UY).

Yarra Valley 0.98 AUGippsland 0.97 AUUpper Goulburn 0.96 AUMacedon Ranges

Table 171: Winegrape Varietal Intensity Index, based on area, relative to world, 1990, 2000 and 2010 (Australian top 40 varieties ranked acording to area in 2010)

Table 172: Price, yield, production and Varietal Quality Indexes, key varieties, 2001 and 2010

Table 172 (cont.) Price, yield, production and Varietal Quality Indexes, Australian key varieties, 2001 and 2010

Table 173: National winegrape Varietal Quality Index, by variety, 1999 to 2005

Table 173 (cont.) National winegrape Varietal Quality Index, by variety, 1999 to 2005

Table 174 (cont.) National winegrape Varietal Quality Index, by variety, 2006 to 2013

**Section IV — Tables:**

**Appendix of Australian macroeconomic data since the early 1800s**

Table A1: Total population, by State, 1788 to 2013

Table A1 (cont.) Total population, by State, 1788 to 2013

Table A1 (cont.) Total population, by State, 1788 to 2013

Table A1 (cont.) Total population, by State, 1788 to 2013

Table A1 (cont.) Total population, by State, 1788 to 2013

Table A2: Male share of population and male/female ratio, 1796 to 2013

Table A2 (cont.) Male share of population and male/female ratio, 1796 to 2013

Table A3: Total crop area, by State, 1821 to 2013\* ('000 ha)

Table A3 (cont.) Total crop area, by State, 1821 to 2013 ('000 ha)

Table A3 (cont.) Total crop area, by State, 1821 to 2013 ('000 ha)

Table A3 (cont.) Total crop area, by State, 1821 to 2013 ('000 ha)

\* A change in definition of crop area led to its increase in all states from 2011

Table A4: Current and real GDP and real GDP per capita, levels and annual growth rates, 1825 to 2013

Table A4 (cont.) Current and real GDP and real GDP per capita, levels and annual growth rates, 1825 to 2013

Table A4 (cont.) Current and real GDP and real GDP per capita, levels and annual growth rates, 1825 to 2013

Table A4 (cont.) Current and real GDP and real GDP per capita, levels and annual growth rates, 1825 to 2013

Table A5: Current GDP, by State, 1861 to 1978 (\$'000)

Table A5 (cont.) Current GDP, by State, 1861 to 1978 (\$'000)

Table A5 (cont.) Current GDP, by State, 1861 to 1978 (\$'000)

Table A6: Real GDP, by State, 1861 to 1978 (\$'000, 1910-11 prices)

Table A6 (cont.) Real GDP, by State, 1861 to 1978 (\$'000, 1910-11 prices)

Table A6 (cont.) Real GDP, by State, 1861 to 1978 (\$'000, 1910-11 prices)

Table A7: Real GDP per capita, by State, 1861 to 1978 (\$, 1910-11 prices)

Table A7 (cont.) Real GDP per capita, by State, 1861 to 1978 (\$, 1910-11 prices)

Table A7 (cont.) Real GDP per capita, by State, 1861 to 1978 (\$, 1910-11 prices)

Table A8: Real GDP per capita annual growth rates, by State, 1861 to 1978 (%, 1910-11 prices)

Table A8 (cont.) Real GDP per capita annual growth rates, by State, 1861 to 1978 (%, 1910-11 prices)

Table A9: Nominal rates of assistance to agricultural and manufacturing sectors and wine, and relative rate of assistance to manufacturing, Australia, 1904 to 2013 (%)

Table A9 (cont.) Nominal rates of assistance to agricultural and manufacturing sectors and wine, and relative rate of assistance to manufacturing, Australia, 1904 to 2013 (%)

Table A9 (cont.) Nominal rates of assistance to agricultural and manufacturing sectors and wine, and relative rate of assistance to manufacturing, Australia, 1904 to 2013 (%)

\* Wine's NRA pre-1969 is just customs revenue as % of sparking + still wine import value

Wine's NRA from 1969 includes brandy

Wine's ERA is the effective rate after taking into account the inflated price of winegrapes

Table A10: Sectoral shares of current GDP, NSW and SA, 1840 to 2013 (%)

Table A10 (cont.) Sectoral shares of current GDP, NSW and SA, 1840 to 2013 (%)

Table A10 (cont.) Sectoral shares of current GDP, NSW and SA, 1840 to 2013 (%)

Table A10 (cont.) Sectoral shares of current GDP, NSW and SA, 1840 to 2013 (%)

Table A11: Sectoral shares of current GDP, Vic and WA, 1850 to 2013 (%)

Table A11 (cont.) Sectoral shares of current GDP, Vic and WA, 1850 to 2013 (%)

Table A11 (cont.) Sectoral shares of current GDP, Vic and WA, 1850 to 2013 (%)

Table A11 (cont.) Sectoral shares of current GDP, Vic and WA, 1850 to 2013 (%)

Table A12: Sectoral shares of current GDP, Tas and Qld, 1840 to 2013 (%)

Table A12 (cont.) Sectoral shares of current GDP, Tas and Qld, 1840 to 2013 (%)

Table A12 (cont.) Sectoral shares of current GDP, Tas and Qld, 1840 to 2013 (%)

Table A12 (cont.) Sectoral shares of current GDP, Tas and Qld, 1840 to 2013 (%)

Table A13: Sectoral shares of current GDP, ACT/NT and Australia, 1840 to 2013 (%)

Table A13 (cont.) Sectoral shares of current GDP, ACT/NT and Australia, 1840 to 2013 (%)

Table A13 (cont.) Sectoral shares of current GDP, ACT/NT and Australia, 1840 to 2013 (%)

Table A13 (cont.) Sectoral shares of current GDP, ACT/NT and Australia, 1840 to 2013 (%)

Table A14: Value of gold, wool, all agricultural, all mining, and all merchandise exports, 1901 to 2013 (\$million)

Table A14 (cont.) Value of gold, wool, all agricultural, all mining, and all merchandise exports, 1901 to 2013 (\$million)

Table A14 (cont.) Value of gold, wool, all agricultural, all mining, and all merchandise exports, 1901 to 2013 (\$million)

Table A15: Shares of wine, wool, other agricultural, gold, and other mining products in the total value of merchandise exports, 1901 to 2013 (%)

Table A15: Shares of wine, wool, other agricultural, gold, and other mining products in the total value of merchandise exports, 1901 to 2013 (%)

Table A15: Shares of wine, wool, other agricultural, gold, and other mining products in the total value of merchandise exports, 1901 to 2013 (%)

Table A16: Merchandise exports, imports, and shares of GDP, current prices, 1822 to 2013 (%)

Table A16 (cont.) Merchandise exports, imports, and shares of GDP, current prices, 1822 to 2013 (%)

Table A16 (cont.) Merchandise exports, imports, and shares of GDP, current prices, 1822 to 2013 (%)

Table A16 (cont.) Merchandise exports, imports, and shares of GDP, current prices, 1822 to 2013 (%)

Table A16 (cont.) Merchandise exports, imports, and shares of GDP, current prices, 1822 to 2013 (%)

Table A17: Foreign exchange rates and CPIs, 1850 to 2013

 0.39 1.96 6.84 2.5 0.39 1.94 6.85 2.6 0.39 1.76 6.81 2.6 0.39 1.52 6.51 2.7 0.39 1.60 6.85 2.8

Table A17 (cont.) Foreign exchange rates and CPIs, 1850 to 2013

Table A17 (cont.) Foreign exchange rates and CPIs, 1850 to 2013

Table A18: International terms of trade, 1871 to 2013

Table A19: Lending interest rates and GDP deflator, 1851 to 2014

# Table A20: Index of real ocean freight rates, 1840 to 2004 (deflated by commodity prices, 1884 = 100)

Source: From Harley (1988) to 1869, then from Mohammed and Williamson (2004) to 1994, then Hummels (2007) to 2004

# **Section V — Tables:**

# **Regional varietal area, production and price data, 1999 to 2013**

**(**online in Excel, as are the above series of tables, at

www.adelaide.edu.au.wine-econ/databases)

# **About the Wine Economics Research Centre**

The Wine Economics Research Centre was established in 2010 by the School of Economics and the Wine2030 Research Network of the University of Adelaide, South Australia, having been previously a research program in the University's Centre for International Economic Studies. Its purpose is to promote and foster its growing research strength in the area of wine economics, and to complement the university's wine marketing and business programs, and long-established strength in viticulture and oenology research.

The University of Adelaide is the southern hemisphere's premier wine research and teaching university and is part of the adjacent Wine Innovation Cluster which includes the University's School of Agriculture, Food and Wine and the Australian Wine Research Institute (established in 1955).

Adelaide is the capital of the state of South Australia, where nearly half of Australia's winegrapes are grown and from where more than half of Australia's wine exports are shipped. Adelaide has four major wine regions and more than 200 cellar doors within an hour's drive (Adelaide Hills, Barossa Valley, McLaren Vale and Southern Fleurieu/Langhorne Creek), in addition to South Australia's three other key wine regions (Clare Valley, Coonawarra/Limestone Coast and Riverland). The University of Adelaide is also home to the National Wine Centre of Australia.

The Wine Economics Research Centre is unique in Australia and one of few similar centres around the world. It has close links with the Center for Wine Economics at the Robert Mondavi Institute for Wine and Food Science at the University of California, Davis, with the University of Bordeaux IV's Wine Economics Group, and with the American Association of Wine Economists' *Journal of Wine Economics*.

The key objectives of the Wine Economics Research Centre are to:

The founding Executive Director of the Wine Economics Research Centre is Professor Kym Anderson. Contact details are as follows:

Wine Economics Research Centre School of Economics University of Adelaide Adelaide SA 5005 Australia Email<EMAIL_ADDRESS>Website: www.adelaide.edu.au/wine-econ