ECONOMICS

G Grapes of Wrath: It's Tough at the Top for Winemakers - Exporters of Premium Australian Wines Are Still Running into Obstacles



Grapes of Wrath: It's Tough at the Top for Winemakers - Exporters of Premium Australian Wines Are Still Running into Obstacles

Introduction

The article that has been selected for this paper is Article 3: Grapes of Wrath: it's tough at the top for winemakers penned by Colin Kruger on Exporters of premium Australian wines are still running into obstacles. The article talks about the current situation of winemakers in Australia and the impact of current economic situation across the globe on their business. The major issues in the wine market for Australian producers relates to demand and supply which is one of the very basic concepts in economics (Reference needed). In addition, the changes in the lifestyle and consumer purchasing power are not being dealt with accordingly.

Discussion

In order to understand the economic dilemma faced by the wine makers in the Australian market, it is imperative to understand the problems that are currently being faced by them as well as their causes. To begin with, the premium wine makers in Australia are faced with the problem of piracy. The flagship brands of Australian wines are being copied in other smaller markets. This is putting a financial strain on the premium winemakers who sell only for their brand. Most of these wines are being copied in the Chinese market. Because of this reason, the winemakers have lost their edge to France which has taken over the market with its copied brands that it sells at lower prices.

This is particularly hazardous for the winemakers of Australia who had a grip of the price sensitive market but is now losing its share.

The loss in market share is coupled with the pressure to cut down on prices as a consequence of crippling over supply. This relationship is illustrated in the following graph (Reference needed).

From the above graph, it is evident that price is a product of demand and supply. This price increases when the demand for a product is less or when the supply for the product is more than the demand for it.

As concerns the situation of price of wines in Australia, the businesses are pressured from both the sides. Not only the demand for premium price is dwindling but also the industry is marked by oversupply. This means that ...