Australia is the fourth largest wine-exporting nation after France, Italy and Spain, sending approximately 2.5 million bottles of wine overseas each day. The UK and the US are Australia’s largest markets. Australia is the biggest wine exporter to the UK, and the second biggest to the US, behind Italy. Australia’s exports in wine have grown at an extraordinary rate in recent years. On a national scale, Australia has about 2000 wine companies and the sector employs around 31,000 people. There are 167,000 hectares under vine and the total grape crush is1.85 million tones.
Michael porter developed the theory of national competitive advantage. This explains why particular nation achieves international success in particular industries. Competitive Advantage of nations has been the outcome of 4 interlinked advanced factors: Factor conditions, Related & supporting industry, Firm strategy and rivalry and Demand conditions.
Factor Conditions: Australian wine has a competitive advantage because of its natural resources and environment. Lower land costs, a large choice of climates and terrier offering regional diversity spread across 62 regions. Australia has a strong infrastructure of viticulturists and winemakers, research institutions and an industry structure, which is free from the regulatory strictness. There is also unity in the Australian wine sector and close working relationships with related industries such as food and tourism.
Firm Strategy and Rivalry The Australian wine industry displays the cluster characteristics of a geographic concentration of interconnected companies and institutions producing a defined product. Collaboration and competition, with the industry citing the pre- competitive sharing of research outcomes, the development of market strategies and the sharing of costs in relation to research and industry development. These links and relationships have allowed the industry to develop the wine brand ‘Australia’ under which even small firms can benefit from in an international market.
Related and Supporting Industries:.Two of the largest wine bottle manufacturers in the world – Owen Illinois and Amcor have a presence in Australia. Grape growers are supported by a number of firms that provides services such as mechanized pruning, harvesting and summer trimming.
Demand Conditions: Demand for wine in Australia has grown steadily in the last twenty years and is concentrated in domestically produced wine. The market share of domestic wines has reduced in comparison with that of imported wines. This growth in imports can be partly explained by the appreciation of the Australian dollar over the last six years.
Australia maintains national standards for wine that are administered by state and territory governments. Federal regulations focus on quality control. The Australian federal government assists the industry by improving the trade environment and by improving the domestic economic operating environment