How to evaluate and choose export markets

7 things to consider when choosing an export market

Australian wine is exported to more than 100 markets around the world each year.

And while around three quarters of the value of this Australian wine is exported to just five markets, it can be worth considering diversifying into new markets, depending on where you wish to position your product. For example, is your competition with similar brands thriving with their exports? Or is there opportunity for growth in other markets that will allow you to achieve a desired price for your wine?

All markets for wine can be categorised by their levels of ‘maturity’ with regards to how much wine is already consumed, what wine knowledge already exists and what the perceptions around wine (if any) are.

New markets tend to be those where wine is relatively new to consumers. However, where there is not a high level of existing wine consumption, there can be considerable potential for consumers of alcohol to move from other beverages to wine, as economic and consumer preferences shift.

The challenge for wine businesses is to allocate enough resources to the domestic market, where there is already a demand for their wine, while also testing the waters in new markets where there is potential for growth. 

So where do you start when trying to choose and compare export markets? Here’s a basic, step-by-step flow of the top seven considerations. These include: 

1. Market insights and performance
2. Competitor analysis
3. Customer profiles
4. Price and profit
5. Market access
6. Channels to market
7. Business goals.

1. Market insights and performance

There’s no denying that investigating potential markets takes time. The good news is there’s a range of tools available to help you get the critical data you need to inform your decision.

Market Explorer

Market Explorer is a great place to start. It incorporates wine consumption, import and export data from Wine Australia and IWSR (a leading source of data and analysis on the beverage and alcohol market), along with key statistics on population size, economic indicators and the operating conditions in each market. This can help inform you on: 

• which markets drink the most wine 
• how the average wine price per bottle compares 
• which markets consume the most imported wine
• on- versus off-premise consumption
• consumption of premium wines
• wine share compared to total alcohol market
• where Australian wine is exported to; and
• where Australian wine is exported to by price point. 

Using the interactive dashboard, you can rank and sort markets according to different key indicators. Explore the various tabs and features in order to ascertain the information you’re looking for. This stage of your research should enable you to identify a small number of key markets that look promising.

Export Dashboard

The export dashboard provides comprehensive interactive data on Australian wine exports dating back to 2010. Here you’ll find headline figures for the latest release of data, as well as detailed statistics on wine exports by destination market, GI claim, variety, wine style, container type, and exporter size. An important aspect is the inclusion of year-on-year growth rates, which enable you to assess how each market is performing for Australian wine exporters.

This stage of your research should enable you to assess the performance of the key markets you selected above, narrow down your selection and identify the best products (e.g. variety and price point) for your preferred markets.

Market Insights

The Market Insights section of our website provides an extensive range of statistics, reports, articles, analysis and insights on Australia’s largest wine markets, enabling you to find out more information on these markets, such as on- and off-trade retail data and consumer insights.

Some reports are restricted to winegrape levy payers and wine exporters. To access these reports, you will need to create an account on the website with a valid wine industry ABN or exporter ID, and you will need to be logged in to view and download the reports. While some reports are restricted to levy payers and exporters, others are publicly available or can be purchased.

Market Bulletins

Wine Australia regularly releases Market Bulletins, which provide up-to-date insights on the domestic and international wine markets, creating a clearer picture for Australian wine producers and exporters.

2. Competitor analysis

Researching competitors in potential markets can give you greater insights into how wine brands are finding success (or not), as well as the price point you should be considering for similar wine products you plan to export. Using a tool like Wine Searcher, for example, allows you to search thousands of products in a variety of overseas markets. The ultimate goal of competitor analysis is to help you create a strategy that will make your wine stand out.

Note that in overseas markets, you might also be competing with a large domestic category as well as other major wine export nations such as France, Italy, Chile, New Zealand, Spain and more.

Why should I conduct a competitor analysis?

You should analyse your competitors to find out:

• how similar wines perform in the market
• where there are gaps in the market
• relevant price points
• how saturated the market is with similar wines; and
• if the market is open to newcomers.

Research the competitive environment

You should consider:

• the competition structure of the market and whether it's concentrated or fragmented
• who the main market players are
• your competitors’ size, growth, ownership and leadership; and
• the market share of your current competitors. What percentage of the market is Australian wine exports, and how big is the pie for other countries in the same market?

Define your place

Consider how you will get wine to your customers. Think about your routes to market and compare them to:

• how your competitors distribute their wine
• where your target consumers buy similar wine in your target market; and
• other channels you could use to distribute your wine that may be better than your competitors, such as e-commerce (online sales).

3. Customer profiles

Building profiles for your ideal consumer can help clarify your target market, while also informing how you should advertise your wine exports and your unique selling proposition. While it is advisable to build your customer profiles based on your product or brand, and then decide which markets to enter, the inverse is also true for some exporters. For example, you may find that once you enter a market, your target consumer becomes more obvious. In these instances, distributor and retailer metrics can be helpful. 

Your customer profiles should include information such as:

• demographics (age, gender, location, income)
• wine buying habits (regularity of wine purchases – weekly, fortnightly, etc.)
• preferred price range (low-cost, premium, etc.)
• online behaviour (particularly if you plan to market your wine through online and social media channels)
• offline channel interactions (e.g. how often do they visit bottle shops?)
• customer loyalty (repeat buyers); and
• what attracts them to wine (wine style, region, labels/bottle, premium price, brand story, etc).

You may be able to get some or all of this information from online resources, or you may need to entrench yourself in your chosen market (through market research) before you start selling to get a firm understanding of the type of customers who will likely purchase your wine. 

4. Price and profit

Getting your pricing right is a key challenge of wine exporting. And while you need a level of international price consistency, the market/s and customer profiles you choose will significantly impact how you look at pricing. 

The good news is that pricing can often be determined during negotiations with your distributor/import partner. When negotiating FOB pricing, you will need to factor in the distributor’s margin, and then compare this to other competing wines in their portfolio. Where you sit in their range can heavily influence their sales teams and increase or reduce how much focus they put on your brand.

Consider the following pricing strategies and how they may impact your market selection process. 

• Cost plus: With cost plus pricing, you calculate all the costs involved in getting your product to the consumer, then add a margin. Some markets are more expensive to export to than others, which will ultimately impact your end price.
• Competitive: With competitive pricing, you set your wine prices at the same amount or less than your main competitors in the new market. So the market you choose essentially sets your price. 
• Demand-based: Also called ‘top-down’ or ‘reverse’ pricing, you start by setting your price based on your competitors' wines. Working backwards, you then factor in your export costs and other expenses. Keep in mind that 'demand-based' involves the value your customer places on your wine. When reviewing customer profiles as above, it’s vital that you gather feedback from the market to find out what customers are willing to pay for your wines.
• Premium: This strategy is an extension of demand-based pricing. It implies that your wine is already top-quality, gold standard or exclusive. For this strategy to work, you need to ensure consumer opinion is in your favour within your chosen market. 

5. Market access

Global trading conditions and access to overseas markets is crucial to the ongoing success of Australian wine exports.

Some countries have international trade measures in place for several reasons, including to provide protection for local industries. Most trade measures impose some cost (money, time, bureaucracy, quota) on trade that alters the price or availability of the imported product relative to the domestic product.

The most common trade measure is a tariff – essentially a tax on imports that adds to the cost of imported goods. Australian wine is faced with tariffs in various export markets. However, through free trade agreements (FTAs), some tariffs are reduced or eliminated, benefitting Australian exporters. With multiple agreements not yet in force or under negotiation – and the international trading environment becoming increasingly complex – it’s important to stay up-to-date with global conditions and factor them into your decision making.  

To help you understand market access, we maintain comprehensive Export Market Guides outlining the requirements of 40 major international wine markets including tariffs, duties and taxes, as well as wine standards, labelling requirements and import and certification requirements. You need to have a levy-payer-access account on the website or be a registered exporter on WALAS to access the Export Market Guides. You can also stay up-to-date with trade announcements, events and advice via our Market Bulletins.

6. Channels to market

There are many different pathways to new markets, from direct-to-consumer strategies through to more complex arrangements involving brokers, distributors and retailers. There are also often multiple ways to approach a single market, particularly with large or complex markets such as the USA. 

Ultimately, your decision will be based upon your company’s objectives and the financial resources you’re willing to invest. Either way, it’s important you consider your potential routes to market when comparing your markets in the first place. 

For more comprehensive information on entering new markets, view our routes to market page.

7. Revise your business goals

Last but not least, review all this information and consider how it will impact your export objectives and the short-, medium- and long-term business goals you have already defined. Feed that information into your market research, and then revise your business goals as appropriate. Then, it’s simply a matter of weighing up your findings to assess which markets hold the best competitive opportunity for your export business.

Unfortunately there’s no silver bullet when it comes to choosing export markets – there are countless factors at play, the relevance of which depends on your individual circumstance, product and goals. New markets of all levels of maturity are important to evaluate, as is the continued re-evaluation of your existing markets. But taking the time to do your research and work through these seven considerations will help you to make informed decisions.