Australian Wine Industry Analysis

This assignment delves into a comprehensive analysis of the Australian wine industry. It examines the industry's strengths and weaknesses, identifies emerging opportunities and potential threats, and explores diversification and market expansion strategies employed by leading companies. The analysis draws on various sources, including academic journals, industry reports, and news articles, to provide a well-rounded understanding of the current state and future prospects of the Australian wine sector.

Running head: AUSTRALIAN WINE INDUSTRY
Australian Wine Industry
Name of the Student:
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2AUSTRALIAN WINE INDUSTRY
Executive Summary
This report focuses on the SWOT analysis of Australian wine industry. However,” the big four”
include Beringer blass, Southcorp, Ornaldo-Wyndham and BRL hardy, which are the popular
wine manufacturers of Australia. Hence, it is important for the wine industry to focus on the
market share in international market. However, Australian wine industry invests more to expand
the market in various countries. They have major market share in UK. On the other hand,
dependence from the UK market needs to be reduced, which may generate a big challenge for
the Australian wine industry. Diversification is another big strategy that is followed by “Big
four”.

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Table of Contents
Introduction......................................................................................................................................4
SWOT analysis of the Australian wine industry.............................................................................4
Analysis of the strategies of “Big Four”..........................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Australian wine industry is considered as the world's fourth largest wine exporter in the
global market. Approx 750 million liters wine is distributed in the international market in every
year. 40% of the total wine production in Australia is consumed in the domestic market.
However, such wine industry acts as a good contributor to the Australian economy (Signori et al.
2017). High revenue has been executed by Australian wine industry. Maximum wine
manufacturing industries in Australia are situated in the Southern part of this country where the
temperature is low. A vineyard needs low temperature, for this reason, the industries are located
in the cooler parts of Australia. This study deals with SWOT analysis of the Australian wine
industry and marketing strategy of "Big four" Australian wine companies. Such "Big four"
includes Southcorp, Beringer Blass, BRL Hardy and Ornaldo-Wyndham. These are the popular
wine companies of Australia those expanded their market share in the international market.
SWOT analysis of the Australian wine industry
Strength
The main strength of the Australian wine industry is its diversification. However,
Australian wine industry focuses on the market expansion in the international market. However,
diversification refers to the product diversification. However, this industry includes innovation in
the wine products and develops a variety of products with different brand names. As for
example, Mclaren vale, Coriole fiana, Corole nero and Los Hermanos are the popular brands in
Australia. Hence, product diversification is the big strength of such organization
(Businesschamber.com.au 2017).

5AUSTRALIAN WINE INDUSTRY
Climate is a major strength of the Australian wine industry that helps them to produce
vineyard in a proper way. The soil type is good in this country that allows the wine
manufacturers to produce different types of wines such as sweet wines, white wines, sparkling
wines and fortified wines (Taylor and Taylor 2017). On the other hand, tradition is another
factor that is followed by the Australian wine industry to expand their market share in a country.
However, it is important for an industry to follow the cultures and lifestyle of the people while
launching a new product in the new region. Australian wine industry gives their concern to the
lifestyle and the demand of the people to understand the tradition of a region. As for example, in
Italy Australia has a good share in the wine industry. Hence, maximum wine companies in
Australia follows the Italian culture as it is an important part of their market share.
Market expansion is another strategy of Australian wine industry to enhance their
business. However, in UK Australia has a strong market share and UK is the main country of
their export (Varsei and Polyakovskiy 2017). On the other hand, they export wine in U.S. Japan,
China and Italy. Australian wine industry has a strong focus on the global market to expand their
business at the international level. Only 40% of the total wine production is consumed by the
domestic market in Australia, which highlights that a maximum production goes to the foreign
market, this makes the Australian economy more strong.
Weakness
The major weakness of the Australian wine industry is the start up cost. However, the
startup cost is high in the Australian wine industry that often affects their profitability. However,
it is crucial for an industry to manage the startup cost of a business to achieve maximum
profitability (Signori et al. 2017). Australian wine industry is trying to reform their business

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structure, which focuses on the major weakness of their business as during such reformation
their business is hampered. On the other hand, Australian wine industry has been suffering an
imbalance between the supply and demand in the regions where the climate is warm. That is a
big weakness of such industry. However, in the recent years, it has been found that 70% of the
wine grape production in Australia is uneconomic, which affects the business. In the recent
years, the Australian wine industry has been facing a prolonged downturn that affects the overall
profitability of the business as well as the economy of the country (Golicic et al. 2017).
However, volume-based tax leads this country to face large-scale disruption. As a result, the
wine production from the warm climate regions contributes less to the Australian economy.
Apart from these Australian wine companies are productions oriented rather than marketing.
Opportunity
Market expansion in China will bring a big opportunity for the Australian wine industry.
According to the statistics, wine sales can be increased up to 50% in China (Business.nab.com.au
2017)). It is a big scope for Australian wine industry to make them unique from the international
competitors by expanding their business in China. However, China has a great demand for
vintage wine. Hence, by introducing vintage wine Australian wine industry can develop premium
marketing in China. This highlights the market expansion strategy in the international market.
Apart from China Australia has a great opportunity to expand their market in Europe. Due to
drought, heat waves and frost the European climate is not favorable for wine production
(Weeklytimesnow.com.au 2017). On the other hand, Australian climate is favorable for wine
production. This leads Australia to increase their market share by introducing a variety of wine in
the European market.

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Threat
Change in the market trend is a big factor that leaves a negative impact on the business
of any industry (Raftery 2017). However, significant changes have occurred in the Australian
market from past decades that focus on the change in the demand of the customers. It is
important for an organization to cope with the changing needs of the market. In the context of
Australian wine industry, the changing trend of the market highlights on the future threat for
such industry. On the other hand, huge competition is another big threat to the Australian wine
industry. As for example, emerging growth of Italian wine industry may affect the market share
of the Australian wine industry. However, Italian wine industry has occupied a significant
portion of the global wine industry. Apart from this, other countries like China and Asia also
expanded the market share in the international wine market by producing wine domestically that
can overtake Australian wine industry (Golicic et al. 2017). This brings a big threat for the
Australian wine industry. On the other hand, Australian wine industry has the maximum market
share in UK. Hence, reduction of the dependence from the UK market will be a major threat
for such industry.
Analysis of the strategies of “Big Four”
According to the given scenario, Beringer Blass is one of the major organizations of
"Big four", which focuses on the diversification strategy in the context of wine production.
However, diversification is a big part of the success of a business as it enables an industry to
meet the consumer demand (Keys 2017). As per the SWOT analysis, it has been received that the
Australian wine industry also adopts the diversification strategy. Diversification strategy is
served as the growth engine for such organization. In order to expand the wine operation in the

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international market, this organization has adopted three channel strategies include traditional
channel, acquisition of wine club and acquisition of specialist wine packaging operations and.
However, this organization has developed joint venture policy that is a new strategy for such
organization as Australian wine industry did not follow the partnership working.
Market expansion in the global market is a significant strategy for the business owners to
enhance the sales revenue (Hamilton 2017). In the context of Southcorp, it has been found that
they have expanded their market over 80 countries. On the other hand, it has been received from
the SWOT analysis that, market expansion is the major strength of the Australian wine industry.
Hence, Southcorp has adopted the same strategy in this context. Dependence on the UK market
is a big threat for the Australian wine industry. However, Southcorp has made a joint venture in
1990 and established a brand in Californian in order to reduce the dependence from UK.
Australian wine industry focuses on the cultures and traditions of the different country while
establishing the business in those regions (Varsei and Polyakovskiy 2017). However, Southcorp
did not give their concern towards the region's tradition, which made a clash between the
business culture and the regional culture. This organization has adopted sourcing strategy for a
spontaneous wine production when the climate condition is not favorable.
As per the SWOT analysis, the climate of the warm region in Australia is not good for the
wine production. Hence, Southcorp has overcome this barrier by developing this strategy.
Distribution channel is crucial to enhance the market share in the global market (Varsei et al.
2017). BRL Hardy has independent distributors to increase their sales in the global wine
industry, which is the core strategy of Australian wine industry. Orlando Wyndham focuses on
the production of a single brand that is the New World. This brand is introduced in China,

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Argentina, Chili and South Africa. Thus, this company follows the market expansion strategy of
Australian wine industry rather than the diversification.
Conclusion
The above study highlights the strength, weakness, threat, and opportunity in the context
of Australian wine industry. However, Beringer blass, Southcorp, Ornaldo-Wyndham and BRL
hardy are the popular Australian wine companies that have adopted some strategies, which are
similar to Australian wine industry, and some are new. The major strength of the Australian wine
industry is the market expansion and product diversification. On the other hand, huge completion
and production oriented business strength are the major weaknesses of such industry. The above
companies follow the diversification and the market expansion strategy to enhance their market
share.

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References
Business.nab.com.au. 2017. New market opportunities for wine in China. [online] Available at:
https://business.nab.com.au/new-market-opportunities-for-wine-in-china-4696/ [Accessed 19
Nov. 2017].
Businesschamber.com.au. 2017. AUSTRALIA'S WINE INDUSTRY: Collaboration and Learning
as Causes of Competitive Success. [online] Available at:
http://www.businesschamber.com.au/NSWBC/media/Misc/Ask%20Us%20How/Australias-
Wine-Industry.pdf [Accessed 19 Nov. 2017].
Golicic, S.L., Golicic, S.L., Flint, D.J., Flint, D.J., Signori, P. and Signori, P., 2017. Building
business sustainability through resilience in the wine industry. International Journal of Wine
Business Research, 29(1), pp.74-97.
Hamilton, M., 2017. Wine industry litigation. Australian and New Zealand Grapegrower and
Winemaker, (636), p.60.
Keys, T., 2017. Key files: Wine industry research-understanding the value. Wine & Viticulture
Journal, 32(2), p.12.
Raftery, D., 2017. Producing value from Australia's vineyards: an ethnographic approach to'the
quality turn'in the Australian wine industry. Journal of Political Ecology, 24, pp.342-367.
Signori, P., Flint, D.J. and Golicic, S.L., 2017. Constrained innovation on sustainability in the
global wine industry. Journal of Wine Research, 28(2), pp.71-90.

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Taylor, S. and Taylor, M., 2017. The Aroma of Opportunity: The Potential of Wine
Geographical Indications in the Australia-India Comprehensive Economic Cooperation
Agreement. In The Importance of Place: Geographical Indications as a Tool for Local and
Regional Development (pp. 81-107). Springer International Publishing.
Varsei, M. and Polyakovskiy, S., 2017. Sustainable supply chain network design: A case of the
wine industry in Australia. Omega, 66, pp.236-247.
Varsei, M., Varsei, M., Christ, K., Christ, K., Burritt, R. and Burritt, R., 2017. Distributing wine
globally: financial and environmental trade-offs. International Journal of Physical Distribution
& Logistics Management, 47(5), pp.410-428.
Weeklytimesnow.com.au. 2017. Wine Australia: Export opportunities for Australian wine
producers boosted. [online] Available at:
http://www.weeklytimesnow.com.au/agribusiness/wine/wine-australia-export-opportunities-for-
australian-wine-producers-boosted/news-story/367b3d86742f155c7ef4095e055891af [Accessed
19 Nov. 2017].