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GTAP Resource #4655

"Asia’s Evolving Role in Global Wine Markets"
by Anderson, Kym and Glyn Wittwer

Rice wine is common in Asia, but wine made from grapes has had a very minor role traditionally. Prior to this century grape wine was consumed only by Asia’s elite, and produced only in tiny quantities and mostly in just Japan and – from the late 1980s – China. However, income growth and a preference swing towards this traditional European product has changed the consumption situation dramatically. China is also expanding its area of vineyards and is now the world’s 5th largest producer of grape wine, up from 15th as recently as 2001. That supply expansion has not been able to keep up with China’s growth in demand though, so wine imports have surged. Nor are those imports only of low quality. The average current US$ price of Asia’s wine imports grew at 7% per year between 2000 and 2009, compared with only 5.5% in the rest of the world, and by 2009 it was nearly 80% higher than the world average (and more than four times higher in the case of Hong Kong and Singapore). Meanwhile, after removing its tariff on wine imports in February 2008, Hong Kong has become the world’s most important market for ultra-premium and iconic wines.

What is the future of Asia in the world’s wine markets? Will China’s wine production eventually exceed its needs domestically? How important will wine demand be in the four next-most-populous Asian countries (India, Indonesia, Pakistan and Bangladesh)? What roles will excise and import taxes and preferential trade agreements play?

This paper reviews recent developments in wine production, consumption, and international trade in the light of comparative advantage theory. It then draws on a detailed simulation model of global wine markets to project their developments over the next few years under various economic growth, real exchange rate, and policy assumptions. It concludes that China is likely to continue to be by far the most dominant player in Asia, and to change global markets for wines dramatically, just as it has been doing...

Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2015
Created: Wittwer, G. (4/13/2015)
Updated: Wittwer, G. (4/13/2015)
Visits: 2,265
- Economic development
- Preferential trading arrangements
- Asia (East)

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