Laura Jewell MW looks at opportunities for Australian wine in the UK and Europe
With the latest UK Europe Export Report on Australian wine having just been published, Laura Jewell MW gives her insight into the state of the Australian wine in a range of markets and looks at the changes, challenges and opportunities that lay ahead.
UK Europe Export Report - Australian wine in the Nordic nations
As we have recently returned from our annual tasting events in the Nordic countries, I thought I would start with some observations on these small but important markets. It can often seem quite daunting to approach the monopoly countries in particular, with their market dominance of up to 80 or 90%. However, we were delighted to be joined at our trade tastings by the buyers of the monopoly companies in Norway, Finland and Sweden, who each gave us some insight into how they work. In Norway, wine sales are heavily diluted by cross border sales, with an estimated 30% of Vinmonopolet sales being lost to ferry and airport sales. Pierre Emmanuel Marchés, Product Manager for the Vinmonopolet, explained their tender process, logistics challenges, and the different tiers of ranges available. Higher price point wines are in growth, and there is a move away from the large tenders for bulk and bag-in-box, which has had a big impact on Australian wine volumes due to the dominance of some of the brands.
In Finland, the shift is also away from lower priced and bulk wines to premium bottled wines. The monopoly here is going through a major change, with the development of their on-line service which will list 10,000 products (currently about 5,700). They have changed how they allocate wines to stores, based on size and sales profile, and analyse the market based on past sales and future trends. Bag-in-box is still popular, but with a shift to smaller sizes and more premium prices, and there is strong growth in the €10 - €15 per bottle level. Australia is in 6th place in terms of market share, and in growth.
Over in Sweden, the Systembolaget dominates and drives the trends toward organic and low/no alcohol products. Bag-in-box has settled at about 50% of their sales and they have improved the offering in the frequently changing temporary range, where wines from 150 – 1000 SEK are creating excitement in the category. There is no monopoly in Denmark, but the market is led by the multiples who account for 85% of sales, mainly through Coop and Dansk. There is a big cross border trade with Germany, where there is no duty on wine.
However, the opportunities in Denmark are in the booming restaurant scene, and the smaller importers and independent retailers, and not just centred on Copenhagen. There is growing interest in natural and biodynamic wines and, at the other end of the scale, sweet moscato styles, but red wines still dominate the Australian imports. In all of these markets, the hotel and restaurant trade presents the biggest immediate opportunity for premium Australian wines, not necessarily in volume, but in appetite for new wines and customers with a desire to learn about our regions and varieties.
UK Europe Export Report - Australian wine in the UK: still number 1
There is always a caveat with the export figures in that there is a lot of bulk wine that is bottled and then re-exported to other countries, which we cannot capture. Nowhere is this more obvious than the UK, where most of the major Australian brands are bottled and then distributed to other European markets. The recent crises in the exchange rate are unlikely to change this anytime soon. Four of the top 10 brands in the UK are from Australia, continuing to drive growth in the multiple retailers and maintaining Australia in number one place. The ranges in the multiples seem to have settled down after the major cuts earlier in the year, and there is a move towards more premium wines across the board, from Waitrose to Tesco, Oddbins to M&S. Consolidation among the suppliers has also levelled out, with the integration of Conviviality and Bibendum continuing and, on a smaller scale, the move of the portfolio from Hallowed Ground to Hallgarten Druitt Novum.
The buzz in the market is around the independent retailers, many of whom are moving to a mixed offering of shop and wine bar, with Enomatic machines offering premium wines by the glass with cheese and charcuterie platters. In the on-trade, we are talking to the younger sommeliers and bar staff who are looking closely at new styles of wine, be they natural or new wave. Our Artisans of Australian Wine tasting in a nightclub in Shoreditch attracted almost 300 such visitors, all keen to taste the wines from Ochota Barrels, Ruggabellus, Mac Forbes, Timo Mayer and Patrick Sullivan to name but a few. And we still had Oz Clarke and Steven Spurrier there too. As one winemaker put it:
‘The value is mega. It would be rare, if ever, that the winemakers and brands involved would get together in Australia, let alone in the UK. Showing a united front like that elevates everyone and should have changed some minds about Australian wine.’
Australian wine post Brexit
Pricing post Brexit is the elephant in the room that everyone will have to address, now, in six weeks or six months and its does not just affect the Australians. Prices will rise across many countries of origin, and may have an impact before the key Christmas trading period, although some suppliers have said that they will not make any moves before the first quarter of next year. David Gleave MW of Liberty Wines said “’We are seeing increased interest in, and rising sales of, premium Australian wines in the premium on trade (i.e. over £25 a bottle) and the independent off-trade (over £10 a bottle). This increase in sales is linked to stylistic and regional diversity. Chardonnay from many regions, dry, classic and intense Rieslings, cool climate Pinot Noir, Shiraz in all its diversity, modern Grenache, classic Cabernet Sauvignon and other varieties are all doing well. These wines need to express great individuality in order to forge for themselves an identity that is distinct from the mass market brands that are on the supermarket shelves. The positive thing for the on trade and the independent retailers is that they have the premium Australian field almost solely to themselves, so they are enjoying the challenge.’
Whatever happens over the next two years as the UK extracts itself from the EU, the UK will continue to be the benchmark in the wine market. China, the US, and the fine wine market all look to the UK to follow the trends. So, my challenge to Australian wineries is to think long-term and make sure you invest in this market. As Michael Hill-Smith MW of Shaw & Smith says
“’The UK is an important market for us. The UK trade and media have an in-depth understanding of Australian wine; many have visited our regions and understand both our traditional and “new wave” styles. We have many years of work and friendship invested in this market and plenty untapped potential if we are prepared to put in the time and effort.’
Laura Jewell is a Master of Wine and is Wine Australia’s Head of Market EMEA.
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