Europe is an important destination for the Australian wine category. In the 12 months ended May 2020, 330 million litres valued at $600 million free on board (FOB) was exported to Europe. More than 100 million litres of Australian wine valued at $230 million was shipped to European destinations outside of the United Kingdom.
In most regions around the globe, restrictions associated with the COVID-19 pandemic have impacted wine consumers’ social, shopping and drinking habits. Wine Intelligence recently released COVID-19 impact reports on three key European countries – Germany, the Netherlands and Sweden and it is these three key markets that our Market Bulletin will consider this week.
Germany is the biggest imported wine market in Europe. In 2019, 260 million cases of wine were sold at a retail value of US$12.5 billion.
Germany has managed the COVID-19 crisis well, with a lower population of severe cases and fatalities than in many other countries. This has been attributed to its well-funded health system, technological edge in testing for the virus and decisive leadership from its government.
According to Wine Intelligence, wine consumption frequency in Germany had increased prior to the COVID-19 crisis and has remained at an elevated level throughout the lockdown. This is due in part by swapping some of the lost on-trade and social occasions, by more in-home drinking with meals and online catchups with friends. Germans are also maintaining their previous patterns of spending on wine to drink at home – unlike other markets, where spend has fallen away. Furthermore, online channels experienced a noticeable rise in usage among German wine consumers during lockdown, in addition to the big discount retailers.
Since the pandemic, Australian exports to Germany have increased. In the 3 months ended May 2020, the value of exports increased by 25 per cent in value compared to the same period in 2019. In contrast, in the three months ended February 2020, exports declined by 14 per cent compared to 2019. Overall, in the 12 months ended May 2020, Australian exports to Germany increased by 0.5 per cent to $49.4 million.
The Netherlands is the fourth largest imported wine market in Europe, with sales of 39 million cases valued at US$2.6 billion.
As COVID-19 hit the Netherlands in March 2020, the public was advised to restrict travelling to and from ‘affected areas’ and when the crisis rapidly worsened, schools, offices, restaurants and bars were closed. However, there was no complete lockdown.
Wine Intelligence reports that regular wine consumption frequency was trending up slightly prior to lockdown and has now fallen back to April 2019 levels, particularly driven by Gen Z consumers and those with low wine involvement. All occasions experienced declines in wine consumption frequency during the lockdown, with formal/celebratory occasions suffering the most due to social restrictions. Spend per bottle on wine to drink at home was virtually unchanged by the lockdown.
Australian exports also have experienced an uplift to the Netherlands. While Australian exports declined by 6 per cent to $41.2 million in the 12 months ended May 2020, in the three months to May, exports increased by 8 per cent compared to 2019.
Sweden is Europe’s sixth largest imported wine with sales of 22 million cases valued at US$2.2 billion.
Sweden adopted a less restrictive approach to the COVID-19 pandemic than most countries. While it discouraged large gatherings, most everyday social activities were allowed to continue. Bars and restaurants remained open, though with social distancing restrictions in place. Sweden’s wine consumers were therefore faced with a less extreme change to their lifestyles and drinking habits compared with consumers in other countries.
As a result, Wine Intelligence reports that the behaviour of wine drinkers in Sweden has changed less dramatically. During the impact of the pandemic, wine consumption of still wine and other beverages remained fairly stable. However, wine consumption frequency by occasion has fallen across the board, with social formal occasions being the biggest casualties, despite these not being officially restricted in the same way as other countries. Like many markets, the biggest channel winner for wine purchase was online, led by younger Swedish wine drinkers.
Australian exports have also jumped since the advent of the pandemic in Europe. In the three months ended May 2020, the value of exports to Sweden increased by 26 per cent. Overall, in the 12 months ended May 2020, Australian exports to Sweden increased by 8 per cent to $24.1 million.