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Australian Wine Volumes Slump, But Value Improves As Consumers Tap Into The High End

February 6, 2019

Global export volumes of Australian wine have fallen substantially from their peak of 2007, and volume continued to slide overall last year, with bottled shipments slipping 3% to 40 million cases. But bottled shipments by value increased 7% to A$2.24 billion ($1.62b), reflecting improved demand for wines at higher price tiers, according to the trade group Wine Australia.

In the key U.S. market, there are signs of recovery—specifically in the all-important $20-and-above tier. Australian wines retailing at $20-$25 grew 16.1% in the year-to-date through November 4, according to IRI, while wines above $25 grew 15.4%. Moreover, the number of Australian wineries entering the U.S. is on the rise, reaching nearly 300 last year. That compares to a low of 234 in the lean years following Australia’s 2008 financial crisis, when a weak Australian dollar forced many smaller wineries to stay home.

At the height of Australia’s popularity, Shiraz was the calling card—particularly the high-abv Shiraz expressions that carried bold, ripe flavors. But American palates eventually tired of that style. “Shiraz was at the top, but then it started to face challenges,” says Aaron Ridgway, head of marketing for the Americas at Wine Australia. “Consumers came to think of all Shiraz labels as tasting the same, costing the same, and coming from the same place.”

While Shiraz has yet to fully regain its footing, there’s been noteworthy success with cool-climate Shiraz iterations that are lighter and spicier than the traditional style. “Shiraz is nowhere near where it was eight years ago, but it’s getting easier to talk about, thanks to styles from cooler regions,” says Aaron Meeker, sales manager at New Jersey-based Vine Street Imports, which handles more than 30 Australian wineries. “There are definitely some green shoots, with more modern (Shiraz) styles from both cooler and warmer climates,” adds Kathy Marlin, senior vice president and general manager at Negoçiants USA, a division of Winebow, which imports around 20 Australian labels.

Perhaps most importantly, there’s also now greater emphasis on the country’s regional diversity. “Australia has a multitude of regions and varieties that people have yet to fully understand,” says Ridgway. “There’s a lot beyond Shiraz. We see increased demand for Chardonnay, Riesling, Sauvignon Blanc, and even more obscure varietals like Vermentino and Grenache.” At attractive price points of $20-$35 a 750-ml., marketers are touting wines like Grenache from McLaren Vale, cool-climate Shiraz from Yarra Valley, and Pinot Noir from Adelaide Hills. “Australian wine encompasses all that and more,” says Gordon Little, co-founder of New York-based Australian Wine importer Little Peacock. “That’s a message worth pushing.”

Cabernet Sauvignon and red blends are also in the spotlight. Since launching in 2013, Treasury Wine Estates’ 19 Crimes—whose portfolio features Hard Chard ($13), Cabernet Sauvignon ($15), and Red Blend ($13) variants, among others—has taken the Australian category by storm. According to Impact Databank, the brand soared 51% to 1.6 million cases in 2018. “We’ve invested heavily in 19 Crimes through digital marketing,” says Treasury global CMO Michelle Terry. “The interactive label art and our virtual reality component, combined with the price point, have made this a standout wine.”

Meanwhile, Wine Australia continues to spread the word. Among various initiatives, a new campaign called Aussie Wine Month will launch in September, bringing 100 Australian winemakers to the U.S. for a nationwide tour that will include trade events by day and consumer events by night. —Julia Higgins

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