The United States (US) is one of the markets pinpointed by many for growth of the Australian wine category.
But where are the opportunities for Australian wine, particularly in the post-COVID-19 market that has experienced significant changes to consumer behaviour?
To assist Australian wine companies looking to enter or expand in the market, Wine Australia has engaged respected US-based market researcher Wine Opinions to undertake a four-year research project into consumer and trade insights in the market. The research builds on a previous project with Wine Opinions that concluded in 2019 and provides a baseline for the market position of Australian wines in the US post-pandemic.
In this Bulletin, we present some of the key findings of the first round of the current research project.
Context
The US is the world’s biggest wine market and it is Australia’s number one export destination by value. Australia currently holds a 14 per cent share of the total imported wine volume and 10 per cent by value. This ranks Australia third in volume (behind Italy and France) and fourth in value (behind Italy, France, and New Zealand).
Australian wine sales are heavily weighted to the commercial/value (less than US$10 per bottle retail) end of the market, with 77 per cent share of the volume of Australia’s sales in the market, with the premium and above segment (US$10 or more per bottle) accounting for 23 per cent. Australia is ranked number two in the commercial/value segment with an 18 per cent imported market share but number four in premium and above sales with an 8 per cent share.
The commercial/value segment of the total US wine market has been in decline, while premium and above is steadily on the rise. IWSR has forecast these trends to continue. Out to 2026, commercial/value sales are predicted to fall by 2 per cent per annum and premium and above to grow by 7 per cent per annum. High inflation may slow growth in the short term.
The historical and forecast growth in premium wine sales is also supported by the results of the previous study by Wine Opinions that highlighted the growth potential for Australian wines in the US market at US$20 or more per bottle. As a result, the first year of the current project has a greater focus on growth potential for leading varietal types in the US$20 or more segment. Other areas that were explored included (but not limited to):
- determining levels of consumer interest or trial of Australian wines across varietal types
- the most critical factors for new portfolio additions for the trade
- identifying the factors that are most influential to consumer choice of a new wine to try
- tracking changes in the demographic profiles of those who regularly buy Australian wines
- establishing “quality for price” perceptions of Australian wines by price segment
- engagement with the US market promotional campaigns of Australia
- the interest in no and low alcohol wines and related “better for you” features, and
- the importance of sustainable certifications and labelling.
Two separate surveys were conducted by Wine Opinions:
- a survey of consumers, 85 per cent of which were high frequency wine drinkers, and
- a survey of the trade (importers, distributors, retailers, restaurants, media/marketers).
Best growth potential for Australian wines is at US$20 to US$25 per bottle
According to the trade, for every varietal type tested, the greatest growth potential for Australian wines is between US$20 to US$25 per bottle.
For wines retailing at US$20 or more per bottle, more than half the trade saw red blends (mainly Grenache Shiraz Mourvèdre) and Cabernet Sauvignon as having the most growth potential. Distributors gave the highest rating to Cabernet Sauvignon, while retailers were most optimistic about the growth potential of red blends. Just under half the trade saw the Shiraz as having the greatest growth potential and was rated highest by those in the on-premise trade tier.
For white wines, sparkling wine from Australia was seen to have significantly higher growth potential than Chardonnay or Riesling. The on-premise trade was also the most optimistic of the trade tiers about white wines.
For consumers who had not purchased an Australian wine costing US$20 or more in the past 12 months, unfamiliarity was by far the leading reason for not purchasing. This was agreed to by nearly two-thirds of respondents across age groups. There is a clear opportunity to improve the familiarity of Australian wines among consumers as more than half of the respondents said they were intrigued by the different wine-growing regions of Australia, with this sentiment most strong for the 21 to 39 year age group. Furthermore, for those consumers that had purchased Australian wine at US$20 or more in the last 12 months, around 90 per cent rated the quality of the wine as good or excellent.
Among the consumers who had purchased Australian wines over US$20, they were most interested in trying rosé, red blends, Riesling, and Pinot Noir.
Grape variety and region of origin are the most important factors influencing consumer new wine purchase decisions
Consumers were asked to rate the importance of a number of factors on a scale of representing their degree of influence over the purchase of a new wine. Overall, the grape variety and region of origin were the factors deemed most influential across age and gender groups, as well as buyers of Australian wines at any price level.
It is important to understand the trade’s portfolio
For the trade survey, the importer, distributor, retail and on-premise trade tiers were asked to consider a number of statements that might enter into a decision to make a new portfolio addition of a wine that would sell for US$20 to US$40 per bottle. They rated finding a wine to fill a gap in their portfolio as the most important factor, ahead of quality reputation of the wine’s region of origin, having a consistent supply of wine, and personally liking the wine. Thus, for Australian wineries looking to expand in the US, it is crucial to understand how their wines can fill a gap in an importer’s portfolio.
In-person campaign activities are crucial
Wine Opinions surveyed their trade panel to measure and evaluate the importance of a variety of wine campaign initiatives such as trade tastings, regional visits, advertising in trade and consumer publications, and webinars hosted by winemakers. Every promotional campaign considered by half or more survey respondents to be “very important” was an in-person event or experience. The most important campaigns identified were trade trips to regions, in-person trade “walkaround” trade tastings and visits to key accounts by winemakers from the region.
While this sentiment does not negate the benefits of social media campaigns, information downloads from campaign websites, and other such initiatives, it is a strong indication that the US wine trade has put the pandemic restrictions in the rear-view mirror and is once again embracing personal interactions.
Mid-strength alcohol is the sweet spot in “better for you” category of wines
Both the consumer and trade panels were asked their interest in a range of attributes common to the “better for you” category such as alcohol content, low calories/carbohydrates, low sugar, and vegan. Consumers and trade both indicated that they are most interested in wines with lower alcohol content – 7%–9% ABV for the trade and 5%–9% ABV for consumers. For the consumer panel, females were more interested than males in each of the different ”better for you” attributes.
Sustainably produced wine is important
Consumers were asked to indicate the level of importance they give to wines made by wineries that are certified for their sustainable production practices. Across all consumer segments tested, nearly all showed that approximately two-thirds of respondents considered certified sustainable production “somewhat” or “very” important in the wines they purchase. Interest is skewed to females and mostly to the under-60 age segments.
The trade panel were shown three alternatives for identifying sustainably produced Australian wines on their front or back labels:
- a statement that the wine is "Sustainably produced"
- a statement of “Certified sustainable” production, and
- a logo or “Trustmark” indicating certification of sustainable production.
The trade respondents were asked to rank them in order of their marketing value. “Sustainably Produced” was the clear favourite, being ranked first by 49 per cent of the trade, ahead certified sustainable (24 per cent) and Logo/Trustmark (10 per cent). This suggest that it is not enough to rely on just being certified but rather telling the brand story around sustainable practices is most important. Certification adds authenticity to the story.
For more information
The two reports are available to download.