evaluate the effects of global changes in the economic activity on taylor's wines
Global Effects
The dynamic state of the global economy will continuously affect Taylor's Wines as an enterprise which operates trans-nationally. Of the 1.073 billion litres of wine produced in Australia by around 2500 businesses, over 66% is being exported, making Australia the fourth-largest exporter of wine globally.
Fluctuation of Australian Dollar
Although the Australian dollar was very valuable in the past years, it has been undergoing a steady decline since mid 2013. The fall in the Australian dollar provides good opportunities for businesses which are based on exporting domestically produced goods. As Taylor's Wines grow their own grapes and create their wines in their personal winery, this benefits them. Since the price of their product overseas does not reduce, they still gain the same amount of foreign currency for each bottle. But when converting the currency to Australian dollars, they receive more money than they would if the dollar was stronger. This allows them to invest more back into their business as they are in essence selling their product for a higher price.
Emerging wine markets
Australian wines are mainly exported to the US and the UK and their consumption of Australian wine is rising and set to continue, proving beneficial for our wineries. However, recently there has been a growing trend in China and Russia for wine consumption, as the middle class in the countries grow. If these new markets continue to expand, Taylor's Wines will be able to export their goods to these places and profit immensely. Especially because China is already a strong trade partner with Australia, it will be relatively easy for Taylor's Wines to push their product into East Asia and increase their revenue, and if Russia is also exported to, these new markets are an easy source of new income.
Production of Wine
Currently, the trend seen in the viticulture and winemaking industry is the vast overproduction of wine. Spurred by high grape prices, a large planting of vineyards occurred in Australia during the 1990s. This created a significant rise in Australian wine grape production from around 550 kilotonnes annually in 1990 to over 1500 kilotonnes annually in 2009. This trend follows in several other New World nations such as Argentina and South Africa rapidly expanding their wineries.
This has firstly led to the massive disposal of wines which are not sold, as exemplified in the graphic above. Australian wines, such as those crafted by Taylor's Wines, are being increasingly disposed of due to lack of sales. With an overabundance of the product, it quickly leads to much of the excess being thrown out and wasted. Storage of red wines in Australia has also risen by over 400% from 1996/97, with 300 million litres in cellars nationwide to 1.2 billion litres approaching 2005/06.
An increase in wine production has only fared for the worse for Taylor's Wines. If the supply of wine rises, it become less valued, and so Taylor's Wines have to sell their product for less per bottle. This trend is examined through time, as seen above, wine price peaked at around $5/L on average in 2000-01, dropping ever since, reaching almost $3.3/L in 2008-09. Throughout Australia, this has caused over 8000 hectares of vines to be removed and will continue costing Australian wineries hundreds of thousands of dollars.