In Australia the allure of imported wines is strong. So much so, it is possible to run an eye down wine lists exclusively devoted to non-Australian wines. That wasn’t the case 10 years ago. Italian and Spanish restaurants, especially, are likely to have lists bulging with the wines of those respective countries.
To some, it’s all part of the ongoing maturation of a worldly, sophisticated wine market. To others, it’s a national disgrace. “Something has gone very wrong with Australia’s top restaurant wine lists,” grouched The Sydney Morning Herald wine writer, Huon Hooke, in a wine column last August. “My main beef with the types of wine lists that regularly win big gongs is that they are unbalanced – far too international.”
Organisers behind the Australian Wine List of the Year Awards viewed the issue seriously enough to introduce an annual award in 2012, recognising lists with a strong Australian wine presence. “There is the widespread availability for the first time of the everyday wines from Europe and South America,” says Awards’ chairman Peter Forrestal, on the restaurant-led drive to imported wines. “And there is excitement generated by varieties new to consumers and sommeliers.”
It was bound to happen. In their dreams, Australian winemakers desired a sophisticated wine-savvy drinking public. Now that they’ve got it, they’re worried.
Changing tastes
Echoing the state of play in restaurants, imported wine consumption has grown significantly over the last decade, admittedly off a small base: from 3% to 16%.
The wines of New Zealand are, by far, the Australian drinker’s favourite, with 52.9m L entering the country in 2013 to 2014. That figure represents around 64% of all wines imported into Australia by volume. Impressive!
While Australia is home to a large, ex-pat population of 650,000 New Zealanders, the Kiwis aren’t the ones driving the trend. Research shows it is Australian-born drinkers who have developed the taste, especially for their neighbour’s hallmark super herbaceous, tropical-fruit fuelled Sauvignon Blanc.
A long way behind New Zealand, in second place, is France with 13.1m L. French wine also achieves the highest average price per litre of any importing wine country, at A$15.67 ($11.12). What’s behind this exceptionally high value? In a word: Champagne.
Australia has had a reputation as a major Champagne-drinking country since the 1850s Victorian gold rushes, and rarely falls out of Champagne’s top 10 markets. Today, Australia is the seventh-largest Champagne market in the world. The national taste for the wines of Bordeaux and Burgundy also accounts for strong demand for French wines.
Other major players are Italy, in third place with 8.5m L, and Spain, with 1.06m L. In these cases, the Australian taste is for red and sparkling wines, with an increasing interest in Prosecco and Cava. Freixenet, the biggest producer of sparkling wines in the world, owns Australian wine producers Katnook Estate and Deakin Estate, which no doubt helps with the marketing of its Cava on the domestic market.
Once, the Australian taste was for beer. It still is, for those Australians who live in Darwin, the city of the sparsely populated tropical north. Elsewhere, Australian taste is changing. Wine consumption stands at 29.11 L per person and the national taste is for white wine – but only marginally so – over red.
Australians spend around A$8.47 a week on wine. The biggest spenders live in Canberra (A$14.60 a week), the country’s capital, where the seat of government plays host to a population of well-paid bureaucrats who enjoy the highest disposable income in the country. The least likely to spend money on wine live down south on the island of Tasmania (A$5.19 a week) where household disposable incomes are 15% below the national average.
Australia shares similarities with the United Kingdom when it comes to retail wine sales. Two big supermarket chains dominate sales, leaving plucky independents to fight over the rest. Up to 77% of all wine sold off-premise is through Coles and Woolworths-owned liquor stores like Vintage Cellars, First Choice Liquor, Liquorland (owned by Coles), and Dan Murphy's and BWS (owned by Woolworths).
While there is strong growth in both the A$15.00-to-A$20.00-a-bottle segment and A$20.00-to-A$30.00, the market remains heavily skewed to the lower end, with 80% of wine sales priced at less than A$15.00 a bottle.
However, the Winemakers’ Federation of Australia (WFA) senses consumption is shifting away from the bottom end. And it suggests that discounting is one of the reasons. Lower retail prices are being passed on to consumers who, encouraged, are switching to higher-quality wines at lower market prices. In this scenario, consumers appear to be the winners, producers the losers.
Online wine buying in Australian cities is booming; University of Adelaide research reveals an already acknowledged truth: that wine buyers, frustrated by shopping centre carparks and lugging heavy boxes of wine about, now let their fingers do the buying. The universityʼs research speculates that online purchases are aimed at expensive and hard-to-find wines while, by comparison, in-store purchases are mainly driven by convenience.
Consultancy firm Wine Intelligence puts the figure of drinkers who regularly use the Internet at a whopping 79%. Increasingly, social media can also have a direct impact on wine sales. “We estimate that one in four drinkers in Australia under the age of 35 have purchased a wine brand because they’ve seen a friend post about it on social media,” suggests Wine Intelligence Australia and New Zealand manager, Natasha Rastegar.
Fittingly for the birthplace of the screwcap revolution, Australia continues to be a hotbed of closure dissent. Well, mostly. More than 70% of Aussies buying wine in any given month choose screwcap, although they still associate cork with premium wines, possibly because big names such as Penfolds Grange continue to use them.
Andrew Caillard MW, the Fine Wine Principal at Woolworths Liquor Group, works with winemakers whose wines are destined for Woolworths-owned outfits such as Dan Murphy’s. He says, emphatically, that screwcaps rule.
“Under A$25.00 a bottle, it is mandatory that wines be under screwcap,” he says.
“A lot of wines like Dogajolo from Carpineto, Riparosso from Illuminati, were under cork a while back but they’re now under screwcap,” he adds proudly. “We said, ‘You go under screwcap and your sales will double.’ And they did. All of them!”
Woolworths reserves the right to not do business with producers who don’t accept the screwcap, although, as always, there are exceptions. The supermarket monolith lists quite a number of wines over A$100.00 a bottle that happen to be under cork. The promise of having big volumes of these wines for sale, including Penfolds Grange, speaks the Woolworths’ first language: profit.
And then there are the Burgundians. “There are some places where it is a lot harder to achieve what we want,” sighs Caillard.
Regional variation
Australia is a continent, but it is also one single country. Australians all speak the same language and that pretty much also applies to local tastes in wine.
Wine Intelligence research reveals that Sauvignon Blanc (60%) is the national number one white wine, by a considerable margin, over Chardonnay and Pinot Grigio/Pinot Gris.
In red wines, the love is shared between Cabernet Sauvignon (51%), Merlot and Shiraz/Syrah. As to how a Victorian or a South Australian chooses wine, the influence of the local wine industry seems to come into play; both states have famous wine regions situated close to the capital cities. A strong local wine industry can create an initial buzz about grape varieties and wine styles that will eventually lead curious consumers to discover more from the bigger wine world.
“We have a lot more interest in cool- climate Shiraz in our Melbourne shop than in our Sydney shop,” notes wine retailer Philip Rich of well-known independent retailer The Prince Wine Store.
This, he suggests, is probably due to the large number of Shiraz producers across southern Victoria who loudly and proudly promote the style. Victorians are also the highest consumers of Pinot Noir in the country, possibly because the grape is grown in both the Yarra Valley and the Mornington Peninsula regions, both of which are within driving distance of Melbourne.
“For the first time in my 25-year career people are coming in and wanting wines of more elegance that are medium-bodied and not high in alcohol,” says Peter Nixon, business manager of fine wine at Dan Murphy’s, who also heads the chain’s wine tasting panel. “We used to have a machismo wine culture in Australia, with producers and drinkers vying for the biggest wines with the most alcohol.” No longer.
In the southern state of South Australia, the home of fabulous Rieslings from the Clare and Eden Valleys, Riesling enjoys some of its best sales in the country. But the number one state in Australia for Riesling consumption is Western Australia, which happens to be home to stunning floral beauties from the Mount Barker and Great Southern regions.
Possibly the biggest surprise is Moscato. It consistently rates well in all states, particularly in Queensland, performing better than Semillon, Chenin Blanc or Viognier.
Of all the Australian states, Victoria is considered the market most open to new wine experiences while South Australia and Western Australia are among the least open to changing their established tastes.
Over three-quarters of Australians consume alcohol. Their taste is for bottled wine followed by regular strength beer and spirits according to FARE, the Foundation for Alcohol Research and Education. Most wine is consumed in the family home; the second favourite place to consume it is at a pub; restaurants are in third place.
Interestingly, the kind of wines that on-premise businesses buy follows distinctly different rules to what supermarkets and retailers in the off-trade/off-premise are after.
“Brand and the range of wine offered are much more of an influence for those with an off-premise focus,” suggested Dr Steve Goodman, senior lecturer in marketing the University of Adelaide, in a 2014 research paper. “Whilst those of a focus toward on-premise are much more influenced by taste and (profit) margin.”
Being at the bottom of the world can have its advantages. It forces Australians to reach out and be adventurous, notably in food and now in wine. If you’re interested in entering the market? There’s a local saying for that – give it a go.
Supermarket Power
Woolworths and Wesfarmers have aggressively increased their presence in the liquor retailing market over the past five years, expanding the number of their various chain stores such as Dan Murphy’s, BWS, Liquorland and First Choice Liquor. Their combined share of the Australian alcohol retailing market is estimated to stand at just under 60%. Woolworthsʼ and Wesfarmers’ dominance of liquor retailing has given them significant power over wine producers. The market-wide discounting by these two operators has contributed to limited wholesale price growth over the past five years. The supermarket chains have also exploited their market power to reduce shelf space for branded products and push their own private-label and control-label wines.
From IBISWorld industry report C1214: Wine Production in Australia, by Brooke Tonkin, April 2015.
Australia at a glance
Australia, with a population of only 23.8m, is one of the richest countries in the world, with a median wealth of $219,500.00 per adult. It has six states and two territories that function like states. With a strong domestic wine and food culture, a multicultural heritage, and a tendency to travel internationally, Australians are not only relatively sophisticated when it comes to wine, but are also open to experimentation.
While Australia projects a tourist image that’s based on its natural wonders, the reality is that the majority of the population is urban. The federal capital, and the wealthiest city, is Canberra, but its population is a relatively small 411,000. The major state capital cities are:
The economic fortunes of Australia are strongly tied to the Chinese economy, so if China enters a recession, median wealth may fall.
Felicity Carter
