Contributor\u2019s Panel - Sandy Hathaway

What’s really happening with wine sales in Australia?

If you’ve been following the headlines recently, you might conclude that Australian wine is a threatened species in the domestic market. The latest Roy Morgan Alcohol Consumption Currency Report (September 2018) reported that there had been a decline in the proportion of Australians drinking wine, while millennials in particular – the marketers’ target group of choice – apparently think wine is boring. The Australian Bureau of Statistics (ABS) recently reported that there was a 1.9 per cent decrease in wine prices in the December quarter compared with the previous quarter, despite the overall CPI increasing by 0.5 per cent.

In fact (also according to the Roy Morgan report) nearly half of the adult population in Australia (43 per cent) drinks wine in an average four-week period – making wine the most popular alcohol category. According to IRI MarketEdge (December 2018), wine increased its share slightly to 20 per cent of the total alcohol market in the year ended 2 December 2018.

Figures from IRI MarketEdge show that value growth in wine has been around three to four per cent in the past several 12 month periods while volume has been flat, pointing to ‘premiumisation’ in the domestic market – i.e. a trend towards drinking less but higher value products.

The clear majority (84 per cent) of wine consumed in Australia is Australian-made, according to Wine Australia’s Australian Wine: Production, Sales and Inventory report 2017-18. The report, which is based on an annual survey of Australian winemakers, found that while domestic sales declined by one per cent in volume, the value to winemakers of these sales increased by six per cent, while the average value increased by seven per cent. This may reflect an increase in margins to winemakers, an increase in retail prices and/or a change in the mix of sales channels, with more sales being made through high value direct-to-consumer channels such as the cellar door and wine clubs.

The report also found that Australian wineries sold more wine than they produced in 2017-18, due to strong growth in export markets. While there is no room for complacency, the biggest threat to Australian wine in the short-term is more likely to be lack of supply than lack of demand.

SANDY HATHAWAY, INDUSTRY ANALYST, WINE AUSTRALIA

Sandy is an analyst in the Market Insights team at Wine Australia. She has particular responsibility for domestic market insights. She has been involved in the Australian wine sector for more than 20 years in a number of roles and has been with Wine Australia since 2016.