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Australian Wine Industry Essay

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In this study provides the demand and supply determinants of the significant premium wine grapes in the warm inland regions of Australia by an econometric investigation. The Australian wine grape sector was considerable growth in recent decades because the wine consumption was increased in the alcohol market. As a result, the demand of wine grape increases in the domestic area. Moreover, the increasing demand in export makes Australia as the fourth largest wine exporter in the world (OIV, 2012). The purpose of this study is to illustrate and estimate the impact of demand and supply that can be on Australian wine grape market. The interesting issue about wine grape is an over-supply of wine grape because the export booming in 1990s and early …show more content…
The United Kingdom and the United States are the largest export market. In the early 1990s, the wine market has changed significantly in export markets which have increased by 1300 percent. Moreover, domestic wine demands have grown by 73 percent. According to the financial of grape growers, it finds that two-thirds of growers are efficiently on off-farm income in operation due to the industry will loss profit which concern with low real grape price. It is clear that the number of wine grape has increased considerable since the 1990s to the mid of 2000s similar to real wine grape prices which increased significantly in the 1990s but have declined in the 2000s. From this situation, wine grape market experienced to the imbalance market including disequilibrium trading result from price inflexibility. First of all, individual contract are always use in the warm inland wine region which have a contract with wineries. The contracts are usually longer than more three years and have a limit of price adjustment. Secondly, the unexpected export growth was significant increasing in the market during 1990s. These demand rapids associates with incomplete information that price are adjusting in response to trader with a lag. Thirdly, the large grower cooperative can lead to anti-competitive practices which effect on the price flexibility. Finally, previous institutional arrangements can be cause of price

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