This paper addresses three questions: how well does Australia's wine industry performance since the late 1980s compare with previously and with the recent performance of its competitors abroad; what are the prospects ahead for Australian producers, given that global wine consumption per capita has not been growing yet premium wine production is expanding in many countries; and what can be done to improve those prospects? In absolute terms, and relative to other Australian industries, the wine industry has done extremely well since the late 1980s in terms of export-led growth. It is now the world's second largest exporter of wine after the European Union. Relative to other New World wine export suppliers, however, Australia's trade performance is not outstanding. Exports from the United States and several other Southern Hemisphere producers also have grown rapidly in quantity and in quality, albeit from smaller bases. Given that competition from other New World suppliers, and the quality upgrading of several large wine regions in Europe, the continued prosperity of the Australian industry depends on it meeting numerous challenges. The way it is positioning itself to do that may well provide an example to other industries of how to sustain export-led growth.