Sam Holmes, General Manager The Americas, Negociants Australia on the American wine market

SAM HOLMES

General Manager The Americas – Negociants Australia

AMERICA IS THE SECOND BIGGEST MARKET FOR AUSTRALIAN WINE AFTER CHINA. IT IS A MASSIVE PREMIUM OPPORTUNITY FOR OUR INDUSTRY. SAM HOLMES, GM OF THE AMERICAS FOR NEGOCIANTS AUSTRALIA TALKS TO US ABOUT THE END-USE OF THE WET TAX, AMERICA’S DIVERSE DEMOGRAPHIC AND THE CHALLENGES AND REWARDS OF SELLING AUSTRALIAN WINE INTO THIS MOST COMPLEX OF EXPORT MARKETS.

We introduced our wine into America that was cheap and cheerful with creatures and critters on labels. Is this still how the average American perceives Australian wine or is there a growing understanding for our regionality and premium offering now?

I think it is correct to say we went through a cheap and cheerful phase and we paid the price for that later on when we were almost exited out of the market. The trade and consumers got sick of it. But I don’t think there is anyone who even remembers those days. The buyer or the Sommelier now might be a thirty-year-old and they were at university.

Australian wine sales in America are on a high. How are they tracking?

There is definitely growth, and we are definitely up, but we have seen the dollar drop back in the past five years back to 70 cents so the value of our exports to America will grow just through foreign exchange gain. A lot of the work on the market over the past few years, such as bringing the trade down (to Australia) and holding events has put us back on the map. The interest is back, and we are making inroads.

What are Americans drinking in terms of Aussie wine?

Chardonnay is big. It is not Shiraz. Cabernet is strong. Pinot Grigio. The Barossa is well known over there for Premium. What sells Our biggest challenge is Shiraz isn’t a category yet. That is going to be Wine Australia’s challenge and our challenge. How do we get Shiraz back on wine lists and back on shelves? That is going to take time.

well is the classics such as Sauvignon Blanc, Pinot Grigio and Cabernet.

Where in the US are the most people enjoying Australian wine? Are there specific states that are more Aussie friendly?

The usual suspects are California, New York, Illinois, Texas. That hasn’t changed for years, but you might see Georgia growing because Atlanta is becoming a more affluent place. Florida has always been a big market because of tourism. When you think about the states I have just mentioned, they are all sitting on the outside of America. Someone used to say it’s like when you cook beef; it’s well done on the outside and rare in the middle. These states are the more premium wine consuming states, and I don’t think that has changed in 20 years.

What about Canada? How are Australian wine sales going there?

Canada has been a lifelong friend. They have never fallen out of love with Australia. They are very consistent consumers. It is not double-digit growth, but it grows and never declines. It is a solid market. They love Australian wine. They get it. It’s almost our twin country; it’s just colder. They consume like us. Vancouver is like Sydney. Toronto is like Melbourne.

What are the biggest challenges Australian wine importers face dealing in the Americas?

Canada and the US routes to market are extremely difficult. In the US, you have to work with an importer and a distributor in every state. It is difficult to get to your customer. It is very fragmented. You might have a really good importer and distributor in California, but that will not guarantee success in Colorado or New York. You are very reliant on your distributor partner to make a success there. For

example, the distributors in the US might have a portfolio of two to 3000 different wineries with thousands of wines. It’s hard to get cut through. In Canada, there are government-controlled monopolies in most provences, so breaking in can be difficult.

What are the brands that really fly over there for Negociants?

Jansz Tasmania is really growing – it’s growing the fastest. Our Y series is the right prices point, so that is the biggest range. Our Signature Cabernet blends are also in growth at the $40 - $50 bracket.

If I wanted to drink a premium Australian wine in say New York or LA where would you send me for offpremise and on-premise?

Wine.com has been very supportive of Australian wine, and they would be the largest online retailer nationally and have helped a lot. In terms of a Dan Murphy’s equivalent, Total Wine and More has been a strong supporter. After that is the independent and individual such as Hidden Vine in San Francisco and Wine House in LA who have a passion for it. It varies state to state.

Do Americans buy into the Tasmanian pure and pristine ethos?

Yes it resonates, particularly with the hipsters. Tasmania has a good reputation over there. The other funny reason Tasmania is known in the states is because of the Tasmanian Devil from the Disney Looney Tunes. It’s bizarre, but that was revealed through market research with the American consumer. What our importer and distributor have done well is opened it and allowed customers to taste it.

America is always the shiny toy. Everyone wants to nail it. There has probably been more failures than there has been successes, but it is a big place. They speak English and have plenty of money. The opportunity is certainly there, and we would be mad not to chase it. Our biggest challenge is Shiraz isn’t a category yet. It’s not a thing. That is going to be Wine Australia’s challenge and our challenge. How do we get Shiraz back on wine lists and back on shelves? That is going to take time.

Have you seen a difference in market response because of the Wine Australia activations in the US such as last year?

It made a difference last year. Our distributors ordered up wine for the programme, so we did get sales from it. Now it is how do we follow up on that? How do we keep going? Wine Australia is relying on the government to fund them again. It seems a shame to do it for two years and then stop. We need to give it a good five to ten years if we want real momentum. People will say why is the Australian government providing funds to the wine industry? We say – well actually it is our funds. We pay 29 per cent in WET tax so it’s not like we are asking for money that is potentially allocated to other sectors. This is over and above GST, the income tax and payroll tax. All we ask is can they (the government) tip in the hundreds of millions of dollars they take from WET tax into marketing support. We are not asking to be subsidised. We are just asking - could some of our money be spent on promotion?

All we ask is can they (the government) tip in the hundreds of millions of dollars they take from WET tax into marketing support. We are not asking to be subsidised. We are just asking - could some of our money be spent on promotion?