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On 24 June 2012 Professor Kym Anderson spoke at the AAWE-ICABR workshop in Avellino, Italy, entitled Technology and Innovation in the Wine Industry. Professor Anderson talked about the Georgian wine industry in a presentation entitled: ‘Is Georgia the next ‘new’ wine-exporting country? The roles of traditional vs. new technologies and trade alliances’.
Georgia has been producing and exporting wine for thousands of years, and until the trade embargo in 2006, the lion’s share went to Russia. Advantages include low labour and viticultural land costs by Western standards and recognition of Georgian GIs by the EU. The Ukraine is currently the largest importer of Georgian wine but there is potential in the rest of the CIS countries and Europe as well as Asia.
Professor Anderson’s presentation offers great insights into Georgia’s place in the global history of wine markets and its potential. Yet another wine-producing country to watch with interest!
Professor Kym Anderson examines the importance of the wine industry in Georgia and how it impacts on the country’s rural development in particular.
Despite having an open economy and well-educated labor force, Georgia is one of the poorest CIS countries, and has among the highest income inequality and poverty incidence. Almost half the workforce lives in farm households and are engaged in low-productivity activities, earning a small fraction of urban wages.
The wine industry is dominant in Georgia’s rural economy, some being for self-consumption, some for sale. Professor Anderson asks: How might the wine industry contribute more to Georgia’s economic growth, export earnings and poverty alleviation over the next decade or two?
Georgia has a comparative advantage in wine production. Domestic consumption is high relative to incomes so the obvious focus for growth is in wine exports.
With the dissolution of the Soviet Union and even more so Russia’s ban on imports of Georgian wine since 2006, Georgia suddenly has an unusually large degree of freedom to influence its comparative advantage in wine for the decades to come. A key question is: which market segments, in which destinations, to target?
Professor Anderson also considers the potential for wine tourism to contribute to wine export growth.
Access the full paper here: Rural Development in Georgia: What Role for Wine Export Growth?
Professor Kym Anderson gave a fascinating and informative presentation at the plenary session of the Crush 2011: The Grape and Wine Science Symposium in Adelaide, entitled ‘Wine’s globalization: New opportunities, new challenges for Australia’.
The Crush 2011 symposium, organised by the Wine Innovation Cluster, brought together top wine and grape researchers from all over Australia and overseas, from universities, research institutes, industry and government to present the latest cutting edge research, to network and to foster future collaborative opportunities. The University of Adelaide had a strong attendance, as did the Australian Wine Research Institute (AWRI), Commonwealth Scientific and Industrial Research Organisation (CSIRO), the University of South Australia, Grape and Wine Research and Development Corporation (GWRDC), South Australian Research and Development Institute (SARDI), and other universities and institutions around Australia and overseas. Inspiring talks were provided in the plenary session at the National Wine Centre by GWRDC Chairman Rory McEwen, Kym Anderson, John Brooks of Zork, Mark Thomas of CSIRO Plant Industry, Keren Bindon of AWRI and Rebekah Richardson of Pernod-Ricard Pacific.
Professor Anderson gave an insightful and concise summary of the challenges facing Australia’s wine industry today, essentially:
• Profits of wineries have nose-dived
• Winegrape prices fell sharply in 2009, 2010 and in 2011
• Bulk wine exports 47% in 2010-11, up from 15% 1996-2003
• Import share of domestic wine sales has risen from 3% in 2001 to 15% in 2010-11 (NZ, France, Italy)
• Volatility of weather is not expected to lessen
Trade is a huge consideration for the Australian wine industry, with 66% of our wine production exported in 2009. Meanwhile the world market for wine has got tougher with the strong Australian dollar, fashion swing away from our wine in the traditional markets (UK, US, Germany), strong competition from other global producers, oversupply of wine in Europe, the growth of supermarket power in wine sales, environmental concerns, and so on. Plus wine is being targeted in a number of countries including Australia with regard to negative health implications, including rising taxes and regulations.
However! Globalisation has a long way to go and there are huge opportunities as wine expenditure grows around the world, particularly in Asia, dominated by China. Furthermore, in terms of the average price of bottled still wine imports, five of top 10 countries globally are Asian so there are profits to be made!
The data behind Kym’s presentation are from a new compendium of global wine statistics, downloadable as a free e-book at www.adelaide.edu.au/press/titles/global-wine or in Excel format at www.adelaide.edu.au/wine-econ.
Details of the Crush 2011 symposium including full programme and abstracts may be found at www.wineinnovationcluster.com/crush2011
Andrew Jefford, wine writer for Decanter magazine, writes about the Wine Economics Research Centre’s recent release, Global Wine Markets, 1961 to 2009, A Statistical Compendium in an article entitled: “Jefford on Monday: All The Figures That’s Fit To Print“.
Jefford picks out juicy snippets from the burgeoning compendium, making you want to delve deeper and questioning your assumptions about the shape of the world wine market.
Full information on the compendium is freely available in pdf or Excel format by chapter here.
On 8 June 2011 Professor Kym Anderson of the Wine Economics Research Centre spoke to the Barossa Next Crop Leadership Program at the National Wine Centre in Adelaide about Australia’s evolving role in the world’s wine markets. He outlined the main challenges to Australia’s wine industry today – falling winery profits, falling winegrape prices, rising bulk wine exports as a share of the total, and rising imports of wine as a share of domestic sales. He provides great insight into the underlying reasons and looks at the potential for this industry going forward.
Rounding off his presentation, the take-away messages were:
Boom/bust/slow-recovery cycles are normal for the wine industry
But the present one involved a more sudden and severe downturn than expected due to rapid acreage expansion in previous 15 years plus drought, and then GFC, strong A$, strengthened competition from other wine-exporting countries
Vine-grubbing in Australia and the EU is easing the over-supply, and growth in Asian wine imports is boosting demand
Climate change may require vignerons to alter their varietal mix and/or moving to higher latitudes and altitudes
If Australia switched to volumetric wine tax, expect quality upgrading
but climate change & tax change will hurt irrigated areas most, as is greater competition from lower-cost exporting countries
Foreign investment could put a floor on vineyard and winery asset values in Australia
More investment in innovation is vital (R&D and promotion)
This comprehensive compendium of global wine statistics produced by Professor Kym Anderson, Executive Director of the Wine Economics Research Centre and Signe Nelgen of the School of Economics, University of Adelaide, revises and updates previous editions and expands on the range of data provided. As Professor Orley Ashenfelter of Princeton University and founder/author/publisher of the newsletter Liquid Assets says, “The authors have revised and expanded what was already an indispensable compendium to another, even higher level.”
Until very recently, most grape-based wine was consumed close to where it was produced, which was mostly in Europe. Barely one-eighth of the world’s wine production was exported prior to the 1980s, even counting intra-European trade. The latest wave of globalization has changed that forever. Now more than one-third of all wine consumed is produced in another country, and Europe’s dominance of global wine trade has been diminished by the surge of exports from ‘New World’ producers. New consumers have also come onto the scene as incomes have grown, eating habits have changed, and tastes have broadened. Asia in particular is emerging as a new and rapidly growing market for grape-based wine – and in China that is stimulating the development of local modern production capability which, in volume terms, already rivals that of Argentina, Australia and South Africa.
“Kym Anderson and Signe Nelgen’s data track the astonishing changes undergone by the wine world over the last half-century in meticulous detail. This volume should be an essential download for everyone researching, studying or writing about wine.” So says Andrew Jefford, wine writer for Decanter, author of The New France, and Australian Wine Writer in Residence at the University of Adelaide during 2010.
The most detailed version to date
This latest edition of global wine statistics not only revises and updates data to 2009, but also expands on earlier editions in a number of ways. For example, we separately identify an extra eight Asian countries or customs areas (Hong Kong, India, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand) in addition to China and Japan. We also include more than 50 new tables to cover such items as: excise and import taxes; retail expenditure on wine per capita and per adult and as a percent of national income; the share of domestic sales in off-trade; the shares of the largest firms in national markets and globally; the most powerful wine brands globally; and the shares of different winegrape varieties in national and global production. Given the growing interest in the health aspects of alcohol consumption, we also show volumes consumed per adult as well as per capita. A significant new section provides estimates of the 2009 volume, value and unit value of wine production, consumption, exports and imports for four categories: non-premium, commercial-premium, super-premium and sparkling wines.
“The ever-changing world wine market has progressively become more global and interconnected among nations. To understand these changes it is more important than ever to take a global perspective, which requires information at a global level. This newly expanded and updated statistical compendium will be useful for anyone interested in knowing about and understanding the changing patterns of wine production, consumption and trade in various parts of the world. It is also an invaluable resource for economists and others who seek to analyze those patterns and their underlying causes.”
Professor Julian Alston, Director of the Robert Mondavi Institute’s Center for Wine Economics, University of California, Davis
“The first edition of this ground-breaking book (to 2001) was an indispensible part of my reference library, its pages festooned with Post-it markers. The rate and amount of change in global wine markets since then could not have been envisioned by the authors (or anyone else), so while this is technically a revised edition, it is to all intents and purposes a new work, every bit as indispensible as the first edition.”
James Halliday, wine critic and author of the Australian Wine Companion
The pdf version may be downloaded free of charge from the University of Adelaide Press site, and a hard copy may be ordered for A$35.00 plus postage.