It’s five o’clock somewhere and chances are, many the world over are relaxing with a fine glass of Australian wine. That is actually not an exaggeration. Australia’s wine has continued to capture the attention of wine connoisseurs the world over and with good reason. The price points, product quality and backstories of the generational wine producers all work well in making Australian wine a favourite.
Why is Australia extremely important as a wine producing country; quality and scale wise? Look at the statistics. It produced 10.6 Mn hectolitres of wine in 2020. 60% of it is red and 40% of it is white varieties.
Wine is produced to some capacity in every state of Australia, and the country has developed an extensive appellation system with more than 60 designated wine regions.
With its huge range of climatic and geographical conditions and vast size working in its favour, Australia is one of the most versatile wine-growing nations in the world. By 2021, over 146,000 hectares were vineyards in Australia. 39% of this was allocated to Shiraz, 24% to Cabernet Sauvignon and 21% to Chardonnay. Merlot was planted in 8% and Sauvignon Blanc in 6%.
Many of Australia’s brands have an impressive international presence. Penfolds, Jacob’s Creek, Yellow Tail, 19 Crimes, De Bortoli and Wolf Blass are among the best rated Australian wines.
Tough times yet brighter days ahead
Australian wine exports have faced many a challenge in the past few years – a global pandemic chief among them. By March 2023, Australian wine exports declined 7% in value to reach AUD 1.90 billion. In terms of volume, it declined by 1% to 620 million litres. The decrease in exports was largely due to the United Kingdom (UK). Mainly UK’s pre-Brexit demand, followed by COVID-19 resultant changes in the preferences of consumers. The total value of exports was below the previous 10-year average of AUD 2.30 billion by 18%, while volume was 15% below the 10-year average of 726 million litres.
However, the decline of UK shipments was moderately offset by the increase in shipments to the United States (US) and Canada, as shipping conditions continue to improve worldwide. Unpackaged wine is the clear winner here.
More tough times await Australian Wines globally. With high inflation squeezing the discretionary income of consumers, luxury items such as wine are often the victim in terms of how much consumers are willing to spend on it. This has added on to wine losing its share of the market to other drink categories and consumers lowering their alcohol intake in general.
The number of serves of wine in the top 20 markets worldwide has fallen by 5%, when the first half of 2022 was compared with the same period in 2021, reported IWSR. Where is this dip felt the most? In the lower price segments. This is because consumers, while purchasing wine less frequently, choose to spend more on each wine product they purchase – leading to premium wine showing a global growth. Unfortunately, this change affects Australia disproportionately. The worrying export performance is due to a large share of its exports being lower priced products.
Australia’s previous largest market for red wines was China. However, when Australia called for an investigation on the origin of COVID-19, China slapped a punitive tax. A five-year tariff of up to 218 % for Australian wine sold in quantities of less than two litres was imposed by China from March 2021.
However, all is still not lost for Australian wine. With new opportunities in Asian markets opening up with Japan and South Korea, the nation can be hopeful that things will gradually get better.
(AK)