General Information about Australia
Australia is a country found in the Pacific Ocean to the south and east of the Indonesian archipelago. Despite being the sixth-largest country in the world, it remains one of the most sparsely populated countries: the population in 2023 was 25.69 million people. Again, despite being largely flat and having unfertile soils, Australia is a megadiverse country, with rainforests, deserts, savannah, and, of course, climates suitable for wine-growing. The most populous city in the country is Sydney, with a metropolitan area population of 5.3 million, followed by Melbourne, close behind on 5 million, Brisbane, at 2.6 million, and Perth, on 2.2 million.
Australia has a developed economy which is steadily growing, with a an annual GDP growth of 4.3%. Its nominal GDP per capita was US$60,443 in 2021. The country is known for its close trading ties with both the English-speaking West in the UK and the USA, as well as the rest of the Asia Pacific region, including China and Japan.
Importing Wine to Australia
Australia represents a particular challenge to the wine distributor. The positives are clear: the market is large, it continues to grow, and the country has a strong winegrowing culture of its own. But the difficulties are just as obvious: Australia is about as far from the world’s major wine producers as it is possible to be. How, then, should a small distributor proceed?
According to Wine Intelligence, Australia is ranked as the 8th most attractive wine market in the world. The change in the ranking occurred in 2022, largely due to the successful economic situation in the Australian economy. In 2021, Australia’s GDP per capita increased by 17%, and in 2022 by 7%; its population is also growing and the unemployment rate is decreasing. It is important to take into account that the share of imported wines accounts for slightly less than 20% by volume (2022) of the wine market.1
In 2022, USD $701M worth of wine was imported into Australia. This is the 16th largest in the world2:
- New Zealand ($273M)
- France ($263M)
- Italy ($90M)
- United States ($16.7M)
- Spain ($12.6M)
Of the 106 million litres of wine imported in 2023, two thirds come from New Zealand. Any distributor who can factor in transport costs, or minimise them somehow, will find a market open to wine of all origins, all the more so for their relative scarcity.
Wine Distribution in Australia
Between 2020 and 2023, we’ve seen a decline in wine sales in Australia. This applies to both imported wines and local ones, but the decrease affected local wines to a greater extent.
In the Australian market, the share of imported wines is quite low, with two-thirds of the volume of imported still wines coming from New Zealand (mainly Sauvignon Blanc), followed by 13 per cent from France and 8 per cent from Italy. In terms of imported wines by volume, Italy and France dominate in sales of imported sparkling wines 45 per cent is from Italy and 42 per cent is from France (mainly Champagne).
Wine Australia goes on to describe exactly how wine is sold. As in so many countries, supermarkets dominate the market. More than two thirds of Australian wine is sold in supermarkets or equivalent; working with Woolworths, recently renamed the Endeavour Drinks Group, is key in such circumstances, as is a low retail price. By comparison, on-trade sales account for only a fifth of sales. Though the online sector is expected to grow, up from 5% to 10% in 2023.
Wine Consumer Preferences
But what exactly do Australians choose to drink? Here again, the country bucks the trend. Where most nations prefer red by a significant margin, Australia has a slight preference for white at a third of total consumers. Bottles of red lag behind on 27%, while sales of sparkling wine are strong at just over 10%. Popular grape varieties are the usual suspects: Cabernet Sauvingon, Pinot Noir, Shiraz and Chardonna. According to IRI MarketEdge, the average bottle of wine in Australia sells at between AUD 7.39 and AUD 26.59 per 750 ml.
As noted above, wine consumers in Australia prefer local wines, occupying 83% of the market by volume (2022). If among still wines the dominance of Australian wines is undeniable, then among sparkling wines Italian and French wines are most popular.
Australia remains an attractive market for organic wines, including vegan wine. 18% of all new products recorded on Mintel’s Global New Products Database (GNPD) in Australia in 2020 were certified vegan and 12% were certified organic, indicating strong consumer preference for organic and vegan wines.3
Crucial to understanding the Australian wine market is its recent crash. In the aftermath of the Coronavirus pandemic, the government of Scott Morrison called unilaterally for an investigation into China’s handling of the virus in Wuhan. Beijing, sensitive to allegations of a cover-up, froze much trade with the country, knocking AUD 650 million from the value of the world’s fifth largest wine exporter. Australians have since voted in a new government under the leadership of Anthony Albanese, which has seen the wine market rally, with total volume expected to rise to 538.4 million litres by the year 2028.
Wine Manufacturing in Australia
Australia’s vineyard area in 2022 was 146,244 ha, with more than half in South Australia, a quarter in New South Wales, and 15% in Victoria. There are a total of 2,156 wineries and approximately 6,000 grape growers in the country. In 2022-2023, 964m litres of wine were produced in Australia, which is 24% less than the year before. The most popular grape varieties from which Australian wines were produced were Shiraz and Chardonnay. AUD $1.9b (621m liters of wine) were exported from Australia in 2022-2023.4
Sources:
- https://www.wineaustralia.com/news/market-bulletin/issue-296 ↩︎
- https://oec.world/en/profile/bilateral-product/wine/reporter/aus ↩︎
- https://my.nzte.govt.nz/article/is-australia-the-right-market-for-your-wine ↩︎
- https://www.wineaustralia.com/getmedia/c9d253cf-05ea-4417-a6b1-43ed031c5250/MI_PSI_Report_2022-23_F.pdf ↩︎
