Industry Analysis Report the Australian Wine Industry Essay example

1949 Words Mar 2nd, 2012 8 Pages
INDUSTRY ANALYSIS REPORT

THE AUSTRALIAN WINE INDUSTRY

‘The Boutique Producer’

by

4 students (anonymous)

Executive Summary

This report provides an overview of the Australian Wine Industry using Porter’s Five Forces industry analysis framework and seeks to provide recommendations based on the impact of the forces for a start up boutique producer.

Through the use of Porters framework and the application of economic theory, the report will provide detailed insight into the drivers of each force and the pressures that these forces put on the industry. These insights will then be used to determine the competitiveness of the industry and formulate recommendations for a start up boutique producer.

Methodology
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This has the affect in turn of minimizing the amount of differentiation available for a small start up boutique and may diminish an immediate competitive advantage.

Wine Processing
Bottling
Bottles, Caps and labels are available from multiple suppliers. In NSW alone there are nine different suppliers (WD, 2008).

These suppliers however can achieve a dominant position when producers purchase particular shaped bottles or labels to increase differentiation and brand recognition. This reduces substitutability, increase dependence and strengthens the suppliers power (Porter, 1980). This situation is further emphasized by the oligopolistic market structure of specific wine suppliers for example chemical, preservative and oak cask suppliers and the producer’s need to maintain product consistency.

Boutique wineries generally contract out bottling services to a small number of available bottlers. This in turn creates an oligopolistic environment that can leave producers potentially vulnerable.

Labour
Vineyard labour can be split into two functional groups, each of which has varying levels of affect on producers.

The first group is qualified professionals in winemaking, agriculture, marketing and business management. This labour group has the greatest ability to exert pressure on producers operations due to their direct role in vineyard functions.

On the other hand, the second group, commonly available manual

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