Macroenvironment analysis for the Australian wine industry PDF

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22/06/2020

Strategic Management

Macro-environment analysis for the Australian wine industry - An illustrative example

• Purpose of this analysis • Focus of this analysis – The Australian wine industry

• Detailed description and analysis Factor P

Issue

Opp/Threat

Effect on growth

E S T E L

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Macro-environment summary for the Australian wine industry Factor Political

Issue Free trade agreement with China, reducing wine import tariff to China from 18% to 0 in 2019

+/- effect on growth +

Economic

Increased disposal income in Australia Variable international economic growth Low exchange rate (AUD$/US$) Many international lower cost competitors emerging

+ + (China/Asia/US) - (Rest of the world) + -

Worldwide grape surplus Quality wine becoming more fashionable worldwide

+

(Green) Environment

Australia seen as desirable worldwide Australian wine is fashionable overseas Low population growth Increased variety of wine products More application of marketing concepts Increased focus on quality Increased water controls reducing irrigation water availability

+ + China + + + -

Legal

Increasing focus on impact of alcoholism in society

-

Social/cultural

Technological

Discussion Factors favouring future growth include increasing disposable income in Australia, China and Asian countries; the continued exposure to ‘fresh’, ‘clean’ and ‘innovative’ value-for-money wines from Australia; technology changes in production that improve production efficiency, quality and consistency; Australia remaining fashionable and desirable worldwide.

Factor dampening the future growth include Increasing disposable income is not being replicable in the major export markets of the US, UK and some European countries; Low prices will exist due to continued worldwide grape surplus. The low population growth in major target markets will also dampen future growth prospects, except for China.

Lack of water availability and pressure on irrigation in the future will substantially reduce future supply.

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Key drivers for future growth • Key drivers of future growth include the political, economic and sociocultural factors. They include the free trade agreement with China that gradually reduce the wine import tariff from up 18% to zero in 2019, the economic growth in China and US is another key driver, and the customer value for quality wine.

Conclusion • In summary, moderate growth (slightly higher than Australia’s GDP growth rate) in the next three years is expected due exclusively to high export growth in Asian, particularly China, and other developing market. Source: Adapted from Hubbard, Rice and Galvin (2015)

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