Photo: Elements Margaret River

Skål! Nordic markets celebrate the diversity of Australian wine

Market Bulletin | Issue 126
Photo: Elements Margaret River
25 Sep 2018
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This week kicked off with the ‘Made Our Way’ tasting in Denmark, and will be followed by Australian Wine Tastings in Norway, Sweden and Finland.

Together these four countries represent 11 per cent of Australian wine exports to Europe by value. In the year ended June 2018, the value of exports to the Nordics increased by 1 per cent to $68 million, while average value increased by 5 per cent to $2.58 per litre. The price segment showing the most growth in volume is wines above $10 per litre, that grew by 12 per cent, although off a small base.

Figure 1: Australian wine exports to Nordic markets, 201718 (Million AUD)

These markets are characterised as having high income, an increased involvement in the ‘foodie’ culture, a high demand for organic wine, and a high incidence of cross-border purchasing to combat the rising prices of alcohol.

Denmark

Australian wine tasting Copenhagen 2017

Denmark, the southernmost country of the Nordics, is a small nation of around 5.8 million people. It is home to an estimated 3.8 million wine drinkers, who consume around 35 litres of wine per adult every year, a much higher level of consumption than the other Nordic countries[1],[2]. Also, unlike the other Nordic countries, alcohol sales are not dominated by a government-controlled monopoly.

In the 2017–18 financial year, Australian wine exports to Denmark declined in value by 6 per cent to $22 million. This decline was driven by the middle price segments, exports priced between $2.50 and $9.99 per litre. However, the market above $10 per litre has increased by 6 per cent to nearly $4 million. Driving the increase above $10 were bottled wines from McLaren Vale, increasing to nearly $1 million during the year. Cabernet Sauvignon blends, straight Chardonnay and Grenache blends priced at above $10 also experienced growth.

Norway

Australian wine tasting Oslo 2017

Norway has a slightly smaller population of 5.4 million people, a similar proportion of whom are wine drinkers, but per capita consumption in Norway is less than half of Denmark’s, at 16 litres per adult per year2.

Most wine is bought through the government alcohol monopoly Vinmonopolet, although its market share is decreasing. Norway shares its eastern border with Sweden, where alcohol is relatively less expensive, so it is becoming more common to buy alcohol in Sweden and bring it back to Norway. Alcohol sales at the airport duty free section are also eating into Vinmonopolet’s market share as Norwegians are frequent travellers1.

The value of Australian wine exports to Norway decreased by 20 per cent to $5.6 million in the year ended June 2018. However, organic wine exports increased by 17 per cent to $157,000. Although small, this segment of the market is growing, which is consistent with the other health conscious Nordic markets.

Sweden

Australian wine tasting Stockholm 2017

Sweden has the largest population of all the Nordic markets, with nearly 10 million people, 4.5 million of whom are wine drinkers1. Per capita consumption has been in a gradual decline in this well-established market; each adult now consumes around 26 litres per year2.

Systembolaget, the government alcohol monopoly, is a strong driver of consumption trends in Sweden. With well-trained staff and lofty goals around how much organic wine it offers, Swedish wine consumers are becoming more educated about what is in their wine and more willing to explore new regions and varieties. Some 21 per cent of the total wine segment belongs to organic wine, which is one of the highest shares in the world2. Sweden remains Australia’s most important market for organic wine, receiving 46 per cent of all Australia’s organic wine exports (see Figure 2).

Figure 2: Volume share of Australian organic wine exports, 2017–18

Total Australian wine exports to Sweden increased by 12 per cent to $23 million in the 2017–18 financial year, with all price points above $2.50 per litre experiencing growth. While red and white wine saw modest increases, the volume of Australian sparkling wine shipments more than doubled, illustrating the larger market trend of the growing popularity of sparkling wine. Bottled wines from McLaren Vale and Coonawarra experienced growth, while top varieties such as Shiraz (and blends), straight Chardonnay and straight Cabernet Sauvignon also increased in value.

Finland

Australian wine tasting Helsinki 2017

Finland is similar in population size to Denmark and Norway, with 5.5 million inhabitants. However, a significantly lower share of the population drinks wine compared with the other Nordic countries1. These wine drinkers also consume less wine per capita than their neighbours, at a rate of 14 litres per adult each year2. Beer is the dominant drink of choice in the Finnish market[3].

The Finnish alcohol market is also dominated by a government monopoly, called Alko. However, recent trends are affecting its dominance in the market place. Since 1 January 2018, general retailers have been allowed to sell alcoholic beverages up to 5.5 per cent ABV (compared to 4.5 per cent previously), increasing the availability of lower-alcohol beverages in market. Additionally, high tax rates on alcohol are driving frequent wine drinkers to purchase wine from a ferry or a retailer in Estonia, where relative prices are lower1

Figure 3: Australian wine exports to Finland (million AUD)

As illustrated in Figure 3, Australian performance in Finland has been increasing in strength over the last 5 years, growing by 14 per cent in value on average. Export growth remained steady in the last financial year, growing by 7 per cent to $17 million. Exports valued at above $10 per litre grew by 22 per cent in value to $2.3 million, while exports below $2.50 also increased, by 34 per cent to $7 million. Driving growth above $10 were bottled wines from Barossa Valley, Tasmania and Adelaide Hills, while varieties such as Grenache blends, Pinot Noir and Riesling also experienced good growth.

Wine Australia’s Export Market Guides provide valuable information for levy-paying exporters looking to enter the Scandinavian markets.

 

[1] Wine Intelligence

[2] International Wine and Spirit Record

[3] Euromonitor


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