HSC Geography - economic activities - viticulture PDF

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Detailed notes covering core topic: economic activities with case study of VITICULTURE...

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Global economic activity: Viticulture Description of the nature, spatial patterns and future direction of viticulture in a global context Viticulture: the commercial growing of grapes with the intent of making wine - European nations that have produced wine for centuries were instrumental in the global distribution of viticulture, particularly to south america and australia - In the 17th century wine making techniques meant that wine was stored in bottles rather than wooden casks which changed the nature of production - By 1800 the majority of european nations relied heavily on their wine trade - The 20th century saw the rebirth of wine globally, with the impact of technology and the emergence of ‘new world’ producers, increased varieties and niche market production

The new and old world of the wine industry The old world is the traditional wine production areas eg. france and italy. - In these regions wine is produced using traditional methods, this includes such things as not using additional watering and only using oak barrels. - The french word ‘terroir’ is often used to describe many of the old world wines. This refers to site specific differences in wines that are caused by factors such as soil types, drainage and rainfall (meaning they have a close connection to the local geography & topography). This creates a distinctive and exclusive ‘hand-crafted’ wine which is often favourable to wine connoisseurs. The new world refers to counties that have produced wine that have been colonised by European settlers: australia, south africa, new zealand, south america, and north america. - New world wines are blended with different grape types, often from different regions. - They are often described by grape variety rather than the vineyard and are popular due to their consistency from one vintage to the next. - The new world has adopted many technological advancements in the wine production process such as computerisation involvement and the invention of the screw cap. - These wines are often tailored for the mass market and are aggressively promoted in new markets.

Branded wine production -

Production is scaleable; that is, it can be large-scale and employ industrial processes Often made from brought-in grapes Often ‘international’ in style to maximise potential markets Usually defined by winemaking style - lacking a sense of ‘place’ Made to a style and to fit a price point

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Because production is only limited by the supply of suitable grape stock, these wines are often widely available Heavily marketed to build brand identification

Estate wine production -

Production is typically small scale and vineyard based Vineyards supplying the grapes are generally owned by the company making the wine Limited production, subject to vintage variation Typically display regional influences or a ‘sense of place’ Often made to cater for the wine enthusiasts who seek a distinctive product; not necessarily made to fit a specific price point Exclusivity of the product is often used as a marketing tool Availability is sometimes a problem because of limited production Marketing is limited High diversity

The winemaking process Wineries are traditionally located close to vineyards in order to reduce the damage done to grapes during transportation It is the winemaking process that largely determines the nature and characteristics of the wine produced. 1. Juice extraction: mechanical wine presses are used to crush the grapes 2. Primary fermentation: requires yeast. Yeast is often already present on the grapes, as a powdery substance on their skin. The fermentation process can be initiated using this natural yeast, but often a cultured yeast is added to ensure a more predictable result. The temperature during the fermentation stage affects the taste of the end product. (2225 for red wines, 15-18 for whites). 3. Secondary fermentation: usually takes place in large steel tanks and lasts for three to six months. The originally cloudy wine becomes clear. 4. Ageing and blending: quality red and white wines are stored in barrels made from oak for a period ranging from a few months to a number of years. While ageing, the wine absorbs the aromas from the wood. The winemaker will often mix or blend wines from different casks. This gives the vintage a label or uniform taste. 5. Bottling: remaining traces of yeast are destroyed by addition of sulphite. This prevents the fermentation process from continuing in the bottle.

Future challenges facing the global viticulture and winemaking industries -

Tensions between traditional winemaking techniques and the new ‘industrial’ production processes Changes in the spatial patterns of production and consumption - A lull in consumption in traditional winemaking and wine-consuming countries - New emerging markets in asia

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- Increased competition from new world ‘branded wines’ Changes in consumer tastes and preferences, especially among the youth Competitions from other alcoholic beverages The process of globalisation and the emergence of global wine companies Changes in the marketing and retailing of wine Ecological sustainability concerns The potential disruptive impacts of climate change

Biophysical factors of viticulture Climate: -

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At a global level determines growing region and at a local level, specific vineyard character Temperature: ideal is 19 degrees for white grapes and 21 for reds. At ideal temperature the vine produces the sugar needed for plant growth, influencing colour and flavour Sunlight: due to photosynthesis plant growth determined by amount of sunlight. This makes aspect of slopes important eg. in australia north and west facing gets more sunlight. Wind: excessive winds can damage grapes and also cause erosion via the removal of topsoil. Therefore vineyards are rarely in high wind areas. Rainfall: vines need approximately 700mm a year. In australia, this is an issue, thus irrigation is required. Heavy rainfall can also cause major problems (erosion, fruit damage). Frost: vines damaged when temps drop below -1. Especially in late autumn and early spring. Soil management, irrigation etc. used to alleviate the impact of frost.

Soil: -

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Depends on factors including parental material and the physical, chemical and biological processes of weathering Suitable viticulture soil generally not fertile or especially deep Depth of soil determines root system - Deep soil = bulk wine production, bigger roots and grapes but worse quality. Better for red wines. - Shallow soil = high quality wine, though less of it. Better for whites. Soil determines wine quality by water supply and temperature in and above soil:

Topography: -

Elevation, aspect and incline of the vineyard must be taken into account Plain, flat land better than on undulating, sloping contours to prevent erosion The direction the vines are facing can affect vines growth rate and quality (aspect) Slope assists with drainage but a steep slope is susceptible to erosion

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altitude can impact temperature and therefore control the character of the grapes via the location above sea level

Diseases and pests: -

Grapes are vulnerable to a range of diseases, many influenced by the climate eg. more humid summer = more diseases Fungus parasites are responsible for most grape diseases Diseases spread by insects or in the soil which makes them hard to control Fungal disease ‘downy mildew’ common in hunter valley; associated with high rainfall in the growing season Some diseases have been used to good effect eg. Botrytis bunch root increases sugar.

Ecological factors Sustainability is central to the future of any productive activity as it aims to meet the needs of the present generation without compromising the ability of future generations to meet their needs. Ecological concerns include: - Increasing pest resistance - Soil compaction and erosion - Low levels of organic matter - Excessive water and fertiliser usage - Mining, as is the case in the Hunter Valley: “it could affect the vines, the quality of the grapes the taste of the grapes - it could alter the terroir” (The Australian) Methods that can be used to overcome some of these issues include: - Ground cover crops being grown between rows of vines to reduce soil erosion - Use drip irrigation to reduce water usage - Use biodegradable fungicides to limit the environmental impact - Reduce the use of synthetic agrochemicals

Organic viticulture: Driven by ecological concerns, the production of organic wines is increasing rapidly. Organic viticulture includes non-intrusive soil management processes, alternative means of protecting vines against diseases, and strategies to minimise pollutants that might disturb the natural ecology, such as no artificial or synthetic chemicals, open canopy management, using biological control to manage insects and organic materials being added to maintain soil nutrient levels. Eg. the required nutrients are added to the soil by organic manures, such as animal compost, worms etc.

Economic factors Economic factors influence the nature, spatial distribution and future directions of viticulture and winemaking. The general level of economic activity: there is a positive relationship between economic growth rates and wine consumption. As disposable incomes increase, so too do discretionary purchases of goods. Shifts in consumer demands: keeps market dynamic. Innovative styles and types of wines, and cheaper prices are popular with customers. Increasing concentration of retail power: because of their purchasing power, large retailers are able to demand greater product consistency (hence shift from estate to branded) and favour higher quality wines (undermines branded wines). Competition between the new and old world: drives down prices Branding and marketing: labels and names now recognised globally Competitive advantages exist in the industry. European / old world wines enjoy: - Close proximity to major wine markets - Reputation based on quality and tradition - Ease of trade due to the European union - Continuing strong demand in non-european markets, especially for exclusive labels The new world will see it’s competitive advantage enhanced by: - Developing innovation and technology into their industry - Providing value at every price point - Developing image and brand strength FUN ECONOMIC FACTS - The value of wine exports has increased 15% in the past year to $2.56 billion - Volume of wine exports = 811 million litres - These figures largely being driven by exports to China, a market that has increased 63% in the past year, providing $848 of Australia’s exports - Average value of $3.16 per litre

Sociocultural factors The global pattern of wine consumption is changing. Per capita consumption in traditional countries is falling, while it’s increasing in new world countries.

Level and rate of income growth Rising incomes fuels demand in UK and US. Demand in Russia and China driven by emerging affluent middle class, improving living standards and rising disposable incomes, and the gradual westernisation of the lifestyles of young consumers. France, italy and spain seen a decline in wine consumption, despite rising incomes. In france, wine consumption annual per capita fell from 160L in 1965 to 70 L in 2005.

Cultural convergence Cultural convergence is a product of advances in global communications and trade. An increasingly globalised industry uses advanced marketing techniques to sell branded wine to a global market.

Age of population Rates of wine consumption are highest in 35-65 age group. The number of young people and the proportion who drink wine are critical to the future of the industry. This explains the difficulties for traditional wine markets as young people seem to have a preference for alternative alcoholic beverages.

Changing consumer tastes and lifestyle expectations Wine is increasingly being adopted as the most appropriate alcoholic beverage to drink. In the US, per capita consumption of wine grew 9% between 2003 and 2005. The increasing proportion of couples eating out means they are spending more on wine.

Marketing and licensing laws Promotion of new world wines has seen a decrease of old world wines. Less stringent licensing laws in the UK, in 2005, increased wine sales in bars and restaurants. Wine consumption in Newcastle driven by small pubs and resturaunts.

Potential health benefits Increasing consumer interests in wine’s potential health benefits has driven wine consumption. It is claimed that polyphenols occuring in red wine reduce the risk of heart disease, stroke and cancer.

Political factors International political context National governments work through various bodies to enhance the competitive environment of the global wine industry. The australian government is working through various multilateral forums such as the WTO to secure better access to overseas markets and endeavouring to establish a more transparent and fair, rules-based trading environment. Concerns include: - Australia launches WTO action against Canada over ‘anti-competitive behaviour’ in wine industry - ABC, 2018. The Canadian state governments are keeping the price of local wine product artificially low while increasing the mark-up value on imported wines. - High tariffs on imported wine in some countries - High levels of domestic support given to the EU winemakers - worth $2 billion which is equivalent to the Australian wine market. - The EU winemakers’ access to export subsidies. The government is aiming to improve access to for australian wine to international markets through international organisations such as the International Office of Vine and Wine. The negotiation of free-trade agreements also improves access. The free trade agreement with the US will open up a market of over 300 million.as part of the agreement, the US will reduce the tariffs it imposes on imported Australian wine to zero.

National political context Maintaining strong economic growth as well as low inflation and employment can help to bolster consumer confidence (therefore spending) and investment by enterprises (increasing productive capacity). To help bolster the export capacity during the 1990s, the aus government engineered a major increase in the area of land devoted to grape growing. Soon the industry’s output exceeded the demand. Australian wine and Brandy Corporation Principle role to enhance the operating environment - Produces point-of-sale material such as promotional posters in a number of languages over the world. - Sponsors visits by influential international wine writers and buyers to australian wine regions and events. - Promotes better informed decision-making in the industry by collecting and analysing wine data. - Preserves Australian wine’s internationally recognised reputation for quality and integrity. Eg. the AWBC inspects and issues permits for all wine exports. Australian Trade Commission Role is to help Australian companies win overseas contracts by reducing time, cost and risk involved in selecting, entering and developing international markets. With offices in 58 countries,

Austrade is well positioned to provide advice, market intelligence and ongoing support to Australian companies looking to develop international markets. Food Standards Australia New Zealand Statutory authority responsible for protecting the health and safety of people in Australia and New Zealand through the maintenance of a safe food supply.

Organisational The wine industry operates within a number of international and national regulatory bodies. At an international scale, the most important organisation is the INternational Organisation of Vine and Wine (OIV). This is the peak international wine industry body. - Based in Paris, established in 1927, it has 47 members including all the world’s major wine producers and consumers. The OIV’s principal role is to: - Provide a forum where concerns from producers and consumers can be addressed. - Assist government and non-government organisations, especially those that carry out standardisation activities - Contribute to international standardisation of existing practices and standards - Develop new international standards that improve the conditions for producing and marketing wine and wine products The OIV also promotes grape and wine research and development. Provides recommendations to government organisations when producing regulations. The main organisations in the national context are: - the Australian Wine and Brandy Corporation - The Grape and Wine Research and Development Corporation - The Australian Trade Commission - Food Standards Australia New Zealand - Winemakers Federation of Australia National: Wine Australia supports a competitive wine sector by investing in research, development and extension, growing domestic and international markets, protecting the reputation of Australian wine and administering the export and regional wine support package. - The Strategic Plan 2015-2020 outlines the key investment priorities in market development, regulatory services and research over the next five years Ownership, decision making and control: The nature of ownership and control in the global wine industry has changed substantially over the last decade or so. Through corporate takeovers and egrets, globalisation has led to the emergence of large, international wine corporations. Eg. 2003 takeover of the Australian wine producer BRL Hardy by the US based Constellation Brands. Given the fragmentation in the global wine market, experts expect that corporate mergers and acquisitions will be an important feature of the industry for the foreseeable future.

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Some big wine companies try and reposition themselves as ‘global wine producers’. They want to capitalise on the growing demand for wine in emerging markets. In response to this is the small boutique winners, reflecting the local character and attempting to differentiate themselves via quality and individuality.

Technological In recent decades technological developments have been applied within the global wine industry, especially in the New World. Eg. the introduction of the screw cap. To minimise the financial losses of oxidation from faulty corks many in the industry are introducing screw caps. This has provided these markets with a competitive advantage. These new world markets continue to adopt new technologies in an effort to further improve the wine production process and provide further competitive advantage against the traditional old world wine countries. The majority of these technologies contradict the classic old world concept of terroir, although some of these technologies are beginning to be adopted by some of the traditional wine producers also. -

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The use of Geospatial Technologies (GIS): used in site selection process, site monitoring and management of vineyards Water storage and management: irrigation technologies, the use of in-ground moisture probes etc. to more effectively use the available water facilities / supply Transport and storage: using sophisticated facilities and systems to facilitate the movement of wine on a global scale while maintaining quality Biotechnologies: using genetics to modify plants / vines to become resistant to disease and to ensure reliable levels of yeast / fermentation. Cloning: used to achieve consistent grape quality Harvesting and pruning: mechanical harvesters and pruners reduce labour but can damage the vine and collect unwanted material, including canes, leaves, insects and unripened grapes. It is not however, a priority when labour costs are low. Information technologies: includes sales and marketing via the internet. Also the internet can be used to monitor industry trends and developments. Wine manufacture: scientific processes and industrial processes are being used to enhance wine quality and brand consistency. Winery design: principles of passive s...