Body 3: Economic Flashcards
- Point - economic value
Viticulture contributes significantly to the global economy, with the industry valued at $260 billion USD.
- employment
As well as being a social impact, wine production produces employment and incomes which also boosts the economy, the Australian viticulture industry employing approximately 170000 workers.
- consumer purchases and tourism
There is a positive correlation between activity of the global wine industry and growth of the global economy, as winemaking encourages consumers to purchase goods and services such as wines, wine tours and wine tastings, as well as accommodation when visiting vineyards. The wine tourism industry is valued at over $86 billion USD.
- Importing and exporting and other production
Additionally importing and exporting of wines, and production and sale of other inputs of wine such as bottles and the barrels generates economic revenue.
- Taxes
Taxes on wines produce revenue for the government, for example Australian wines are impacted economically by the wine equalisation tax (WET), as all Australian wine exporters are required to pay 29% tax on the wholesale value of the wine, this money being used by the government for infrastructure projects.
- Negative economic impacts - wine glut
The global wine market is controlled by market forces such as supply and demand, meaning that supply must meet demand as otherwise there is underproduction driving up prices, or overproduction driving down prices. The 2004 global wine glut was a result of overproduction, the imbalance of supply and demand causing a major decline in wine production and costs. By 2005 there was enough wine in storage to fill 800 olympic swimming pools.
- Link
The large amount of economic activity associated with wine production produces significant economic growth, increasing global viability of the wine industry.
