Australian Wine In The Midst Of An Upmarket ShiftAugust 8, 2017
Australian wine has faced an uphill climb in the U.S. for a long time, but lately there’s been progress at the above-$15 level.
According to Impact Databank, Australian wine shipments to the U.S. slipped 12% to 16 million nine-liter cases in 2016, down from 22 million cases in 2010. However, helped by an improved exchange rate and a focus on premiumization, value increased by 3% to A$458 million ($347m), with wines above A$10 a liter—corresponding to $15 a bottle and up at U.S. retail—growing by 23% to A$41 million ($31m), according to Wine Australia. Overall, the $15-plus Australia category has expanded by nearly 60% in the U.S. since 2012.
“Right now, things are difficult for Australia at under-$10, but exporters are getting more confident in putting premium wines into the system,” explains Aaron Ridgway, head of market, Americas for Wine Australia. “Around 90% of the category in the U.S. is under $10. If we could grow above-$10 wines to 15% or 20% of the market, it would really show the amazing diversity that exists at the top.” The Australian federal government, which has committed A$50 million ($38m) to stimulating Australian wine exports over the next three fiscal years, is backing the premiumization effort.
The Australian category in the U.S. is dominated by big-volume brands like Deutsch Family’s Yellow Tail (7.8 million cases), Treasury Wine Estates’ Lindemans (1.5 million cases) and The Wine Group’s Fish Eye (1 million cases), which all sell at below $10. But Deutsch and TWE among others are increasingly on the move at Australia’s premium end as well. TWE’s millennial-focused 19 Crimes label ($12-$25) nearly doubled to a half-million cases last year, earning Impact “Hot Brand” honors. TWE is also looking to revive interest in its Penfolds franchise with Penfolds Max’s ($25), a super-premium range launched in May. And it’s further targeting younger LDA consumers with Samuel Wynn & Co. ($14), a new Aussie lineup slated to debut in the U.S. early next year.
“With Penfolds, we’ve really only dabbled in the U.S. to this point,” Michael Clarke, TWE’s CEO, told SND earlier this year. “Looking into our 2018 fiscal year, we plan to invest behind Penfolds and grow that brand in the U.S. We’ll also be extending 19 Crimes, and we’ve selected other propositions from Australia—focusing on the luxury and masstige segments—that we think can work in the U.S. as well.”
Likewise, Casella Family Brands and Deutsch have partnered to relaunch the Peter Lehmann brand, recently unveiling new packaging and a more streamlined portfolio. Peter Lehmann’s U.S. push centers on Clancy’s Red Blend ($16), Portrait Shiraz and Portrait Cabernet Sauvignon ($19). “We’re excited about Peter Lehmann because that price segment of Australian wines is beginning to grow again,” CEO Peter Deutsch recently told SND. “Also, over the next few years we’ll begin to launch some very limited wines under the Casella brand name, which we’ll seed in various markets.”
Palm Bay International is also eyeing gains at Australia’s higher end. The New York-based importer added Australian Vintage Ltd.’s Tempus Two wines ($15-$20) to its U.S. lineup in June, with expectations that the category will continue to move upscale in the coming years. —Christina JelskiSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.