This paper seeks first to quantify the relative importance of the different factors contributing to growth in Australia’s wine industry over the ten years to 1996. This growth accounting exercise uses an economy-wide model for Australia that separately distinguishes nonpremium from premium red and premium white grapes and wine. Around half the premium wine output growth in that period is attributed to export demand growth. Other important contributors to growth include upgrading of domestic preferences, increases in national income, input-saving technological changes and (negatively) increases in domestic consumer taxes on wine. Looking forward, recent and intended vine plantings ensure wine output in 2003 will be about twice that of the mid-1990s. Our model is used to examine how that vineyard expansion might affect the market, especially grape and wine prices and wine exports early next century.