Australian wine industry are feeling the heat

Australia’s once dominant wine industry is facing its biggest challenge, as competition increases from lower-cost rivals and consumer tastes change.

Producers are being encouraged to target exports to Asia to revive the industry.
Last year, Australian wine exports fell by almost 10 percent, the first decrease in a decade. It was a sign that after a long boom, the country’s vineyards are struggling under the weight of increased competition from lower-cost rivals in Chile, Argentina and South Africa and the changing tastes of international consumers.

A long drought also has brought higher irrigation costs, especially in the parched wine belt in southeast Australia. Relatively high wages also undermine Australia’s international competitiveness at a time when prices for exported wine have fallen.
The average price per liter of Australian wine sold overseas is about 25 percent lower than it was a decade ago.

Sluggish demand in Great Britain, a key overseas market, is likely to force a fundamental restructuring of Australia’s wine trade, although exports to the United States remain positive.

Wine experts warn that Australia’s wine industry may have to cut production by up to a fifth to stay afloat in an increasingly competitive international market.