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Modeling Global Wine Markets to 2018: Exchange Rates, Taste Changes, and China's Import Growth*

Published online by Cambridge University Press:  16 October 2013

Kym Anderson  and
Glyn Wittwer
Kym Anderson*
Affiliation:
Wine Economics Research Centre, School of Economics, University of Adelaide, Adelaide SA 5005Australia
Glyn Wittwer
Affiliation:
Centre of Policy Studies, Monash University, Clayton Vic. 3168Australia; e-mail: glyn.wittwer@monash.edu.
*
(contact author) e-mail: kym.anderson@adelaide.edu.au.
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Abstract

In this paper, we use a revised, expanded, and updated version of a global model first developed by Wittwer et al. (2003) to project the wine markets of its 44 countries plus seven residual country groups to 2018. Because real exchange rate (RER) changes have played a key role in the fortunes of wine market participants in some countries in recent years, we use the model to analyze their impact, first retrospectively during 2007–11 and then prospectively during the period to 2018 under two alternative sets of RERs: no change, and a halfway return to 2009 rates. In both scenarios, we assume a return to the gradual trend toward premium wines and away from nonpremium wines. The other major development expected to affect the world's wine trade is growth in China's import demand. Alternative simulations provide a range of possibilities, but even the low-growth scenario suggests that China's place in global wine markets is likely to become increasingly prominent. (JEL Classifications: C53, F11, F17, Q13).

Keywords

changes in tastesglobal grape and wine modelingreal exchange rate changes
Type
Articles
Information
Journal of Wine Economics , Volume 8 , Issue 2 , November 2013 , pp. 131 - 158
Copyright
Copyright © American Association of Wine Economists 2013 

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Footnotes

*

Revision of a plenary paper presented at the American Association of Wine Economists' Annual Conference, Stellenbosch, South Africa, June 26–29, 2013. Thanks are due to conference delegates for helpful comments and to Australia's Grape and Wine Research and Development Corporation for financial support under Project Number UA 12/08. Views expressed are solely those of the authors.

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