People and economic activity

A description of the nature, spatial patterns and future directions of one economic activity in a global context Nature of the wine industry
The nature of the economic activity of wine production encompasses two activities: o Viticulture- the science and practice of grape culture. o Winemaking- the process of converting the sugar present in grapes into an alcoholic beverage. 300 million hectolitres p.a. = Massive oversupply Grape growing is a highly specialised agricultural system and therefore the knowledge and skill of the wine maker is a key factor. The wine industry is multi-sectoral Sector Definition Examples in wine industry Primary Extracting/ harvesting products from the earth Viticulture Secondary Processing raw materials to finished goods Wine making, bottling, labelling Tertiary Services Sales, wine tourism Quaternary Information Mkt info, sales, internal communications Good export industry Product is value added in the country it is grown in then exported Unlike how Aust. Exports iron ore without adding value as a raw material Chinas increasing demand for quality wine is driving up prices. Different grape varieties Reds = Shiraz, Pinot noir, Cabernet merlot/ sauvignon, Merlot Whites = Sauvignon Blanc, Chardonnay Can use different grape varieties/ types to change the taste of the wine by combining different attributing flavours Technological advancements that have changed the nature of the wine industry Old world = The creation of the glass bottle allowed wine to be matured longer and stored indefinitely, this lead to the production of vintage wines New world Technology has revolutionized wine production; the use of refrigeration for example has led to viticulture becoming a highly specialized form of agriculture. Old world vs. New world Differences between these two worlds have emerged as the wine industry has become increasingly globalised Old world o Wines have a close link with geography, both in a physical and cultural sense o Produces wines with regional characteristics and the term Terroir is used to describe many on these wines o Terroir = Refers to the site specific characteristics/ differences in wines that are caused by factors such as soil type, drainage, microclimate and sun exposure o Remain relatively popular due to their image of quality/ sophistication

New world o Grapes are usually blended = wine is produced with varietal characteristics o Described by variety rather than vineyard o Popular due to the consistency of the product from one vintage to another o Tailored to meet the demands of the mass market o Aggressive approach to entering new markets + branding strategies mean they appeal to consumers who are unfamiliar to wine products and therefore have become very influential

Spatial Patterns of the global wine industry

Worlds total wine production ranges from 250 300 million hectolitres annually of the worlds wine is produced in Europe 1960s 70s world vineyard planting was increasing fast Globalisation (breaking down of trade barriers and tariffs) has affected the production and consumption pattern of wine which has: o Turned wine into a global commodity o Fostered an increase in exports from new world countries as they are finding it easier to compete Production trends Top Producers (2008) Old or New Amount (Billion Litres) Share of world exports (%) world Italy Old 4.7 18.2 France Old 4.4 18 Spain Old 3.7 18 U.S.A New 2.5 5 Australia New 1.3 8 1960s 70s world vineyard planting was increasing fast Wine production in the old world is steadily decreasing with the top two countries (France and Italy) production levels decreasing over the last 2 decades but still remain the biggest producers Wine production in the new world is steadily increasing with Aust. and U.S in top 6 producers. Together the top 5 producers now only account for 62% of wine produced as more new world countries are now growing wine, bigger spatial distribution of where wine can be and is made. Although Aust. produces less wine than U.S and Argentina it ranks above them in the volume of wine exported. Consumption trends Top consumers (2008) Old or New world Wine consumption per capita (litres) France Old 47 Italy Old 45 Croatia New 40 Portugal New 40 Consumption in France has fallen from a peak annual of 150 bottles per head to around 60 France + Italy account for 26% of the worlds consumption Europe = 69% of the worlds consumption

Global wine production in 2004 was larger than consumption levels which left a 5.7ML surplus of wine, the biggest gap ever. Asian wine consumption, led by China, is growing at 4 times the global average,(China will be 7th largest consumer by 2013 Last year, more fine wine was sold in Hong Kong than in NY and London put together = Asia becoming a large premium wine mkt ($20-50) Australian Wine Industry Total area of vines at harvest increased by 6% from 2000 Sth Aus. state with the largest area of vineyards & accounts for 41.9% of total vineyard area Red wine grapes accounted for 68.9% of all new plantings with Shiraz the most widely planted. Chardonnay is the most popular white variety in new plantings 90 grape varieties are grown commercially in Aust. 90% of Aus. wine is table wine & 10% is fortified More than 1/3 of all wine produced in Aus. is exported. Strong Aussie dollar = ruining export profit margins Recent surplus of wine in Australia = wine dumped below cost = damages Aus. premium brand as it attempts to differentiate itself from the market.

Factors explaining the nature and spatial patterns of the global wine industry such as:

B.E.E. S.T.O.P.
Biophysical Factors
The spatial distribution of viticulture and winemaking is directly linked to the biophysical factors that determine where wine grapes can be grown successfully. The application of modern technologies and the preference by consumers for different varietal wines now means that traditional requirements for long, dry, warm-to-hot summers and cool winters can be extended into other areas who do not have the ideal climatic factors

Site
Site selection Important as it is the interaction between factors such as soil, slope, aspect and climate that influence the types of wine produced and its character Terroir The distinctive site specific qualities of a wine (the same species when planted at different location can result in very different wines) Aspect of site Affects the amount of sunlight (North & West facing slopes get more direct sunlight in the Southern hemisphere)

Climate
Climatic factors determine the spatial distribution of grape growing on the global scale

Temperature, rainfall and the number of sunny days determine the length of the growing season for grapes and therefore the quality and quantity of the harvest Within these suitable climates, particular species are able to tolerate more specific climate types (cooler regions = early ripening wines are preferable) The quality and style of wine will be influenced by the climate type. Productivity and profitability of a vineyard can be affected by adverse climatic conditions such as: high/low temperatures, wind, hail or too much/too little rainfall. Fluctuations in climate will cause regional differences in wines as well as local variations. Ideal climate long, dry, hot summers (for ripening) and cool, moist winters (for pruning). They also need frost-free days during budding Grapes can be grown over a range of latitudes and altitudes o Hot regions: California, Barossa Valley o Cool regions: England, Luxembourg o Wet regions: NZ o Dry regions: Chile, Israel, Greece Temperature Temperature affects sugar production in grapes and therefore the type of wine produced. It also regulates the time of each stage of the growth cycle of the vine. The optimum temperature is between 18 and 33C. Cooler sites produce delicate, light-bodied dry whites and sparkling wines. Warm sites produce medium to full bodies whites and table reds. Hotter sites produce full-bodied reds and whites. Climatic variations e.g., sun exposure can affect the colour, aroma and flavour of grapes. Sunlight Level of solar radiation determines the rate at which photosynthesis occurs and therefore growth is directly related to the amount of sunlight it receives The aspect of the site will affect this Wind High wind = damage grapes and inhibit growth via the process of wind pruning Wind also causes erosion = removes topsoil = exposes roots = inhibits vines ability to obtain moisture from soil = stunts growth Rainfall Need average rainfall of 700mm p.a. Majority of crops in Aus. receive less than this Irrigation is used to supplement natural rainfall, and therefore crops tend to be located near rivers/ dams/ public supply In France farmers are restricted by appellation controls to the natural supply of rainfall Therefore there is a close relationship between river systems and wine growing areas Heavy rainfall (summer) = erodes soil, damage/ strips grapes, promotes disease Frost Vines are damaged by frost when temps drop below -1C Usually occurs late Autumn, early Spring (the bud-burst period) Soil mgt, irrigation and vine training patterns can be used to combat this problem Diseases and pests

The diseases grapes are vulnerable to are primarily influenced by the climate Botrytis bunch = affects wines during harvest time when rain exceeds 60mm and there is high humidity (sucks out moisture and makes more sweet = bad but can be made into sweet table wines)

Soil
Soil determines the character and quality of a wine by influencing the water supply and temp below and above the ground. Nature of soil depends on a number of factors: o The composition of the parent material (granite or limestone) will influence the properties of the soil and thus the character of the wine o The physical, chemical and biological processes of weathering Depth of the soil will affect the development of the root system o Deep soil with water reserves = beneficial for bulk production o Shallower, drying soil = beneficial for producing quality wines The depth and nature of the soil needs to be different in diff climates o Hot/ dry climate = deep soil, high clay content (enhances water storage capacity) o Cool/ wet climate = Shallow soil will provide good drainage and increase temp.

Topography
Relationship between topography and climate = important in determining the character Topography influences the climate on a local scale Altitude influences the temperature (temps fall 6c every 100m in altitude) Slope assists with drainage but a steep slope is susceptible to erosion Aspect is important as grapes need to maximise their exposure to the sun. This also influences the way in which the vines are trellised Large water bodies moderate local climatic regimes as water absorbs large quantities of heat. They reduce temperature extremes and add to humidity levels Elevation, aspect and incline of the vineyard must be considered. To reduce erosion + increase drainage on slopes they are planted on contour banks. The contour banks vary in width and length according to the desired qualities of the fruit Different slopes and heights are used for different purposes. Microclimate = The climate within a small area that can dramatically affect the character of the wine 4 key topographic factors that can affect viticulture: o Altitude air temp falls by 6C every 100m o Steepness much easier on flat. More susceptible to erosion more costly to establish o Aspect shapes that face the sun through much of the day are the warmest, vice versa o Proximity to water bodies water absorbs and stores large quantities of heat. It modifies the temp of adjacent land by convectional circulation of air.

Ecological factors

Sustainable management practices are increasingly being applied to the practice of viticulture around the world. This requires that the resources used in the production of wine should meet current demands without compromising the ability of future generations to meet their needs. Ecological concerns associated with viticulture: o Increasing chemical interventions to pest resistance (nitrogen based fertilisers) o Soil compaction and erosion o Poor water infiltration o Low levels of organic matter in soils o Excessive water use To reduce the severity of these concerns, sustainable land use practices can be adopted: o Caring and conserving soils resources contour planting, revegetating upper slopes to minimise erosion, organic material as mulch o Reducing the use of agrochemicals and replacing them with copper and sulphur sprays and biological controls over insect attack o Minimising ploughing and mechanical harvesting practices to reduce soil compaction and loss of soil structure o Management of water supply drip irrigation Organic viticulture o is a system of grape growing that doesnt use industrial chemicals to maintain fertility, increased productivity or combat pests and disease o It aims at using natural, micro biotic activity instead of synthetic substances to aid energy flows and nutrient cycles within the vines o Since the 1990s organic viticulture has grown in most regions of the world o National Association for Sustainable Agriculture Australia (NASSA) certifies the organic viticulture industry and has strict requirements Wine production is highly capital intensive (needs high investment in land, equipment and technology) especially in the growing competition nationally and globally Wine production is growing in importance economically for a large number of nations particularly those in the new world. 5 main factors that influence activity within the wine industry o The general level of economic activity Relationship between economic growth rates and wine consumption More disposable income = increased purchases of luxury goods and services o Shifts in consumer demand Make the market dynamic Better quality wines and cheaper prices are sought after New and innovative styles and types are popular with consumers o The increasing concentration of retail power The increasing demands placed on the industry by large retailers will determine the future of the industry

Economic factors

High purchasing power = able to demand greater product consistency (feature of branded wines) It is initiating the shift from estate to branded wines = increasing opportunity for new world wines to gain mkt share in traditional wine mkts o Competition between old and new worlds Gives the wine trade a competitive edge Prices have been driven down relative to those of alternative alcoholic beverages o Branding and marketing Play an increasing decisive role in wine sales Becoming global (labels and names known globally) Important economic activity for exporting countries o France = 24%, Italy = 23.9%, Australia = 2.6% o Much of what is produced is consumed by that nation, e.g. France only imports less than 5% of its wine. Competitive Advantage: o Refers to the cost of production including investment in capital and the returns received o Increased global competition has resulted in many small scale producers in Australia becoming uncompetitive. The power of the largest producers, combined with the oversupply has resulted in many producers ceasing o In old world countries the pattern is continued with a growing number of companies producing the bulk of the wine and the traditional family orientated enterprises declining o Because Australia has such a variety of climatic zones, it is able to grow a variety of grapes enabling it to compete on a global scale Wine consumption is increasing as beer and spirit consumption decreases = no net real increase in total alcohol consumption Level and rate of income growth o Consumption is increasing in new world Demand in China increasing due to the emergence of affluent middle class, improved living standards, rising disposable income and the westernisation of lifestyles Rising income and changing preferences continue to fuel demand in UK, USA o Consumption is decreasing in old world Although France has all these things ^ consumption actually falls with increased education and income due to regulations (OH+S, DUI etc.) France per capita consumption was 160L in 1965 down to 70L in 2005 The process of cultural convergence o This is a product of advances in global communications and trade (globalisation) o Increasingly globalised industry with advanced mkting techniques to sell wine to a global mkt

Sociocultural factors

Exception = Japan, despite high incomes and exposure to western culture, consumption has not increased The age structure of the population o Consumption highest = 35-65 year olds o Increasing preferences in younger markets for alternate beverages Changing consumer tastes and lifestyle expectations o Wine = most appropriate beverage for at home and restaurants o Increasing trend in western countries = Dinks = eat out more, spend more on wine Marketing and licensing laws o Promotion increased in new world wines = decline in sale of old world wines o Less stringent laws in new world = increasing wine sales in bars and restaurants Particularly used in new world regions, where traditions and practices of 100s of years of viticulture and winemaking arent so culturally embedded. The use of geospatial technologies (GIS) o Used in site selection, site monitoring and mgt Water storage and mgt o Important in marginal rainfall areas where irrigation is required o Drip irrigation Transport and storage o Use of refrigerated trucks and container shipping of bottle wine o Allowed for the movements of wine on a global scale while maintaining quality Biotechnology o Involves the use of molecular genetic or genetic engineering to modify genes from one species and transfer them to another. o Used to engineer disease resistant species (grapes resistant to fungicides, reliable yeasts that can be used to fermentation.) o Wine can now be tested for its authenticity using DNA Cloning o Used to achieve consistent grape quality o Cloned plant = direct replica of another organism Harvesting and pruning with mechanised harvesters o Reduces labour costs and the difficulty of finding seasonal workers o Can damage the vine and collect unwanted material (insects, unripened grapes) o Improving in efficiency so slowly being adopted (but not in cheap labour countries) Information technologies o Allows the use of the internet for wine sales and marketing o Used to monitor financial transactions and industry trends and developments o Gas chromatography can be used to analyse consumer preferences of aromas. Wine manufacturing o Now involves more modern processes and equipment such as stainless steel vats for the maturation and storage of white wines o Used to enhance wine quality and brand consistency Winery design and equipment

Technological factors

Passive solar design and natural ventilation can be applied to help minimise the use of energy intensive heating, ventilating and air-conditioning equipment. o Equipment such as barrel scrapers can prolong the life of oak barrels and reduce overhead costs o Aust. invention = scans barrel, creates 3d imaging, so that scarper can only remove amount needed = prolongs the life of barrels. o Helicopters = used in marginal areas to reduce frost by circulating air = expensive Bottling o High capacity automated labelling and packaging machines can be used to achieve mass production in high capacity plants such as VINPAK o Wine cask = Aust. Invention, convenient shape, cheaper, lighter. o Screw cap/ Stalvin seal = reduces the chance of corking (10% of wine was impacted by corking.) Organisational factors relate to the framework of ownership, decision-making and control affecting the wine industry. Old world o Appellations more tightly controlled (Terroir) o E.g. France Appellation Controlle = varietal control, harvest control (tonnage/ ha) New world o Less formal controls/ greater freedom to meet changing mkt trends/ demands o Still has various organisations Global o OIV created with 8 founding members (old world) aimed to: inform members of measures to be taken to cover concerns of producers, consumers in the wine industry act as a reference body for intergovernmental and international organizations establish the norms to improve trade conditions for the wine industry o Today membership is 45 nations both old and new world o In 2002, EU tried to extend control over wine production by name ownership laws. They were successful in gaining control over geographical names such as Champagne and Burgundy Ownership, decision making and control o Ownership of wine producers is very fragmented, eg, the worlds largest producer in volume terms, Gallo has only 1% of the world market. Production is particularly fragmented in the old world. o However, in the new world, ownership is more concentrated, eg, the top four Australian companies cover 80% of the market. o Control dominated in Australia by 4 big companies- Southcorp, BRL Hardy, Olando, Wyndha, and Mildura Blass o Most producers are small, family owned and do not crush or produce wine on site o The Australian wine industry has undergone consolidation. This is the takeover or merger by large companies of smaller ones, with the result of creating larger main players.

Organisational factors

Political factors
International Political Influences National Political influences (Australia) The European Union produces 60% of the Wine labeling laws mean that they must worlds wine and 60% of the worlds meet the Food Standards Code consumption Australian wine and Brandy Corp says Due to oversupply of wine the EU has tried they must have information about to reduce production through its Common country, grape variety and vintage Agricultural Policy by paying producers to AWBC identifies geographical wine pull up vines growing regions which impacts on labeling Apellation de Controlle is a series of laws Australian Trade Measurement Code established by France to regulate the wine controls information regarding volume, industry (early 20th Century); dictates wine print size, placement of label, alcohol production content Control over the kinds of grapes used in a Taxation- through the Federal particular regional blend Government 10% tax- GST and 29% wine Irrigation is prohibited in France equalization tax (WET) Use of oak chips illegal Some wineries dont cellar their wines and only sell them when their true value is Impacts on Europes global determined as if you sell wines at their competitiveness premium you must pay WET Amounts that particular regions can Site location controlled through state and produce is therefore set and if consumer local governments and impacts on where demand changes, changing type of wine vineyards can locate. produced is limited as the type grown is determined by the Appellation Controlle Planting material regulated through movement of grapes and root stock intra Spain, Germany and Italy have similar and interstate to prevent spread of controls disease Countries like the US put quotas on the Growing market for organic wine- has to amount of wine that can be imported to be approved by the Organic Farmers protect their domestic producers. Association UK Australias biggest market but joined State Govt impacts on irrigation the EU and had to cut down Australian Wine and Brandy Corporation o Responsible for the promotion and regulation of Aust. Wine o Concerned with factors such as country, grape variety, geographical indications and vintage. o Primary role: enhance the operating environment for the benefit of the industry by: Developing markets for Aust. Wine Promoting better decision making through knowledge development Maintaining the industrys reputation (quality control)

Environment, social and economic impacts

As with any economic activity there are a range of positive and negative impacts that can result from it Pollution from chemical sprays and additives o Fungicides and pesticides used to control pests and diseases can result in residue of toxic chemical in the soil, water and wine, also can impact the health and safety of vineyard workers

Environmental

Some chemicals have been banned e.g. DDT In recent years a considerable movement towards the use of organic fertilizers and natural pesticides Irrigation o Widespread in Australia where vines were over-irrigated resulting in land degradation and growing salinity in soils and water o Also an issue in Californias Napa district o Australian Wine and Grape industry has put in place a $3.6 million 3 year research project to eliminate the practice of flood irrigation = aims to increase water efficiency by 5% to reduce the industrys contribution to salinity problems o Decline in the use of flood irrigation and increase in the practice of drip irrigation however it is expensive Labour exploitation o In Australia, seasonal grape pickers are protected by minimum wages and hourly rates of pay o In the USA many of the casual workers are illegal immigrants from Mexico and have no protection o Because viticulture is an economic activity largely centred in the Developed World there is little evidence of labour exploitation o OH&S laws apply to all who work within the winery Job creation o Has been a reduction in the labour force directly involved in viticulture and the processing of grapes for wine o Machines have replaced seasonal workers during pruning and picking seasons o Despite this there has been job creation scientific knowledge applied to quality control and vintage wine requiring a higher skilled workforce o Use of computers increased demand for IT specialists (websites, marketing etc) o Wine tourism = creates jobs in hospitality, transport and service industries Wine tourism o In Australia over 10% of international visitors are attracted by wine tours, festivals and tasting o Wineries encourage tourism because it can: build brand loyalty, increase sales, yield market intelligence, increase profit margins o Can be negative impacts if not managed sustainably: Increasing from $500 mil to $1.1 bil by 2025 in Australia Hunter region = too much development of tourist accommodation and new vineyards = threaten the rural image/ ambiance of vineyards and increased competition for land Quality and cost of production of wine is being impacted. Provision of infrastructure and value adding o Wine industry reliant on the provision of infrastructure for the production and sale of wine domestically and internationally o Governments (local state and national) provide the utilities required (electricity, telecommunications) plus transport networks (road, rail, sea and air)

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Economic

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Department of Foreign Affairs and Trade assist the industry in developing export markets through trade shows Local authorities and agencies provide essential support for viticulture. Eg: The Hunter Valley Tourist Association has established wine trails with uniform signage and publicity to guide visitors throughout the valley Major funding for research and development linked to government and local authorities as wine becomes more competitive Most value adding done domestically which makes the industry multi sectoral = good for the economy unlike iron ore (no value adding done)

Social
Cultural integration o Colonisation, immigration and transnational corporations have led to the diffusion, adoption, and adaptation of viticulture, winemaking, and wine consumption o Migrants have been responsible for the growth in viticulture and winemaking in the Americas, Australia and Sth Africa o Activities of TNCs and their growing dominance impacted on production and distribution during the late 20th Century o Spread of Western Culture also resulted in the spread of this activity Health o Benefits: Mediterranean diet, 1 glass a day helps heart o Impacts: Drink driving, alcoholism

A geographical case study of an economic enterprise operating at a local scale Mistletoe Wines Nature
Produce premium wines for both domestic and international wine consumers Extremely small (8ha) with a 5ha vineyard Family owned vineyard, winery and cellar door (Sloan family) Initial vintage = 240 cases, now produces 8,000 cases = thriving biz Includes a vineyard of 5.5ha, a winery (all wines are made on site), Cellar door (open for wine tastings 10-5 everyday) and Pokolbin Art Gallery and Mistletoe Sculpture Garden Produces 100-120 tonnes of grapes per vintage 40% of grapes processed at site are grown there, other grown under contract localy Grape varieties grown = Verdelho, Chardonnay, Semillon and Shiraz (All typical varieties of the hunter region due to the soil and climate) Sole grower of Muscat Blanc a Petit Grains in the region one of the most aromatic white grapes in the world Harvest occurs between January and March In top 8% of all wineries in Australia (both big and small) Awards o Top wine critic and judge rated them as one of the 10 dark horses in the Australian wine industry in 2007

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Hallidays Australian Wine Companion awarded a 5 star rating in 07 and 08 editions and 5 red stars (best rating) in 2009. 2007 Grand Reserve Shiraz gained highest points in NSW top 100 wines 2009 Reserve Chardonnay placed 2nd in the NZ trophy

Locational factors
Located in Pokolbin, lower Hunter Valley NSW Australia (Hermitage Rd) 10km North West of Cessnock in the heart of the lower Hunter wine tourist trail International and local tourists regularly visit due to its close proximity to Sydney (180km/ 2 hour drive NW) Socio-cultural factors influencing location o History and proximity to Sydney has much to do with the location of wineries in the Hunter o Area first settled in 1820 with James Busby being one of the first to introduce vines in Aust. Biophysical factors influencing location o Climate Hunter = has a borderline sub-tropical climate = one of the warmest wine producing areas in Australia Temp and precipitation patterns opposite to the Old World Mediterranean climate = causes some challenges Lower Hunters weather pattern = dominated by dry winters and wet summers = stresses the wines = lower yields Advantage of this type of climate = maritime influence which brings regular cloud cover in summer afternoons (ripening season) o Soils Region dominated by basalt soils overlying clay + hills = good for growing red wine grapes as hills allow for drainage Sandier soils found in valleys and creek beds = more suited to growing white grapes Soil problems can be dealt with companion planting with crops such as oats = increases Nitrogen levels o Topography Brokenback Ranges provide protection from the drying Westerly winds Undulating foothills provide gently sloping sites = good drainage and aspect for viticulture Economic factors influencing location o As climate for grape growing is marginal, access to tourists is the most important locational factor o Just a day trip from Sydney, over 1.5 million tourists visit Hunter Wineries p.a. o Mistletoes location is in a prime position on the Hunter tourist trail with over 40,000 visitors p.a. o Mistletoe places great importance on this passing trade and views it as the winerys main opportunity to influence future consumer behaviour and return sales o unique wine experience

Offered to visitors Knowledgeable cellar door staff, and a comfortable and friendly tasting area Wine experience combines with attraction of the winerys art and sculture garden (exhibits change every 8 weeks)

Ecological dimensions
Definition: Relations between people and the environment and the effect that they have on each other r Environmental constraints Rainfall o Recovering from drought (last 5 years below average rainfall) o Hunter Wine Country Private Irrigation District used a lot when in drought o Rainfall now returning to average with 1039mm recorded in 2008 o The local dams are above 90% capacity now (best in 8 years) Winds o Problem when fruit starts to swell as it increases evaporation and dry out the fruit o This is supplemented with irrigation that supports moisture levels o Strong spring winds can break new shoots = lower yields as vines produce 2 bunches of grapes per shoot Hail o Late afternoon summer storms o Hailstorms in 2002 were responsible for the loss of 50% of all grapes in the area o However the Pokolbin area is in a rain shadow = less susceptible to heavy rains Bushfires o Bushfire season = grape growing season o Occur in the Brokenback Range o Mistletoe = in no direct danger of being destroyed by fires but can be impacted by them: smoke taints taste of wine, smoke blokes UV rays for a number of days (impacts ripening) Disease o Concern due to high summer rainfall and humidity(borderline sub-tropical climate) o Light Brown Apple Moth, Powdery Mildew, Bunchrot o Vines are sprayed for protection o Phylloxera free due to good mgt of employees and equipment from outside Climate change o Expected to effect primary production in the next 20+ years o Causing shorter, warmer seasons = grapes ripen earlier o May cause higher rainfall concentration in Autumn = good for hunter as its after harvest time. Human activities that impact on grape production Tourism o Is the major industry for the Pokolbin area and is continually increasing o Tourist facilities in the area (resorts, gold courses, restaurants etc.) have both positive and negative impacts on vineyard operations.

Increased coaches and cars = increased dust = blocks pores of vines = affects transpiration rates and water loss. o However tourism is valued by many wineries such as Mistletoe and encourage the mgt and promotion of this economic activity. Open cut coalmining o Activities happen upstream at Singleton and discharge saline water which runs into the river which is then diverted to Pokolbin for irrigation o There are stringent controls in place to ensure saline water is not pumped from the river (monitored by the PID) o Coal dust travelling across from mines can also affect photosynthesis of vines Weeds o Couch grass invades the vineyards and entangles vines o Seeds can also get into the fruits which can be accidentally harvested with the fruit Ecologically sustainable practices of Mistletoe Pest problems are assesses in terms of their extent, location and timing within the growing cycle Quantities and frequencies of pesticide and herbicide use are closely monitored by laws Records of synthetic chemical inputs are maintained Reduction in the use of synthetic chemicals Use of cover crops (barley and other legumes) to fix nitrogen levels in soil and mustard seed which acts as a companion plant, discouraging pests Waste products (skins and leaves) are returned to soil as mulch = reduces water loss Chicken manure used as organic fertiliser Irrigation rates monitored closely to avoid salinity problems.

Linkages and flows of people, goods, services and ideas

Internal linkages People o Main administration occurs onsite at the winery in Pokolbin o This site hosts the cellar door, office and the Pokolbin Gallery/ Mistletoe sculpture garden o Employees: 2 full time = Ken and Gwen - 6 part time = winemaker, maintenance, sales, art curator etc. Goods o Most inputs are sourced locally such as rootstock, vines, chemicals with only some sourced interstate o All oak barrels are imported from france Services o Retail at cellar door and art gallery o 40,000 people visit mistletoe p.a. 10% are international tourists o Wine sales are complemented by sales of art and sculpture from the gallery Ideas o The business follows a biz plan with staff regularly meeting to discuss operations and future plans o The internet is also used to source info

Website + newsletter o Allows Mistletoe wine to market, disseminate info and generate sales External linkages Contractors o Mistletoe contracts other vineyards to grow grapes and top up the supply grown at Hermitage rd. (70 tonne p.a.) o Seasonal workers (locals or backpackers) are hired through a labour contractor to help in harvesting o Wine is transported to and from the bottling company by the bottling company Government/ statutory bodies and non-government affiliations Body Link NSW Office of Water Controls irrigation and waste water mgt Federal Govt. Wine Equalisation Tax (WET) and GST which amount to 42.5% tax one of the highest in Aust. Austrade Promotes wine globally as premium product & controls applications for export licenses Aust. Wine and Brandy Provide information and assistance & is the watchdog about blending, Corporation (AWBC) packaging and export regulations & enforces food standards code throughout every step in the process Hunter Valley Wine Promotes the local wine industry and works to attract tourists and Country Tourism increase the profile of the region as a premium short break tourist destination Exports o Aust. Overall wine exports exceeded domestic sales in 2002 and continues to grow o However, Whilst Mistletoe has exported in the past, current export sales have been stopped due to the lack of stock available and growing domestic market due to more tourism and becoming very established with many award o All wine is sold to the end consumer so Mistletoe benefits from receiving both wholesale and retail profits ( cutting out the middle man) Consultancies o University of Newcastle = offers long range weather forecasts o Regional Art Gallery of Newcastle = offers advice on art and sculptures o Advisors within the industry = accountants, financial planners, legal advisors Marketing o Newsletters = 3 p.a. sent to prescribers (over 7000 on mailing list) o Manned displays set up at trade shows, festivals, farmers mkts o Wine tasting nights and opening nights of new exhibitions = allows mistletoe staff to network with present and potential customer and also local people and businesses o Local print media (Hunter Valley Wine Country magazine) to advertise events o Brochures are distributed at local tourist info centres o Word of mouth

Effects of global changes on the economic activity on the enterprise

New styles o Chief winemaker = Nick Paterson = very innovative = local & experienced o Approach to wine making based on quality not quantity = small scale production and attention to detail little interference in fermenting process

Mistletoe do not over extract = higher quality wine with balance and flavour Using more eco-sustainable practices as this is an increasing trend and ethical issue in the global environment. Technology o Website important for marketing and sales (10-15% of sales and increasing) o 7000 people on mailing list o Internet = referencing tool to research topics relevant to the industry o Computers used in production (tractors, harvesters, irrigation, soil monitoring) Competition o Comes from within region and industry as a whole = leads to innovation and concentration on producing quality wines o Imports increasing by 50% last year from outside of Aust. (due to $ appreciation) o Mistletoe = specialist wine producer = niche = shielded it from competition of cheaper wine imports Glut in certain varieties o Oversupply in 2006 (particularly red varieties) = restricted Mistletoe from achieving realistic prices for their quality wines o James Halliday The quality and consistency of Mistletoe wines is above reproach as is their price o Mistletoe winning a number of prizes has shielded it from many effects of the glut Protectionism vs. free trade o WTO has strived for free trade but trading blocs such as the EU have emerged making the playing field not level. o This does not impact Mistletoe as a specialist wine producer but put pressure on the Aust. wine industry to make quality wine for good prices

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