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New Accolade Wine GM issues a 'word of warning' as Australian wines face a battle ahead

Published:  28 January, 2016

At the Australia Day Tasting held this week in London, Accolade Wines new general manager for the UK and Ireland Rob Harrison issued a 'word of warning' that challenges lay ahead for Australian wines, which now sits below the average price of wine of £5.83 at just £5.20.

"The point I want to make is a bit of a word of warning for Australia. In terms of being fit for the future I am not really sure we are exactly where we want to be. I think there is work as an industry, and as champions of the industry, we need to do a better job of that," said Harrison.

Further he said that Australia needs do more work to better compete in the UK market going forward. "In terms of being fit for the future, I am not really sure we are exactly where we want to be. I think there is work as an industry, and as champions of the industry, we need to do a better job of that," said Harrison.

Category retail development manager Jane Robertson for Accolade wines, presented figures that paint a challenging road a head for the category in the UK market. 

"For a long time consumers were willing to pay a slight premium for a price of wine and about two years we go this flipped. The average price of Australian wine now sits below the average price of wine,' said Robertson.

Australian wines primary area of growth has been between the £4-6 range, but long-term the volume route is an issue.

"Australian wines between £4-6 is very important and where we have had the growth. You don't have to be an economic student to see that for the long-term health of the category this is not the best position to be in," said Robertson.

The issue is potentially more worrying still with the category's sales being over-indexed in the off -trade, which is facing major challenges in its own right, and the on-trade is expected to shrink this year further. Last year's figures show that 87.5% of volume share of Australian wine was sold through the off-trade, which is expected to grow to 89% this year.

Harrison said that Australia is facing a battle on two fronts that needs to be addressed.

"There is a seismic change particularly in the retail environment at the moment .  What we have seen since June of last year is unprecedented. The two key things that I think are going to shape the destiny of Australia going forward are the changes in pricing promotion and range rationalisation. Both which are already happening right now. Ultimately we need to look at what this means and address this if we are to put Australia in a good place going forward," he said.

Harrison admits that Australian wine in in the UK may have been overly dependent on discounting which is now why consumers are finding it difficult to pay above £6.

He said: "If we go back to June of last year you had half-price going every other period on key brands and Australia had a really strong share of that particular mechanic.  Essentially you had a VIP wine club for half price. We moved away from deep discounts quite significantly for the last six or seven months. The reality is that Australia was pretty heavily leverage in deep discounting. That was its thing and what it did really, really well.  That is where you have seen a lot of the growth in the £5 corridor come from."

Although Australia wines the UK and the US are struggling to grow premium Australia, China and other free trade areas have seen substantial growth in the above £10 range.

Read what Andreas Clark the CEO of Wine Australia has in store for the UK.