Shiraz – an Australian love affair

Joe Czerwinski recently featured the regional diversity of Australian Shiraz in the US magazine Wine Enthusiast, stating ‘Blessed with an influx of soulful offerings, there’s no better time to get (re)acquainted with Shiraz.’

Australia takes the lead role in Shiraz on many measures. It is a key variety in our historical export success, but also a key to the future as well.

Wine Australia Senior Analyst Mark Rowley recently presented at the NSW Department of Primary Industries Shiraz workshops, examining some of the key trends that are evolving for Shiraz. Following are some highlights from his presentation.

Global production

Australia’s total Shiraz plantings are only exceeded by France. However, the variety is much more important for Australia, accounting for 27 per cent of our total vineyard plantings compared to 8 per cent for France. The chart below illustrates that Australia is the clear leader for Shiraz – and this is a claim that cannot be made for other varieties.

Shiraz plantings by origin, 2010

Domestic production

Across Australia, premium prices (A$1500 per tonne and above) are paid for Shiraz grapes. The largest regions include Barossa Valley, McLaren Vale, Eden Valley, Clare Valley, Hunter Valley, Great Southern, Adelaide Hills, Margaret River, Pyrenees, Coonawarra and Canberra District. 

Premium priced Shiraz plantings by region, 2015

The premium

There is a strong premium paid for Australian Shiraz. In the bulk market, Shiraz prices are 30 per cent higher than dry red. In export markets, a bottle of Shiraz has an average value of 26 cents per litre FOB higher than dry red (a premium of 4 per cent). Furthermore, in the domestic market, an average bottle of Shiraz retails for an additional A$1.74 per bottle. These premiums in the different Shiraz markets deliver approximately A$80 million to Australian wineries annually.

Domestic market

Consumers in Australia are trading up the quality of their Shiraz. The strongest growth for Shiraz (and most valuable price segment) is the A$16–25 per bottle segment. Above these prices, Shiraz is also strong, with growth slower in the cheaper segments.

Value growth by price segment

Exports

Exports of Shiraz have been particularly strong in the past year, up 13 per cent to $726 million –and this growth is faster than the rate for all exports.

Growth is strongest in the premium segments, with the above $10 per litre FOB segment up 37 per cent to $225 million. China is the primary driver, with growth in all price segments but stronger as the price increases.

Although Shiraz is declining in aggregate to the United States and United Kingdom, there is solid growth in the A$10–20 per litre FOB segments. A resurgence in independent liquor stores in the United Kingdom and Millennials happy to pay US$15–$25 per bottle are believed to be the strongest drivers of these trends.

Meanwhile in Canada, Shiraz is also in decline, with consumers looking to experience other Australian varieties – particularly Australia’s white wines.

Australian export value growth by Shiraz vs all other (above $5 per litre FOB)