A world of opportunity for Cabernet Sauvignon

Cabernet Sauvignon is the world’s most popular wine, with an estimated 151 million cases of the variety consumed around the world in 2019^[1] – 11 per cent of which is estimated to be Australian^[2].

Twelve markets consumed approximately 92 per cent of the world’s Cabernet Sauvignon in 2019, these are shown in Table 1.

Table 1  Consumption of Cabernet Sauvignon wine in 2019 – top 12 markets

^{(source: IWSR)}

The IWSR reports that global consumption declined by 9 per cent year-on-year in 2019 and has decreased from 182 million cases in 2015, in line with general long-term declining volumes of wine consumption.

Where is Australian Cabernet Sauvignon exported to?

Australia’s top export markets for packaged, labelled Cabernet Sauvignon (including blends) in 2020 are shown in Table 2. Most of the markets grew in 2020, particularly the United Kingdom (UK), Canada, New Zealand, Hong Kong and South Korea.
 

Table 2  Australian exports of packaged Cabernet Sauvignon (including blends) by market in 2020

^{(source: Wine Australia Licensing and Approval System)}

China was the top destination for Australian Cabernet Sauvignon in 2019, and this variety was the second largest that Australia sent to China, accounting for 26 per cent of all packaged exports (3.4 million cases).

In late 2020, the Chinese Ministry of Commerce (MOFCOM) announced a decision to impose deposit tariffs and countervailing duty deposits on bottled Australian wine in containers of up to 2 litres. MOFCOM announced in March 2021 that deposit tariffs of between 116.2 per cent and 218.4 per cent on Australian wine in containers of up to 2 litres would remain in place for five years. Following the announcement, exports of all bottled Australian wine have significantly reduced.

USA: the world’s most attractive wine market

While exports of packaged Australian Cabernet Sauvignon to the United States of America (USA) declined by 2 per cent in 2020, it was still the second largest export market for this product.

Cabernet Sauvignon is the number one variety by value consumed in the American off-trade. Australia has a 4 per cent share of this market. Most Australian Cabernet Sauvignon is sold in the ‘popular’ price segment. However, 24 per cent is sold in the premium segment, which accounts for 27 per cent of total sales. Australian wine sales in this segment grew by 11 per cent in the year ended March 2020^[3] (see Figure 1).

Figure 1: Sales of Cabernet Sauvignon in the USA off-trade by price segment and growth in year ending March 2020: Australia compared with the total market

^{(source: IRI)}

UK: strongest growth for Australia’s Cabernet Sauvignon exports in 2020

The UK was the largest importer of Australian Cabernet Sauvignon in 2020 and had the strongest growth – up by more than half a million cases (26 per cent).

In the UK off-trade, most Australian Cabernet Sauvignon is sold between £6.01 and £8.00 per bottle. Both segments showed growth in the year ended 2 January 2021 (see Figure 2) although these growth rates were below those for the off-trade as a whole, which grew by 12 per cent in 2020 due primarily to COVID-19-related changes in purchasing behaviour. Australia has a 31 per cent share of the UK off-trade for Cabernet Sauvignon and 55 per cent for Cabernet blends, putting it in a strong position to continue to grow this market.

Figure 2: Sales of Australian Cabernet Sauvignon in the UK off-trade and growth in 2020 by price segment

^{(source: IRI)}

South Korea: a growing market for wine and with a taste for Cabernet Sauvignon

Cabernet Sauvignon dominates varietal choice in South Korea, according to IWSR, accounting for 41 per cent of ‘new world’ wines in the market^[4] in 2019 and growing by 16 per cent year-on-year. Wine Intelligence (2020) found that 54 per cent of semi-annual imported wine drinkers in South Korea have consumed Cabernet Sauvignon in the past six months, with the next most popular variety being Merlot with 18 per cent (Figure 3).

Figure 3: Reported consumption of different red varieties in South Korea in 2020

^{(source: Wine Intelligence)}

Overall, still wine consumption grew by 8 per cent in 2019^[5], in contrast with declines in most mature wine markets. Red wine has an 84 per cent share of the market.

South Korea was the ninth largest export market for Australian packaged Cabernet Sauvignon in 2020 and grew by 23 per cent (in volume).

New Zealand: demand for Cabernet Sauvignon is growing and local supply is limited

According to IWSR, New Zealanders consumed 300,000 9-litre equivalent cases of Cabernet Sauvignon in 2019. While this is not a large amount by global standards, it is an increase of 74 per cent compared with the year before. Consumption for each of the previous four years was around 180,000 cases. New Zealand produces very little of its own Cabernet Sauvignon, with just 219 hectares planted in 2020 according to the NZ Wine 2020 Annual Report. The area planted has been declining since 2011, with competing pressure for Sauvignon Blanc and Pinot Noir to meet export demand. Australia’s exports of Cabernet Sauvignon to New Zealand grew by 15 per cent in 2020, but further growth will depend on continued increases in demand for the variety in market.