Growing demand for premium Australian Shiraz

The National Vintage Report 2017 shows that just over 500,000 tonnes of Shiraz were crushed across Australia’s 65 winegrowing regions in 2017 – a 15 per cent increase on 2016.

Shiraz is Australia’s number one winegrape in tonnes crushed ahead of Chardonnay (with just over 360,000 tonnes), accounting for more than a quarter of the national crush and 47 per cent of the red crush.

The national average purchase price for Shiraz increased by 12 per cent to $765 per tonne (see figure 1). The average purchase price has been on an upward trend since hitting a historical low in 2011.

Figure 1: National average purchase price for Shiraz ($ per tonne)

Contributing to the increase in the average purchase price of Shiraz was an increase in the share purchased at A ($2000 per tonne or more) and B grade prices ($1500 to $1999 per tonne). The share of Shiraz purchased at A and B prices increased from 13.3 per cent in 2016 to 15.5 per cent in 2017 and double the proportion from five years ago.

The growth in tonnes and price reflects the growing demand for premium Shiraz in domestic and export markets.

Domestic and export demand driving premium price growth

Data from IRI Market Edge Liquor for the 12 months ended 2 July 2017 shows that the value of Shiraz sales grew by close to 10 per cent in the Australian off-trade market. It is by far the number one selling red variety and second overall to Sauvignon Blanc. There was growth for Shiraz across all price points but it was strongest between $10 and $20 per bottle. Just under half of Shiraz sales were in this price bracket.

Wine Australia’s Export Report June 2017 shows that exports of Shiraz increased by 15 per cent to $541 million in 2016–17. The biggest price bracket for Shiraz was $10 per litre or more, accounting for 43 per cent of the value of Shiraz exports. Reflecting the consumer demand for premium Australian Shiraz, the value of exports in this price bracket grew by 30 per cent – the seventh consecutive year in growth (see figure 2).

Figure 2: Exports of Australian Shiraz at $10 per litre FOB or more

Shiraz sales at $10 per litre or more, grew in 9 of the category’s top 10 export destinations (see figure 3). Mainland China was by far the biggest destination and exports grew by an extraordinary 53 per cent.

Figure 3: Top 10 destinations for Shiraz exports at $10 per litre FOB or more