The outlook for the domestic market, where approximately 40 per cent of Australia wine is sold, is optimistic, with many positive signs for winemakers after a long period of flat sales and strong competition from imports.
Australian wine sales in the domestic off-trade market grew by 1.3 per cent in volume and 4.2 per cent in value in the 12 months to 2 July 2017, according to figures from IRI Market Edge Liquor. This equates to an additional 460,000 cases of Australian wine being sold in the past financial year.
This growth reflects data from the International Wine and Spirit Record (IWSR), which shows that per capita wine consumption in Australia increased to 29.6 litres per annum in 2016, after five years in decline. This is the 16th highest in the world and compares with French consumption of 49 litres per adult per year, the highest in the world even though it has been declining for many years. The IWSR has also forecast that wine sales will continue to grow by 1.4 per cent per annum over the next five years.
In good news for Australian wine producers, the volume of imported wine declined by 10 per cent or nearly 9 million litres over the past 12 months and is at its lowest level since 2010–11 (source: ABS). Value also declined (by 6 per cent) and volumes declined from all of the top five importing countries except Germany. Italy and France gained market share from New Zealand thanks to the popularity of sparkling wine, including Prosecco; however, NZ still dominates with 58 per cent of the imported wine market.
Another positive indicator is the trend towards drinking higher priced wines. Australian wine sales at below $10 per bottle (off-trade) declined by 1 per cent, while sales above this price increased by 8 per cent in the 12 months ended 2 July 2017, according to the most recent IRI Market Edge Liquor figures. This trend is particularly apparent for Shiraz, where 80 per cent of volume growth was at $10 per bottle and above, compared with Sauvignon Blanc, where 85 per cent of growth was wines below $10 per bottle.
Wine Intelligence has identified a number of wine consumer trends in its most recent Australian Wine Market Landscape report. The report forecasts that strong growth in lighter style wines, the rosé category (particularly among the younger generations - see below) and the sparkling wine category will continue. Australian wine consumers are also increasingly looking for diversity in wine offerings and becoming familiar with alternative varieties, which represents another opportunity for local producers.
Australian Wine Market Landscape Report - Rosé drinkers
*2017 data compared with 2016
Research Base - Australian regular wine drinkers who drink rosé (n=364)
Source: Wine Intelligence - Australian Wine Market Landscape report