Image source: Drobot Dean - stock.adobe.com

Getting connected: search engine trends of Australian wine

Market Bulletin | Issue 107
Image source: Drobot Dean - stock.adobe.com
15 May 2018
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The modern consumer is busy. According to the 2016 ABS Census data, 22 per cent of couple families in Australia have both partners working full-time and in another 22 per cent one partner works full-time while the other is employed part-time. This results in many families having restricted time outside of work for free time and shopping. In Australia, 9 out of 10 people are connected to the internet through some sort of device, whether it be by mobile, laptop, or tablet. The internet is an incredibly powerful tool to help busy consumers make quick, but informed, purchasing decisions, and for making the purchases themselves. It is projected that within the next few years, 8 out of 10 purchase decisions will be made online (IRI MarketEdge).

What does this mean for wine?

In Australia, online purchasing of wine is still relatively low in occurrence, but growing. According to IRI MarketEdge, online purchases of alcoholic beverages have a 17 per cent penetration rate, i.e. 17 per cent of those who have shopped online have bought alcoholic beverages. When you compare this with other products such as clothing and footwear, which have a penetration rate of 63 per cent, it is evident that there is still room for growth for wine in this space.

According to Wine Intelligence, the top three motivations for online purchasing of wine for regular wine drinkers in Australia are convenience of delivery, better value for money, and simple ordering process. Wine consumers are looking for a convenient way to make informed decisions on what wine to buy and an easy ordering process once they have made their decision.

Source: Wine Intelligence

Wine-Searcher data

In order to understand where the opportunities are, it’s important to consider what the data is showing now and how this has changed.

One source of this information for the wine sector is Wine-Searcher, an online database and search engine that brings together wines and prices from merchants globally. For a given wine, it will provide reviews, recommended food pairings, and prices from merchants so that consumers can make an educated decision on where to buy their wine.

This database has been analysed for Wine Australia with respect to Australian wine to report on the trends for how it is being offered (online or in store) in different countries, and what regions and varieties are growing in offers (stock keeping units or SKUs).

Australian wine producers that have offers in Australian merchants has risen slightly in the past year, by 0.6 per cent to 2124. However, the number of Australian producers with an active online offer for their wines experienced a large jump in the second half of 2017 to reach a 65 per cent share of all producers.

Source: Wine-Searcher

The number of merchants in Australia offering Australian wines has increased by 14 per cent to 1451 businesses, including companies that offer online purchasing of wine. As would be expected, merchants who do not offer any purchasing online are dwindling, down by 8 per cent in the last year to 275. Turning our focus overseas, the number of merchants outside of Australia who offer Australian wines for sale has been stable this year at 3695.

As illustrated below, the majority (63 per cent) of offers of Australian wine globally are overseas. This aligns with the fact that 61 per cent of the volume of wine produced in Australia is exported, while 39 per cent is sold domestically. Total offers globally increased by 3 per cent to 192,197.

Source: Wine-Searcher

The United States of America (USA) is the second largest market for offers of Australian wines, after the domestic market. The USA is also well ahead of any other overseas market in total number of offers, although it should be noted that China, Australia’s number one destination for wine by value, has not been included in this analysis.

There are several factors that can be contributing to this, including that the USA is the largest wine market in the world, the geographical spread of the USA and its large population leading to many different merchants in each state, and the high growth rate of online shopping driving the number of offers available. Online alcohol sales in the USA grew by 33 per cent in 2017, according to Slice Intelligence. This level of growth is being attributed to consumers becoming more accustomed to finding what they want online and having it delivered, also known as the ‘Amazon effect’.

Source: Wine-Searcher

Over half of all global offers have South Australia listed as the state of origin, and growing by 5 per cent per annum. Western Australia grew by 6 per cent in the past year, equating to over 1000 more offers available for purchase this year. Tasmania also experienced a respectable growth rate of 5 per cent, although off a lower base.  

State of origin by frequency of offer

Source: Wine-Searcher

Consistent with production, the top three varieties in global offers are Shiraz, Cabernet Sauvignon and Chardonnay. All 3 are growing at rates around 5 per cent. Pinot Noir comes in at number 4, growing 2 per cent. Grenache is also experiencing encouraging growth with both Grenache–Shiraz–Mourvedre blends and single variety Grenache growing at 7 and 11 per cent respectively.

Source: Wine-Searcher

It is clear that convenience and access are clear drivers for the growth in online sales – and with increasing numbers of brands and more outlets offering online access it seems the growth curve will continue.