Did someone say Chardonnay?

Chardonnay does not always get the attention it deserves. Red wine, particularly Shiraz, has tended to dominate recent stories of Australia’s export success, while Sauvignon Blanc has overshadowed other white wines on the domestic market for many years, currently accounting for 1 in every 8 bottles of wine purchased on the Australian domestic off-trade retail market^[1].

This week, we look at opportunities for Australian producers of Chardonnay, described by Jancis Robinson as ‘the most famous vine variety of all’ because it has almost no synonyms and therefore its name is widely recognised worldwide.

Chardonnay is the fifth most planted winegrape variety in the world, with 201,649 hectares of plantings worldwide in 2016^[2], which was more than Syrah (Shiraz) with 181,185 hectares. The top four are Cabernet Sauvignon, Merlot, Tempranillo and Airen.

Australia has approximately 10 per cent of the world’s Chardonnay plantings and is the third largest grower of the variety after France and the USA.

Chardonnay production in Australia

Chardonnay is extremely important to the Australian wine sector. It is the second most planted variety in Australia, and the largest white. The crush of Chardonnay in Australia grew from 1000 tonnes in 1979 to 28,000 tonnes in 1989 and reached a peak of 428,000 tonnes in 2008.

In 2020, Chardonnay accounted for 42 per cent of the crush of white grapes and its crush of 285,000 tonnes was more than the next 4 white varieties^[3] put together.

Chardonnay is an extremely versatile variety that thrives in a range of climatic conditions. It is grown across all states in 57 of Australia’s 65 geographical indication (GI) regions, from the Granite Belt (Queensland) in the north to Tasmania in the south, and from Margaret River (WA) in the west to Hastings River (NSW) in the east.

The diversity of styles that can be achieved with Chardonnay is reflected in the range of prices paid for the grape variety. In 2020, the average price paid by region for Chardonnay ranged from $400 to $3952 per tonne. The top 10 regions in terms of the average price paid for Chardonnay grapes are shown in Table 1.

Table 1: Top 10 GI regions by average price paid for Chardonnay grapes in 2020

^{Source: Wine Australia National Vintage Survey 2020}

Chardonnay on the domestic market

Chardonnay is the fifth largest variety/wine style by value sold in the Australian off-trade retail market, with retail sales of over $325 million in 2019–20 (IRI MarketEdge – July 2020).

The average value for Australian Chardonnay in the year ending 5 July 2020 was $15.85 per 750 ml. The largest price segment for off-trade Chardonnay is from $6.00–9.99, but the strongest growing price segments were the higher price segments (see Figure 1).

Figure 1: Share of total Chardonnay sales and annual value growth by price segment (YE 5 July 2020)

^{Source: IRI MarketEdge}

Table 2 shows the average price per bottle and year-on-year value growth rates for Chardonnays from selected (larger) GIs. Once again, the range of prices for Chardonnay is evident.

Table 2: Average price per 750 ml and annual value growth rate by GI for Chardonnay on the Australian domestic off-trade market

^{Source: IRI MarketEdge 05/07/20}

In the on-trade (restaurants, wine bars etc.), Chardonnay has the largest share of white wine by-the-bottle listings on menus and wine lists, with a slightly higher percentage than Sauvignon Blanc (20 per cent compared with 19 per cent) – according to Wine Business Solutions^[4]. The share of listings for Chardonnay grew by 4.5 per cent in 2019, more than any of the other top 10 white listings except for Vermentino (up by 20.6 per cent from a low base of 1.6 per cent).

The region with the most listings in 2019 was Margaret River, with 15.2 per cent, followed by Yarra Valley with 11.4 per cent. Both grew their share slightly compared with the year before (up by 3 per cent and 5 per cent respectively). The top four Australian GI regions by average bottle listing price were the same as in the off trade but in a slightly different order: Tasmania ($85.54), Margaret River ($80.21), Yarra Valley ($78.92) and Mornington Peninsula ($72.02). See Figure 2.

Figure 2: Number of Chardonnay by-the-bottle listings and average price by region (Australian on-trade)

^{Source: Wine Business Solutions}

Australian Chardonnay overseas

Australia exported more than 166 million litres of Chardonnay in 2019–20 valued at around $330 million free on board (FOB), with the top 10 markets by value being the United States of America (USA), United Kingdom and Canada (see Table 3).

Table 3: Top 10 markets for exports of Chardonnay in the year ended June 2020

^{Source: Wine Australia export approvals data}

The Wine Australia Market Explorer shows that, for Australian wine labelled as Chardonnay or a Chardonnay blend, there is strong long-term growth^[5] in exports to the USA, the Netherlands, Japan, China, Denmark, Belgium and Singapore (see Figure 3).

Figure 3: Top 10 markets for Chardonnay and Chardonnay blends by value for YE June 2020

^{Source: Wine Australia Market Explorer}

Looking at the exports of Chardonnay and Chardonnay blends by GI^[6], the largest GI region^[7] by value is Margaret River, followed by the Adelaide Hills and Padthaway. The highest average value per litre of the top 10 was Yarra Valley ($17.64), while Padthaway had the best long-term growth rate (see Table 4).

Table 4: Selected GI claims for exports of Chardonnay and Chardonnay blends in YE June 2020

^{Source: Wine Australia export approvals data}