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Australia's Wine Industry

FACT SHEET JANUARY 1995Australian wines are commanding increasing international attention andrespect with their distinctive full-bodied character and deep fruityflavour. These characteristics result from Australia's range of climates,suitable soils, stable water resources and minimal use of chemicals.In recent years Australian wines have won many international awards and thisstimulated some of the world's leading champagne, wine and spirit houses toinvest strategically in the Australian wine industry. They have done so byestablishing partnerships, joint ventures or outright ownership of major,well-established undertakings.The Australian wine industry has also expanded its own position in theinternational wine market by acquiring or taking controlling interests in awinery in France as well as buying major distribution facilities in theUnited Kingdom.OriginsThe first vines were brought to Australia aboard one of the ships of theFirst Fleet in 1788. After an unsuccessful planting at Farm Cove, site ofthe present Sydney Botanical Gardens, they were transplanted to Parramatta,west of Sydney. Wine grape growing and wine-making ventures were soonestablished in various parts of the colony and, by the mid-1820s annualproduction of wine reached some 90 000 litres.Planting and propagation of the vine spread over the Australian continentwith the increase in European settlement. In the 1960s the Australian wineindustry concentrated mainly on producing fortified styles such as port andsherry. The rapid influx of migrants from continental Europe, however, withtheir well-established wine culture, brought about lifestyle changesincluding a boost in the consumption of table wines.This was accompanied by a move by grape growers to replant their vineyardswith more of the classical winegrape varieties. At the same time, winemakersinvested heavily in new technology and equipment, placing Australia at theforefront of world wine-producing countries.Australia's main grape-growing areas are between the 32 and 42 southlatitudes. South Australia, Victoria and New South Wales are the largestproducers, accounting for 98 per cent of winegrape production. WesternAustralia, Tasmania and Queensland have smaller wine industries which aregrowing rapidly in both volume and quality. Rainfall and warmth in theseareas vary widely during the growing season and irrigation must be used toenhance grape yields, particularly where rainfall is low. Scarcely any wineis now produced in the Sydney district. Wine growers have found better soilsand a more appropriate climate in the Hunter River valley, north of Sydney,to the west around the towns of Mudgee, Cowra and Young, and on the plainsalong the Murrumbidgee and the Murray Rivers.The South Australian wine industry began around 1840 in what is nowmetropolitan Adelaide, and soon expanded into the Southern Vales, the ClareValley, and the Barossa Valley. In the 1890s the Riverland region wasdeveloped as a major producer, largely by Italian immigrants.In Victoria, viticulture began in the 1840s in the Melbourne, Yarra Valleyand Geelong Districts. The discovery of gold in 1851 triggered a period ofexpansion, and viticulture soon extended over much of the centre and thenorth-east of the state. The industry was launched in Western Australia whenthe English botanist, Thomas Waters, planted vine cuttings from South Africain the Swan Valley in 1829.Production and exportsAustralia's wine industry  with some 4000 wine grape growers producing some700 000 tonnes for 8000 winemakers  is a major contributor to the nation'sexport, employment and tourism earnings. The industry generates retail salesof some $2.5 billion, pays $400 million in taxes, employs about 5000Australians and contributes more than $300 million to the balance ofpayments.The first exports of the then fledgling wine industry were in 1822. GregoryBlaxland shipped 136 litres of wine to London where it won the Silver Medalof the Society for Encouragement of Arts, Manufactures and Commerce, nowknown as the Royal Society of Arts.Historically, most Australian wine has been sold in the domestic market,with exports accounting for only a small proportion of total production.However, in recent years, more emphasis has been placed on producing winefor export and exports have grown rapidly.Australian production of beverage wine is about 450  500 million litres ayear (less than two per cent of world production). In an open domesticmarket, with tariffs declining from about 10 per cent from July 1994 to fiveper cent by July 1996, Australian winemakers have maintained their 97 percent share of the domestic market. Domestic sales by Australian wine-makersreached 320 million litres in 1993-94, worth about $1.2 billion at wholesaleprices. Imports of wine are steady at about eight million litres, worth some$45-$50 million a year.Exports comprise about 28 per cent of total wine sales in 1993-94. Tablewines dominate wine exports at more than 93 per cent of total volumefollowed by sparkling wine at four per cent and fortified wines at just overtwo per cent.Australia's largest wine export market is the European Community (EC). In1993-94, exports to the EU totalled 54 million litres worth $183 million.The major markets in the EU are the United Kingdom and the Republic ofIreland. Other major markets are the United States, New Zealand, Sweden,Canada andJapan.Under the EC/Australia Bilateral Wine Agreement, which came into effect on 1March 1994, Australia gained improved access to the EC market through thelowering of technical barriers to Australia's wines in return for theAustralian wine industry phasing out its use of European geographicalindications. The use of some names such as Hock and White Bordeaux isbeing phased out and further negotiations will be held to establishphase-out arrangements for European names in widespread use in Australiasuch as Chablis and Champagne.The Australian industry will in future use varietal, regional and brandnames to market its wines. There will also be a need to develop replacementnames where protected EC names have entered into common use, such asSherry.Government and industry groupsPolicy issues affecting the wine industry are handled nationally by theDepartment of Primary Industries and Energy in Canberra which aims toincrease the industry's efficiency and international competitiveness. Issuesof concern include improving access to overseas markets, harmonisation ofinternational wine standards (including administering Australia's membershipof the International Office of Vine and Wine), export quality control andadministration of the Australian Wine and Brandy Corporation and the Grapeand Wine Research and Development Corporation legislation.Internationally, the wine industry is one of the most highly regulatedindustries. Domestically, federal regulations focus on quality control andon truth in labelling. Australia's  wine standard is a single nationalwine standard on the composition of wine and is administered by state andterritory governments.Export quality control and promotion is implemented through the AustralianWine and Brandy Corporation(AWBC), which is based in Adelaide. The AWBClicenses exporters and issues certificates of compliance with exportregulations. These require that export wine is sound and merchantable andmeets importing country requirements. The AWBC also administers a wine LabelIntegrity Program designed to ensure, through audits of winery records,truth in labelling claims of vintage, variety and region of origin.The AWBCs Geographical Indications Committee, established in 1993, isworking with the industry to clearly define the winegrape growing regions ofAustralia. To implement commitments under the EC/Australia Wine Agreement, aRegister of Protected Names has also been established to provide protectionfor the names and boundaries of Australian and EC geographical indications,to register traditional expressions for wine, as well as the winegrapevarieties to be used in the manufacture of wine in Australia.The Australian Wine Export Council, a committee of the AWBC, whose membersand their deputies include the chief executives of all the large Australianwine companies, was established in 1992 to devise and implement exportpromotional strategies.The peak industry body representing the interests of Australia's wine-makersis the Winemakers Federation of Australia which has three electoralcolleges the Australian Wine and Brandy Producers Association, theAustralian Winemakers Forum and the Wine and Brandy Cooperative ProducersAssociation of Australia. Winemakers represented by the three Federationelectoral colleges collectively produce more than 95 per cent ofAustralias wine. Wine grape growers are represented by the Wine GrapeGrowers Council of Australia.The Australian Wine Foundation, located in Adelaide, is anindustry-sponsored organisation promoting moderate wine consumption andresearch into wine and health.

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