The United States (US) is the world’s biggest wine market. According to the IWSR, still wine sales for the US in 2021 totaled 314 million cases, with a value of US$34 billion. Until the COVID-19 pandemic hit in 2020, there were fifteen years of consistent growth, with value growing by 3 per cent per annum over that period. With the impact of the pandemic, the value of sales declined by 1 per cent in 2021. However, the IWSR has forecast value to grow by 1 per cent per annum out to 2026.
By value, the US still wine market is split 57 per cent domestic and 43 per cent imported wines. For imported wine sales, 57 per cent of value is commercial/value (less than US$10 per bottle retail) and 43 per cent is premium and above (US$10 or more per bottle). Figure 1 shows that the commercial/value segment has been in decline while premium and above is steadily on the rise.
Figure 1: Value of US imported wine market by price segment
Source: IWSR
IWSR has forecast these trends to continue. Out to 2026, commercial/value sales are predicted to fall by 2 per cent per annum and premium and above to grow by 7 per cent per annum. High inflation will likely have an impact in the short term.
Australian wine currently holds a 14 per cent share of total imported volume and 10 per cent by value. This ranks Australia third in volume (behind Italy and France) and fourth in value (behind Italy, France, and New Zealand). Australian wine sales are heavily weighted to the commercial/value end of the market, with 77 per cent of the volume, with the premium and above segment accounting for 23 per cent. Australia is ranked number two in the commercial/value segment with an 18 per cent imported market share but number four in premium and above sales with an 8 per cent share.
The premium and above segment offers the biggest growth opportunity for Australian wine. The total retail value of Australian premium wine sales has risen by 10 per cent per annum since 2012. Wine Intelligence research also shows that 53 per cent of Australian wine drinkers in the US in 2022 associated Australian wines with the term ‘expensive/fine wines’, up from 38 per cent in 2010. Looking forward, growing Australia’s market share to 10 per cent by 2026 would yield an additional 1 million cases and US$170 million in retail sales. The commercial/value segment is more challenging as the Australian category would need to grow in a declining market. That said, growing Australia’s share to 20 per cent would yield an additional 700,000 cases and US$100 million in retail sales. Wine Intelligence research shows that 90 per cent of US wine drinkers associate Australian wine with the term ‘wines which offer good value for money’ and 83 per cent indicated Australia ‘has wine brands that I recognise’.
The US is Australia’s biggest wine export destination by value and second biggest by volume. In 2021–22, Australian exports to the US grew by 9 per cent in value to $436 million and 10 per cent in volume to 139 million litres. The number of Australian exporters also grew, up by 44 to 306. This is the largest number of exporters to the US since 2007–08.
Figure 2 below shows that both the volume and value of exports to the US have been on an upward trend since October 2021.
Figure 2: Exports to the US by volume and value
Source: Wine Australia
There was growth in almost all price segments in 2021. At below $2.50 per litre, value grew 20 per cent to $75 million driven by unpackaged exports. However, the $2.50 to $4.99 per litre range, which accounted for 60 per cent of the total value exported to the US in 2020–21, declined by 3 per cent to $262 million.
There was very strong growth in all price segments at $5 or more per litre, except at $100 to $199.99 per litre. The total value at $5 or more per litre grew by 47 per cent to $100 million. The strongest growth came at $10 or more per litre, up 57 per cent in value to $61 million, the highest level since 2009.
Figure 3: Exports to the US by price segment ($ million FOB) year ended June 2022
Source: Wine Australia
The stronger growth in Australian premium wine exports is consistent with the overall trend in the US market. There are differences in performance in the US market within the price segments by variety. At below $5 per litre, there was growth in some key white varieties, notably Chardonnay (up 5 per cent to $100 million), Pinot Grigio (up 25 per cent to $43 million) and Sauvignon Blanc (up 15 per cent to $14 million). The major two red varieties declined – Cabernet Sauvignon (down 10 per cent to $49 million) and Shiraz (down 3 per cent to $35 million). There were also increases in Merlot (up 1 per cent to $27 million) and Pinot Noir (up 4 per cent to $11 million).
At $5 or more per litre, the two major red varieties were growth drivers. Exports of Shiraz to the US grew by 50 per cent to $42 million and Cabernet Sauvignon by 22 per cent to $21 million. These two varieties accounted for two-thirds of the exports in this price segment. Off smaller bases, there was also growth in a range of other varieties, including Chardonnay (up 28 per cent to $7 million), Sauvignon Blanc (increasing four-fold to $3.7 million), Pinot Noir (up 85 per cent to $2.5 million) and Grenache (up 25 per cent to $2.3 million).