Over the past week, the Australian wine sector has had two key plans released that detail the outcomes of wide-ranging consultations into priorities for investment and the areas that the grape and wine community has identified to focus on for continuing success.
Australian Grape & Wine (AGW) released Vision 2050 on 24 June, to help Australian grape and wine businesses plan for a profitable and sustainable future over the next three decades. There are five pillars of success that have been identified in the document.
Wine Australia’s Strategic Plan 2020–25 – released today, 30 June – sets out how we will contribute to these pillars in accordance with our remit (see Figure 1).
Figure 1: Mapping Wine Australia’s five strategies to Vision 2050’s five pillars
The focus of this Market Bulletin is on Strategy 1: Market Australian wine. In particular, we will look at the price points that have been identified for export growth.
Increasing the demand and the premium paid for Australian wine
To help Australian wine be enjoyed and respected globally and to build a profitable, resilient and sustainable winegrape and wine businesses, we strive to increase the demand and the premium paid for all Australian wine.
One of the ways in which Wine Australia will do this is through our marketing activities, where we aim to continually improve the perception of the quality of Australian wine, to create a platform for the commercial success of our brand owners and to facilitate in-market support and engagement for brand owners.
Over the next five years, we will continue to focus our attention on improving customer perceptions of Australian wine quality in the premium segments, where we believe value growth will be strongest.
Price points that will provide strongest value growth for Australian wine
Through the consultations for the Strategic Plan, Australian exporters from all wine regions around the country highlighted a desire to capture a greater market share in our target markets at the following price points:
- Mainland China: >RMB200 per bottle
- Canada: >C$15 per bottle
- United Kingdom (UK): >GB£8 per bottle, and
- United States of America (USA): >US$11 per bottle.
Wine sales data from IWSR supports this approach. Figure 2 below shows that in each of the target markets, the commercial, big-volume end of the market declined in the four years to 2019 and this trend has been forecast by the IWSR to continue to 2023. On the other hand, the premium end has been growing and IWSR forecasts this will continue to grow, albeit at generally lower growth rates.
The COVID-19 pandemic has disrupted these trends with sales at the commercial end boosted by a combination of panic-buying and the lockdown of the on-trade. However, the growth in premium wine sales has also continued.
Figure 2: Still wine sales volume growth rates and market shares by price point
| Market | Price segment | Historical CAGR (2015–19) | Forecast CAGR (2019–23) | Price point share of market | Australian share of price point |
|---|---|---|---|---|---|
| Mainland China | Standard and below | -7% | -8% | 83% | 7% |
| Premium and above | 4% | 4% | 17% | 31% | |
| Canada | Standard and below | -0.3% | -1% | 68% | 12% |
| Premium and above | 3% | 2% | 32% | 8% | |
| UK | Standard and below | -4% | -3% | 75% | 24% |
| Premium and above | 3% | 1% | 25% | 10% | |
| USA | Standard and below | -1% | -2% | 75% | 5% |
| Premium and above | 7% | 1% | 25% | 2% |
Source: IWSR
Figure 2 shows that, with the exception of mainland China, Australia’s share of the premium and above market is much smaller than its share of the commercial end of the market. For example, in the UK, Australia dominates the commercial end with a 24 per cent volume share but in contrast Australia holds a 10 per cent share of the premium and above segment. In mainland China, Australia holds a 31 per cent share of the premium and above segment and the focus going forward is to maintain this strong position in the market.
Wine Australia’s Strategic Plan 2020–25 and Annual Operational Plan 2020–21 (the first year of the Strategic Plan) are available here.