Gallo, TWE, Casillero del Diablo, Netherlands

Lacking sparkle

E&J Gallo and Treasury Wine Estates (TWE) featured in a short article on the Shanken News Daily website on March 18. Both companies have plans in hand to push more upmarket wines, or, as the article puts it, they have “premiumisation plans”.

According to a Gallo spokesperson, wines retailing above US$8 ($10.48) have more than 50 per cent of the market. Australian wines in the upper price echelons are also doing well, as the table below for the calendar year 2015 shows:

FOB per litre Volume Value
$10-$15 5% 0%
$15-$20 33% 38%
$20-$29.99 22% 11%
$30-$39.99 93% 100%
$40-$49.99 -62% -62%
$50-$59.99 136% 135%
$60-$69.99 -61% -61%
$70-$79.99 337% 335%
$80-$89.99 79% 79%
$90-$99.99 -34% -35%
$100+ 65% 61%

An area in which Australian wines are missing out is sparkling wine. Sales of bubbly above $15 were up 30 per cent in the US last year, but our sparkling exports were down 29 per cent in volume and 21 per cent in value.

Gallo is doing very well with its La Marca Italian prosecco brand. Gallo is also importing many upmarket wine and spirits brands via its LUX Wines import unit.

Treasury Wine Estates (TWE) reports its 15 priority brands are collectively up 15 per cent this year, compared to last year’s 3 per cent increase. Penfolds, Beringer, Stag’s Leap and Chateau St Jean are the focus top-end brands for TWE. The Lindeman’s Gentleman’s Collection is also going well. TWE is a major producer of sparkling wine but is not finding the traction in the US for sparkling as it does for still table wines.

Technavio is a global market research company It has recently released the Global Sparkling Wine Market 2016-2020 report. The following producers (and others) are covered in the report:

  • Freixenet: Spain, cava producer (also owns Wingara in Australia)
  • LVMH: France for champagne and several other countries for sparkling wine
  • Henkell: Germany, sekt producer
  • E & J Gallo: US, several brands of sparkling wine
  • Treasury Wine Estates: Australia/US, several brands of sparkling wine
  • The Wine Group: US, several brands of sparkling wine
  • Korbel: US, famous brand, still labelled as California Champagne
  • Codorníu: Spain, cava producer
  • Nyetimber: UK, high quality sparkling wine


Casillero del Diablo, a Concha y Toro brand, is working its way up the UK wine brand ladder. Figures to February 27 show it occupies fifth place with value up 20.7 per cent and volume up 24.6 per cent to 1.4 million nine-litre cases.

At an average of £6.16 ($11.47), it has the highest per-bottle price of any of the top-10-selling wine brands in Britain. Sales for the 12 months to February totalled £105.8 million.

My old Dutch

According to Statistics Netherlands, the mood among Dutch consumers deteriorated in March for the second month in a row. The downturn was mainly due to consumers’ opinions about the economic climate deteriorating, but their willingness to buy improved marginally.

The inflation rate in the Netherlands was 0.6 per cent in February. In January consumer prices were also 0.6 per cent up from one year previously. February was the seventh month in a row the inflation rate has been below 1 per cent.

Inflation may be below 1 per cent but the price of mineral water went up 30 per cent. Wine went up 8 per cent, spirits 10 per cent and beer 12 per cent. Soft drinks have risen an average of 17 per cent over the past five years due to sugar tax.

The gripe is that tax on alcoholic drinks has only increased 10 per cent in that time.

Total Australian wine exports to the Netherlands in 2015 totalled 14.2 million litres, worth $29.3 million. Volume was up 6 per cent but value down 5 per cent. The average unit price was just $2.06 a litre.

With such a low average price there is no surprise that wines labelled South Eastern Australia lead the market, with a 69 per cent share. South Australia comes next with 6.6 per cent market share. Adelaide Hills, McLaren Vale and Riverina all record less than 2 per cent market share.

Price points by volume per litre FOB are:

  • $2.49 and under: 57 per cent
  • $2.50-$4.99: 37 per cent
  • $5-$7.49: 5 per cent
  • $7.50-$9.99: 0.6 per cent
  • $10-plus: 0.5 per cent

Chardonnay and chardonnay blends have 25 per cent of the market, followed by shiraz and shiraz blends at 22 per cent and merlot and merlot blends with 14 per cent, equalling cabernet and cabernet blends.

The Netherlands is far from a poor country. According to the World Bank the gross domestic product (GDP) was $US869.51 billion in 2014. The GDP value of the Netherlands represents 1.4 per cent of the world economy. GDP in Netherlands averaged $US322.57 billion from 1960 until 2014, reaching an all-time high of $US931.29 billion in 2008 and recording a record low of $US12.28 billion in 1960.

Why Australian wines are mostly in the lower priced category is a puzzle and needing further investigation.

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