Australian premium wine not growing as fast as key competitors

By Gemma McKenna

Published: 11 July, 2014

Australian wine is not growing as fast at the premium end of the market as key competing countries like France, according to figures from Nielsen.

While individual operators are seeing certain brands grow sales by up to 65%, overall the category is lagging behind the market average when it comes to premium wine sales.

Nielsen's Natasha Kendall told Harpers.co.uk: "I'm not too sure that we can say there is much evidence of premiumisation going on at a topline level."

She said Australian wine was still cheaper, at £5.29 MAT TA, than the light wine average of £5.33. What's more Kendall said price is growing at a slower rate for Australia than the rest of the category. "If we look at two countries which are delivering true premiumisation (New Zealand and France), the difference is pretty stark."

On average, the overall category has seen prices move up 5% in the past year, with Australia growing its price by 3%. In contrast France is up 7.4% and New Zealand 9% in the same period.

However, Kendall conceded: "It's definitely true to say that Australian wine has seen growth in the higher price bands, but this is not a trend that is going against the category and the £3 - £5 price bracket is still very significant."

Australian Vintage's Julian Dyer Australian Vintage's general manager for UK & Europe Julian DyerDyer said its over £7.50 wines are 'certainly the fastest-growing in its portfolio'.

Julian Dyer, general manager of Australian Vintage, told Harpers.co.uk that its more premium wines - those over £7.50 rrp - were "certainly the fastest-growing part of our portfolio". But Dyer said at gross level volumes on the bottom end were under pressure thanks to a combination of duty and longer term trends for drinking less. He pointed out that as the consumer drinks "a bit less" they're looking for a "better experience" and are therefore prepared to up their spend. He said there is a "renewed spark of interest in Australian wines" away from generic supplies of big volumes and towards a "reappraisal of premium tiers".

Dan Townsend, Treasury Wine Estates Dan Townsend, general manager UK and Ireland for Treasury Wine EstatesTownsend says while total Australian wines at £6 to £7 are growing at 19% MAT, Treasury's are growing at 27%.

Paul Schaafsma

Treasury Wine Estates UK general manager Dan Townsend said "consumers see Australian wine to be relevant in all areas: commercial, 'masstige' and premium". He said strong brands were driving the changes, especially in the middle ground, with Australian wines between £6 and £7 growing by 19% MAT. But Treasury's £6 to £7 wines are outperforming the market with growth of 27% MAT. Townsend cautioned: "We all have to understand that for many shoppers in a grocery environment, premium starts at £6 extra (vs the overall AUP of £5.32) - and so we believe we need to give shoppers reasons to pay that little bit more."

Paul Schaafsma Accolade Wine's general manager Uk & Ireland Paul SchaafsmaSchaafsma said the average selling price of Australian wine is lower than total wine, given 'the mass of Australian wine is still sold below £7'.

Paul Schaafsma, Accolade Wine's general manager for UK and Ireland, told Harpers it is working hard via its English cricket and Sky Sports sponsorships to promote its Hardys brand - but most especially the premium portfolio.

He added that Australian wine is still the largest country in UK supermarkets, worth £891 million and in growth of 2.7%. Meanwhile the over £7 Australian category is worth £69 million and is in growth of 15%. Schaafsma attributed the growth to retailers offering greater choice of more premium Australian wine.

Schaafsma said the average selling price of Australian wine is lower than total wine, given "the mass of Australian wine is still sold below £7". But he highlighted that this is changing, as the below £7 category is seeing significantly less growth, at 2%, than its over £7 counterparts.

Meanwhile on and off-trade supplier Liberty Wines said it is beginning to reap the rewards of a burgeoning interest in more premium Australian wines (which it defines as above £10 rrp) after weathering the tougher years. Its Grosset range has grown sales by 35% in the past 12 months to the end of May 2014, while its Cullen wine sales have jumped 62% in the same period.

David Gleave Liberty Wines' managing director David GleaveGleave says regional Australian specialists are helping shift perceptions away from Australia as 'over-commoditised'.

David Gleave, managing director of Liberty Wines, said: "Australia is certainly a growth opportunity for Liberty Wines - the quality of the premium wines, the stabilised exchange rate and the regional diversity on offer make for interesting times ahead. The emergence of smaller Tasmanian producers who produce fantastic still and sparkling wines, is a great example of something to get excited about. All these regional specialists have been able to shift perceptions away from the idea that Australian wines are over-commoditised."