Back up from Down Under

16 March, 2016

It may be a cliché to say that the Australian wine industry has been a victim of its own success but it does aptly sum up its situation. Christian Davis delves down under. 

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AT THE RECENT Australia Day tastings in London, Andreas Clark, CEO of generic body Wine Australia, announced its exports of wine jumped 14% to AUS$2.1bn in 2015, the highest growth in value since October 2007.

Clark also reported that Australian wine exports had grown in each of the country’s top 15 export markets in the year to December 31, 2015. The largest leap was China, Australia’s third-largest market, with a jump of 66% to $370m.

The US, Australia’s number one export market, was up 4% to $443m. The UK grew by just 0.2% to $376m. After China, Canada posted growth of 7% to $193m then came Hong Kong with 22% growth to $132m.

The Wine Australia Export Report December 2015 showed the value of exports increased at each price point, the largest being with wine FOB (free-on-board) value of more than $10 per litre. Sales of these wines grew by 35% to a record $480m and make up 23% of the value of Australia’s wine exports.

The report says bottled wine has been the key driver of export growth. Bottled exports increased by 17% to $1.6bn and the average value increased by 7% to $5.20 per litre.

SIGNIFICANT MARKER

It all seems extremely positive for Brand Australia, except for one significant market – the UK. Although its largest market by volume only managed tiny value growth, Australia still rules the roost with 22% share of the total UK market – but it is stuck in the £4-£6 price point. Around £5.20 for a bottle of Aussie wine is rubbish for a country that has pioneered the marketing of wine and moved it, in a general way, from the rich and the middle class in non-traditional wine consuming markets to a mainstream drink.

Research from wine group Accolade, which owns Australia’s and the UK’s most popular brand, Hardys, shows that Aussie wines are not only languishing at entry-level price points but the chances of getting more SKUs for more premium quality wines are diminishing as the multiple retailers consolidate and reduce their wine offerings, particularly for premium wines.

Prior to ADT’s opening, Accolade Wines, in conjunction with Wine Australia, presented an overview of the category in the UK. Accolade category development director Jane Robertson outlined the dire situation Australia faces in the UK.

Robertson said with Australia being the overall number one country, it has been used by the major multiple retailers to drive footfall, via deep discounting and half-price offers. The result was that consumers were used to getting  Australian wine cheaper, invariably on offer.





Comment

Christian Davis

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