Food Marketing: Analysis of Australian Wine Industry

This report provides an in-depth analysis of the Australian Wine market, its size, profitability, and growth. It also includes a Porter’s Five Forces analysis to identify opportunities and threats. Recommendations are provided to increase sales and revenue.

Running head: FOOD MARKETING
WINE MARKET IN AUSTRALIA
Name of Student
Name of University
Author note

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Executive Summary:
The purpose of this summary is to develop a food marketing analysis with regards to
the Australian Wine industry. In this discussion, there will be a brief discussion of the
Australian Wine industry, its size and its profitability. A Porter’s Five Forces analysis will
help in understanding the different factors of the Australian Wine market and how it affects
its development. This can help to identify the opportunities and the threats of the industry.
Lastly, a recommendation is to be provided about how the market can develop in the future
and increase its sales and revenue.

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Table of Contents
Introduction:...............................................................................................................................3
Background:...............................................................................................................................3
The Industry:..........................................................................................................................3
Growth:..............................................................................................................................3
Size:....................................................................................................................................3
Profitability:.......................................................................................................................4
Porters Five Forces:................................................................................................................6
Competitive Rivalry:..........................................................................................................6
Substitutes:.........................................................................................................................6
Barriers to Entry:................................................................................................................6
Suppliers:............................................................................................................................6
Customers:..........................................................................................................................7
Opportunities and Threats:.....................................................................................................7
Conclusion:................................................................................................................................7
Recommendation:......................................................................................................................7
Reference:..................................................................................................................................9
Bibliography:............................................................................................................................10

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Introduction:
The report is focused on the analysis and interpretation of the factors that affect the
food marketing of a chosen sector. The chosen food market for this assignment is the wine
market of Australia. However, the market which was had one of the largest market shares has
faced serious loss in the past decade since 2007. The market has since been trying to recover
and re-emerge as the world leaders. Secondary data and statistics have been used in the report
for the analysis of the challenges of the wine market in Australia. The use of Porter’s Five
Forces have helped in the better analysis of the threats and the opportunities of the market.
This has further helped in the preparation of the conclusion and the recommendation of the
report.
Background:
The Industry:
Growth:
The Australian Wine market which boasts of the oldest vineyards in the world and
produces some of the best quality wines. It had seen a favourable market boost from 1991 to
2007. The market had increased from selling 400 million litres to 1.2 billion litres
(wineaustralia.com, 2018). However, the sales began to fall after 2007, due to high
competition and global financial crisis in the market. The wine market has turned around
from 2013, and has been growing since then, expanding its exports and markets in USA,
Canada and UK.
Size:
The Australian Wine market has a huge market worldwide. After the fall in sales in
2007, the Australian wine market sought ways to increase its market. It focused on the factors

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such as the freshness of the products and the regional distinction (wineaustralia.com, 2018).
This helped the sector to increase the sales figures and the sector began to export to more
profitable markets in other countries (Anderson and Wittwer 2013). The market benefited
from the shortage of supply and the Australian market taking advantage of this increased their
global foothold by providing a sustainable supply all around the year.
Profitability:
The profitability of the Australian Wine market was the highest by any wine market in
the world. The record 1.2 billion litres sale was the result of the triple increase in sales in the
period 1991-2007 (wineaustralia.com, 2018).
However, the sales of the Australian Wine market significantly fell after 2007 for a
period of six years up to 2013. This was the result of the global financial crisis which
occurred during that period (wineaustralia.com, 2018). There was a fall in demand of the
Australian Wine in the foreign markets.

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Thereafter, the Australian sales market saw a steady rise in the sales. They focused on
the different area of the wine market and enhanced them accordingly. By the end of 2017, the
value of exports increased by 16% to record a sales worth $2.56 billion (wineaustralia.com,
2018). The volume was recorded as 811 million litres which was also an 8% increase. The
exports were increased by 7% (wineaustralia.com, 2018).

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Porters Five Forces:
Competitive Rivalry:
The Australian Wine Industry is a huge market and has a steadfast global presence
(Bianchi, Drennan and Proud 2014). However, the wine industry is dominated by a fierce
rivalry which has seen a number of established competitors vying for excellence. This leads
to the decrease in costs of the products and maintenance of high quality to have a good
market share because a negative impact can have a long time impact on the reputation of a
company.
Substitutes:
The Australian Wine industry has very limited number of substitutes. Moreover, the
substitutes provide very different kinds of products and services which requires the customers
to spend a large amount of money. This a positive aspect for the Australian Wine industry as
the substitutes don’t pose a very critical threat to the industry.
Barriers to Entry:
The wine industry requires huge capital investments which limits the entry of new
entrants in the market. Moreover, the new entrants require to abide by different critical laws
and advanced technologies to gain a foothold in the wine industry. Hence, the existing
Australian Wine industry has a low risk from new entrants in the market.
Suppliers:
Most of the Wine companies in the Australian Wine industry have their established
vineyards and distilleries. These makes them less dependent on suppliers for the manufacture
of quality wines. Hence, the bargaining power of the suppliers in the Australian Wine market
is low.

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Customers:
The Australian Wine industry has a huge customer base (Bianchi, Drennan and Proud
2014). Moreover, due to the presence of a huge number of competitors, the customers have a
high bargaining power in the Australian Wine industry.
Opportunities and Threats:
The opportunities of the Australian wine industry lies in the exploration of new
markets and the introduction of newer wine products (Chong 2014). The established
reputation can help them launch itself successfully and achieve a sustainable sales in a short
period of time.
The threats of the Australian Wine industry lies in the presence of large number of
competitors in the global market. Moreover, the economic crises also play an important factor
in determining the sales of the company.
Conclusion:
The above analysis provides an in depth analysis of the Australian Wine market and
helps to understand the different causes which led to its fall in sales after a considerable
period of success. It also determined how it emerged from that crisis and stated emerging as
the leader of the global wine market. The Porter’s Five Forces helps to analysis the different
factors which helps to identify the opportunities and threats and how the Australian wine
industry can develop different strategies to overcome the market crises.
Recommendation:
The Australian Wine industry can use innovative sales technique to maintain its
global dominance. Maintaining high qualities, and providing affordable prices for the
products are some of the techniques that they can adopt to maintain their dominance in the

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global wine market. Moreover, the Australian Wine industry can develop newer products and
explore new markets for export. This can increase their sales and help them earn greater
revenues. Moreover, the established reputation can also help them achieve a global branding
and help them achieve the global dominance over a sustainable period of time.

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Reference:
Anderson, K. and Wittwer, G., 2013. Modeling global wine markets to 2018: Exchange rates,
taste changes, and China's import growth. Journal of Wine Economics, 8(2), pp.131-158.
Bianchi, C., Drennan, J. and Proud, B., 2014. Antecedents of consumer brand loyalty in the
Australian wine industry. Journal of wine research, 25(2), pp.91-104.
Chong, S., 2014. Business process management for SMEs: an exploratory study of
implementation factors for the Australian wine industry. Journal of Information Systems and
Small Business, 1(1-2), pp.41-58.
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-sector-overviews [Accessed
3 Aug. 2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-state-of-the-sector-2018-
report [Accessed 3 Aug. 2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/getmedia/69f72267-6acd-48b6-a050-beeb6ac26a1a/MI-State-
of-the-Sector-Report-20180117 [Accessed 3 Aug. 2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/historical-wine-sector-data [Accessed 3 Aug.
2018].

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wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-sector-at-a-glance [Accessed
3 Aug. 2018].
Bibliography:
Anderson, K. and Wittwer, G., 2013. Modeling global wine markets to 2018: Exchange rates,
taste changes, and China's import growth. Journal of Wine Economics, 8(2), pp.131-158.
Bianchi, C., Drennan, J. and Proud, B., 2014. Antecedents of consumer brand loyalty in the
Australian wine industry. Journal of wine research, 25(2), pp.91-104.
Chong, S., 2014. Business process management for SMEs: an exploratory study of
implementation factors for the Australian wine industry. Journal of Information Systems and
Small Business, 1(1-2), pp.41-58.
Chrysochou, P & Grunert, KG 2014, ‘Health-related ad information and health motivation
effects on product evaluations’, Journal of Business Research, vol.67, no.6, pp. 1209-1217.
Kotler, P & Keller K 2015, Marketing Management, 15th edn, Prentice Hall, New Jersey.
Chapter 1 – Defining Marketing for the 21st Century.
Krystallis, A, Grunert, KG, de Barcellos, MD, Perrea, T & Verbeke, W 2012, ‘Consumer
attitudes towards sustainability aspects of food production: Insights from three continents’,
Journal of Marketing Management, vol.28, no. 3-4, pp. 334-372.
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-sector-overviews [Accessed
3 Aug. 2018].

11FOOD MARKETING
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-state-of-the-sector-2018-
report [Accessed 3 Aug. 2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/getmedia/69f72267-6acd-48b6-a050-beeb6ac26a1a/MI-State-
of-the-Sector-Report-20180117 [Accessed 3 Aug. 2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/historical-wine-sector-data [Accessed 3 Aug.
2018].
wineaustralia.com 2018. [online] Wineaustralia.com. Available at:
https://www.wineaustralia.com/market-insights/australian-wine-sector-at-a-glance [Accessed
3 Aug. 2018].