Globalisation and Global Effects on the Business
Growth in Global Wine Markets
The global economic activity will continually impact on Taylor's Wines as it has a large connection to the global market that is growing. There is approximately 1 billion litres of wine produced each year in Australia and almost 70% of this is being exported making Australia one of the largest exporters of wine dependent on the demand of other nations. The importance of global markets for Australia can be understood by viewing the graph of total wine export values (bottom left of page), where it is evident that Australia's exports have increased most dramatically. Furthermore, Taylors Wines makes up a large proportion of this export increase.
Additionally, the demand of wine in China has increased dramatically too, providing a potential market opening and business opportunity for Australian wine export and Taylors Wines more specifically. Although wine was barely a part of Chinese life in the past, China's strong ties with the West has led to its increased consumption. Between 2007 and 2010 the average consumption of wine per-capita in China grew from 0.60 to 0.69 litres, which is a 15.8% increase in only 3 years. Therefore, China represents a huge new market for Australian wine companies like Taylors who are attempting to expand their global presence and exports. From the graph at the bottom right it can be seen that Australia's exports to China has risen steadily over the past few years whereas exports to many other countries have decreased slightly, further showing the emergence of the Chinese market.
Additionally, the demand of wine in China has increased dramatically too, providing a potential market opening and business opportunity for Australian wine export and Taylors Wines more specifically. Although wine was barely a part of Chinese life in the past, China's strong ties with the West has led to its increased consumption. Between 2007 and 2010 the average consumption of wine per-capita in China grew from 0.60 to 0.69 litres, which is a 15.8% increase in only 3 years. Therefore, China represents a huge new market for Australian wine companies like Taylors who are attempting to expand their global presence and exports. From the graph at the bottom right it can be seen that Australia's exports to China has risen steadily over the past few years whereas exports to many other countries have decreased slightly, further showing the emergence of the Chinese market.
Change in Australian Dollar
The changing Australian Dollar is another major global factor in the economy that will affect Taylors Wines. Since 2013, the once strong Australian dollar has been declining significantly. Taylors currently make up a small amount of the American market, however a significant fall in Australian currency would actually boost sales, especially if the average price of quality Australian wine fell below the price of quality local wine. In a situation where the AUS dollar is 15% less powerful than the US dollar, a single bottle will translate to only 85% its usual profit. However, the significantly cheaper prices could potentially attract 50% more customers which would lead to an increase in profit. Therefore, the dropping dollar essentially allows the wine to be sold for more profit overall especially if bought in bulk. Below is a graph of the Australian dollar based on the US for the past decade. It is evident that the Australian dollar has decreased steadily in value over the past couple years.
The changing Australian Dollar is another major global factor in the economy that will affect Taylors Wines. Since 2013, the once strong Australian dollar has been declining significantly. Taylors currently make up a small amount of the American market, however a significant fall in Australian currency would actually boost sales, especially if the average price of quality Australian wine fell below the price of quality local wine. In a situation where the AUS dollar is 15% less powerful than the US dollar, a single bottle will translate to only 85% its usual profit. However, the significantly cheaper prices could potentially attract 50% more customers which would lead to an increase in profit. Therefore, the dropping dollar essentially allows the wine to be sold for more profit overall especially if bought in bulk. Below is a graph of the Australian dollar based on the US for the past decade. It is evident that the Australian dollar has decreased steadily in value over the past couple years.