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The key concept the article deals with is the demand and supply side of the wine industry. In order to gain an in depth understanding of these two mechanisms, aggregate demand and supply analysis needs to be made. This is necessary because the article highlights that other industries such as tourism and manufacturing have also suffered losses in the recent past.
The aggregate demand (AD) is the total amount of goods and services that are demanded by the domestic householders, government, private businesses and the foreign consumers at a certain price level. The aggregate supply (AS) is the real output of an economy at a certain price level. AD and AS will change as price level changes and the mechanism that AD, AS varies at different price level in turn indicated the equilibrium real output and the equilibrium price level of an economy taking into account the equilibrium of product, monetary and labor (employment) markets.
The article focuses on the macro-economic and micro-economic factors that are troubling the Australian wine industry. The article explores the reason for Australian company Foster’s parting away with its wine business. First, it highlights the many macro-economic factors such as global economic slowdown and strengthening of Australian currency to be responsible for weak sales figures. But the major argument of the article is that the domestic consumption of Australian wines has decreased. The reason is said to be ‘conservative consumerism’ emerging among the Australians. To highlight this new phenomenon the article mentions the rise in sales of cheaper French wine. The figure below depicts change in Pricing and Aggregate supply with shift in Aggregate demand.
In the news article the writer supports the decision of Foster’s to dissociate itself with its wine business. As mentioned earlier, there are many reasons given for this step. The reasons
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(“Find a newpaper article on wine industry and draw a link to a Assignment”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1582847-find-a-newpaper-article-on-wine-industry-and-draw-a-link-to-a-macroecnomic-concept
(Find a Newpaper Article on Wine Industry and Draw a Link to a Assignment)
“Find a Newpaper Article on Wine Industry and Draw a Link to a Assignment”, n.d. https://studentshare.org/macro-microeconomics/1582847-find-a-newpaper-article-on-wine-industry-and-draw-a-link-to-a-macroecnomic-concept.
This article has been chosen because it has a link with the Balance of Payments and Exchange Rates theory. This theory focuses on the trade aspect between countries and then determines the value of one currency in relation to the other. An analysis shall be made on the description of present challenges faced by the wine industry in context of the unfavorable exchange rates.
Because the stiff competition in this industry, EWP have to embark on modern approaches to analysing the market, this includes competitor analysis. In analysing the competitors, it is important for EWP take into account the competitors’ strategies including products, target customer, strong customer base, pricing strategy, and promotional skill.
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