BOM – Part A

With the current province of the Australian dollar, valuing $ US 1.0432 ( $ CAD 1.0349 ) as of October 2012, there are several strains placed upon the Australian exportation infdustry. Over three-fourthss ( 80 per cent ) of Australian exporters indicate that they struggle to stay competitory when the dollar rises above $ US 0.91, harmonizing to the latest Commonwealth Bank Aussie Dollar Barometer. Exporters believe the Aussie dollar, which has been over $ US 0.91 since September 2010, has the biggest impact on concern when it pushes between the $ US 0.91 – $ US 1.00 scope. Unsurprisingly, this is in blunt contrast to importers, with 23 per cent proposing they would go uncompetitive if the dollar dipped to the post-float mean degree of $ US 0.74. In the face of this continued force per unit area, the Aussie Dollar Barometer has besides revealed the high Australian dollar is a accelerator for raising productiveness for 83 per cent of concerns. In order to battle such exchange rates, Jacob ‘s Creek should endeavor to better productiveness to countervail a decrease in fight in planetary markets. Harmonizing to Joseph Capurso, Currency Strategist of the Commonwealth Bank, it was critical that administrations continued to concentrate on restructuring concern operations and heightening productiveness degrees in order to last. However, The Barometer reveals most concerns expect the Australian dollar to deprecate over the following twelvemonth.

In the long term, the chief deduction of an appreciating exchange rate is structural alteration within the Australian economic system. Since a strong Australian dollar agencies that Australian exports become more expensive, export industries will efficaciously go less competitory in the universe market. Following SLIDE ( DISCUSS IMAGE, NEXT )

However, as Australia ‘s vino industry continues to spread out, there is an increasing trust on abroad markets for wine gross revenues. The go oning growing in Australian vino production combined with comparatively i¬‚at domestic demand will set extra force per unit area on the Australian vino industry to spread out export markets or face lifting stock degrees and lower returns. Additionally, other major universe vino bring forthing states are stepping up production and exports at a similar rate and supplying increasing competition within Australia ‘s traditional export markets. Consequently, keeping entree to all international markets is critical to keeping the viability of the Australian vino industry. The established trade dealingss between Canada and Australia pull attending to a great potency for success should Jacob ‘s Creek choose to put in the Canadian vino market. NEXT SLIDE

Canada and Australia are extremely similar economic systems in footings of size, wealth, administration systems, most discernible socio-economic features, resource gifts and specialisation in international trade. The Australia-Canada trade relationship is mature, extremely productive and loosely based. Canada is Australia ‘s 21st-largest ware trading spouse, with bipartisan trade amounting to A $ 3.2 billion in 2011 with A $ 1.7 billion in imports to Australia and A $ 1.5 billion in exports to Canada. The top acting exports in 2011 included Ni ores and dressed ores, vino, medicines ( including veterinarian ) and meat ( excepting beef ) . The top three ware imports from Canada in 2011 were sulphur and Fe pyrites, civil technology equipment and parts ; and medicines ( including veterinarian ) .

Investing ties between Australia and Canada are significant and Canada offers a stable investing environment for Jacob ‘s Creek. Australian investing in Canada was valued at A $ 43.4billion in 2011, with over 80 Australian companies runing in Canada. Canadian investing in Australia was valued at over A $ 25 billion in 2011, largely in resources and fabrication. Following SLIDE ( DISCUSS, NEXT )

Australia and Canada grant each other discriminatory duty rates on a limited scope of merchandises agreed under the Canada-Australia Trade Agreement ( CANATA ) , established in 1960 and amended in 1973. As the understanding pre-dates the many-sided trading system, most of its commissariats have been superseded by duty decreases achieved by dialogue in the World Trade Oranisation ( WTO ) . The Canadian Australian Chamber of Commerce ( CACC ) was launched on 20 October 2005. The Chamber is an independent, non-profit administration that aims to lend to increasing the degree of trade and investing between Australia and Canada. Membership is free of charge to interested parties. ( Australian Government: Department of Foreign Affairs and Trade 2012 ) . To day of the month Australia has non pursued a free trade understanding with Canada. NEXT SLIDE

The bilateral trade relationship has been about absolutely balanced over the past 10 old ages, as seen in Figure 8. Seen here, over this 11-year period, each state imported, in unit of ammunition figures, a cumulative US $ 16 billion from each other. Following Slide

Canada is non one individual market, but instead a series of provincial markets. Importers into Canada need to hold a relationship with each of the provincial spirits control boards. The Canadian vino market is controlled by provincial spirits control boards which hold a monopoly on the market. Each Canadian state, with the exclusion of Alberta, has a authorities controlled liquor control board which regulate spirits licensing, importing of alcoholic drinks and labelling and packaging criterions. Individual states set monetary values and quotas and require that wine exporters sell through registered agents.

As can be seen at right, the major beginnings of Canadian vino in footings of gross revenues are seen here, with Australia keeping 9.9 % of the entire market portion of internationally sourced vinos in footings of gross revenues.

Canada is Australia ‘s third-largest export market by value, purchasing merely over $ 202 million worth of Australian vino in 2009, representing 16 % of the market portion by value. Exports of Australian vino to Canada totalled 46 million liters in 2009, valued at $ 233.7m. While the volume of exports increased 7 % in 2009, the value has declined by 28 % since a extremum in exports in 2007. Bulk exports made up 24 % of cargos in 2009 yet this class accounted for merely over 5 % of the export value. NEXT SLIDE

The established vino trading has produced a extremely regarded repute for Australian vinos. Canadians are quality-conscious Australian vino consumers, as they drink a higher proportion of Australian premium vinos than most other states. In 2005, Australian vino became the figure one import in six of Canada ‘s states: British Columbia, Alberta, Manitoba, Nova Scotia, Prince Edward Island and Newfoundland. NEXT SLIDE

Research indicates that Canadian consumers choose choice vino over monetary value factors. High-quality imports are taking the growing in this class over domestic merchandises and imported blends. Consumers from Gallic talking Quebec continue to favor imports from France and Italy, whereas other states have embraced New World wines, in peculiar, those from Australia.

Particularly, as the population ages, wellness concerns motivate more ruddy vino ingestion and the increased disposable incomes promote this behavior. Such anticipations reinforce the possible success of Jacob ‘s Creek by supplying a huge scope of premium ruddy vinos, with a broad monetary value scope. Red vino is expected to take the growing in both volume and value footings although white and ros & A ; eacute ; vinos are still expected to turn, albeit in smaller volumes. Cabernet Sauvignon is the most popular ruddy assortment followed by Merlot and Shiraz. In fact, Shiraz has been the success narrative of recent old ages, driven mostly by imports from Australia. NEXT SLIDE

Harmonizing to a Wine Intelligence survey commissioned by Wine Australia in 2010, near to 50 % of Canada ‘s grownup population were regular vino drinkers in 2007. Of these 13 million regular vino drinkers 1.8 million were Australian vino stalwarts, bespeaking that Australian vinos are their most on a regular basis consumed ; and 5.2 million were Australian trialists, proposing that Australian vino is a common beginning of vino yet non their first penchant. When regular vino drinkers were asked what were the most of import factors for purchasing Australian vino, the two most of import were grape assortment as suggested by 75 % of respondents, and recommendation via public dealingss, indicated by 70 % of respondents. Some less of import factors in purchasing Australian vino were trade name consciousness ( 56 % ) , promotional offer ( 42 % ) , intoxicant content ( 34 % ) , and part of beginning ( 32 % ) . Australian vinos when compared to its cardinal rivals in the Canadian market are perceived as being of premium value for money, rated much higher than major Gallic rivals. However, Australia was non rated strongly for holding expensive vinos. Sing as Jacob ‘s Creek provides a broad assortment of monetary value scopes, the Canadian vino market is an disposed investing chance as client satisfaction is inevitable. Following Slide

Therefore, whilst the current province of the Australian dollar topographic points emphasis on Australian exporters, it is imperative that Australian vino makers such as Jacob ‘s Creek expand into international markets. Statistics sing the trade and political standings of the Canadian vino industry, affecting already established trade connexions with Australian wine makers indicate that Canada is an appropriate investing chance for Jacob ‘s Creek. Australian vinos already possess a repute of premium vinos at low-cost monetary values amongst Canadian vino consumers, bespeaking that the success of Jacob ‘s Creek will be inevitable.

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