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Exporting Wine Essay

Exporting wine is considered a challenge particularly in Australia where oversupply of wines for export poses a problem.  Competition is stiff in this market.  It is believed that exporting wines in Australia has reached a plateau and its lackluster export performance shows that it is no longer as lucrative as it was during the golden years between 1996-2007.

But exporting wine’s potentials cannot be undermined as there are other markets that Australian manufacturers have not penetrated yet. China being one of the emerging most promising markets of all.  From out of nowhere, the Chinese logged in no. 7 biggest importers of Australian wine in 2008.  India, Russia, Singapore and Korea markets also hold a lot of promise.

The Australian wine exporters just need to develop marketing strategies to be able to penetrate this untap market effectively.  For years, Australia has focused on UK and US markets. With the plan to penetrate Asian borders, Australian wine exporters should make use of either brokers or distributors for initial introduction of their products.

Building long-term customer relationships with the retailers should be the main goal not just finding brokers or distributors.  Being innovative is another good export plan.  This is especially true with the packaging of the product.

Logistic issues need to be addressed. Pertinent legal issues need to be tackled too particularly in the market research, compliance and payment areas since these are the non-core elements that would likely incur some legal problems.

Exporting Australian wines is also made more easier through the help of Export Market Development Grants (EMDG) scheme by the Australian Government that extends financial assistance to those who want to embark on exports.

II.                Product Description

Exporting wine is a tricky but highly financially rewarding business.  A number of Australian companies have succeeded in selling wines abroad such as to USA and UK.  Wine exporting particularly in Australia might be a saturated market now due to oversupply but there are a number of emerging new, untapped markets that a wine exporter could focus into (Dynamic Business, 2007).

These markets such as China, India, Singapore, Russia and Korea.  These places have grown tremendously in the economic arena in the past few years.  The ‘newly rich’ coming from these areas are therefore eager to try out new luxuries that their money can buy.  Wine is definitely one of these luxuries.  Companies that can produce wines that cater to these emerging markets would definitely have a distinct advantage (Dynamic Business, 2007).

For one, these markets are growing and largely untapped.  To be able to harness them to the fullest would take years. Also, being one of the the first wine companies to penetrate those markets would certainly be a great advantage.  It would position the wine manufacturer at the top of the ladder.  That is why, deciding to export wine now is a critical step because timing is everything.  Entry to the market while the demand is still new and rising would certainly spur demand for the product and therefore, spur sales (Dynamic Business, 2007).

For the company to be ‘export ready’, it needs to honestly assess its capacity and commitment to the project.  The company should look into these critical factors before making a decision to export wine:

Investment. In exporting wine it is important to realize beforehand that investment is required, which could be a sizable one, in order to export wines to international markets. One needs to spend for market research, credit checks or even in hiring staffs to set up an export department.  Government agencies often extend help to first-time exporters.  The company should make use of this resource (Harder-Toolar, 2003).

Commitment. Commitment to the project is an important part of its success.  Exporting wine is a full-time and long-term job. It takes some time before the efforts show so committing to the cause should be number one on the list. Without it, once obstacles come in, it would be hard to go on.  One needs a reason, a goal to attain in order to be clear on what on what to achieve, when, where to go and how to go about it. Commitment to exporting wine should be considered thoroughly before resources are allocated for such purpose (Harder-Toolar, 2003).

Reasons vary which could be:

The reputation of taking part in an international market
Increase in total case sales
Increase market for distribution
Grow future sales
Selling wine products beyond the Australian market needs
Combining business with the pleasure of international travel
Fulfillment of seeing your wine on a wine list
All these reasons would be more than enough to motivate any wine company to venture to wine exporting.

Allocating time and resources. Time and resources are another important consideration when exporting wine. It takes time and resources to succeed in the international market.  It is important to build category and brand to be able to penetrate the export market.  This will take longer time to do compared to the local markets so be prepared to commit time and ample resources.

It takes time to reap the financial rewards of the investment but it would be all worth it in the end. A number of Australia wineries could attest to the fact that exporting rakes in increased sales and profits (Thach, 2005).

III.             Export Potential of Wine

Wine’s export potential is enormous.  From 1996 to 2007, exports of Australian wines flourished immensely.  Great strides have been achieved in wine exporting during these golden years.  A lot of foreign investors came to inject necessary investments in wine production.  Australia companies likewise extended their reach by investing in wineries in other countries like France and Chile (Australian Government Department of Foreign Affairs and Trade, 2008).

What makes Australia’s wine attractive is the fact that it comes from one of the oldest grapevines. Europe’s vineyards suffered massive destruction due to diseases in the 1800s.  Europeans however brought vines to Australia before that, making the ones in Australia the last surviving species of the oldest grapevines. Australian viticulturalists developed ways to preserve the vines.  Australians also come up with innovative ways to use lesser chemicals in wines (Australian Government Department of Foreign Affairs and Trade, 2008).

In 2006–07 alone, Australian wine garnered a total of estimated 1.23 billion litres in sales.  Of these total, 449 million litres were sold locally or 36% of total sales and 786 million litres were sold abroad. Australian wine exports is estimated to be $2.87 billion or a 4.4 per cent surged of sales compared to the past year. (Australian Government Department of Foreign Affairs and Trade, 2008).

The largest export market for Australia  wine in 2006–07 were United Kingdom (269 million litres valued at $977 million), United States (215 million litres $856 million value). Canada, Germany and New Zealand round up the top 5 leading export markets for Australia wine (Australian Government Department of Foreign Affairs and Trade, 2008; Australian Government Australian Wine and Brandy Corporation, 2008).

Tourism is also another aspect of Australia wine as it attracts both local and international travellers to the country thereby increasing its export earnings.

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