The silver linings for Australia’s wine producers

23 October, 2020 by Andy Young

As COVID and climate change cause unprecedented turmoil with bushfires, drought and a global pandemic, a new report from Wine Intelligence suggests there are still some positives for Australia’s wine producers.

The Australia Wine Landscapes 2020 report highlights that while there has been massive disruption caused by hits to the hospitality sector, as well as international tourism and Australia’s economy premiumisation and local spending is helping.

Advertisement

Report authors Richard Halstead and Ben Luker said: “The unprecedented bushfires during the past 12 months have left physical scars on the landscape as well as mental scars on everyone who works in the wine sector.

“On top of this has come another unprecedented crisis in modern history.

“The Covid-19 pandemic has caused massive disruption to the Australian economy and in particular the hospitality sector on which the wine industry depends. And that’s before one considers the potential upheaval in export markets arising from the UK’s exit from the EU and growing trade tensions with China.

“However, there are still plenty of silver linings in evidence, some of which are apparent in the usage and attitude data about Australian wine consumers.

“The bushfire and Covid crises have provoked a strong and sustained outpouring of support for Australian wines from Australian wine drinkers, who have increased their purchase levels of domestic wines at the expense of imports.

“At the same time, the longer-term trends of spending a bit more on a bottle of wine remain in evidence, across all occasions and in all settings (though mostly, of late, restricted to off-premise).”

While these are silver linings in the current COVID climate, the report does look into some longer-term concerns for the category as fewer Australians are drinking wine than at any point in the past five years.

The report claims that more than two million adults have exited the category since 2015.

Halstead and Luker wrote: “At the root of this lies a combination of factors, of which the allure of other, more dynamic alcoholic beverages, and the general reduction in alcohol consumption appear to be major drivers.

“On the plus side, these category leavers tended to be low-frequency drinkers to begin with, and the core weekly drinking population looks stable.

“On the downside, the wine drinker population pyramid is starting to look unnervingly top-heavy, with the average age of Australian wine drinkers rising as the category struggles to entice the 18-24s to become wine drinkers.”

The pair also said that warning signs are apparent in the alcohol portfolios of the nine million regular wine drinkers, adding: “Gin and craft beer are growing their audience, and most likely siphoning off some of the traditional wine ‘moments’ such as the social outdoor or pre-dinner occasion.

“Most concerningly, these two alcohol categories are strongest among younger drinkers, suggesting that wine is going to have a bare-knuckle fight over the next decade to hang onto these consumers as they enter their 40s and 50s.”