Eye on the others
Australia is not the only country pleased with its wine exports. Romania exported 14 million litres of wine in 2015 with a value of €25 million ($35 million). That works out at about $2.50 a litre.
Europe accounts for 78 per cent of export volume, worth €17 million, with the five largest markets being:
After those five it’s China, the US and Canada.
Finland pays the most for Romanian wine, at €5.63 a litre, and Israel the least, at €1.38 a litre.
It’s often forgotten that if a market to which Australia exports wine also produces wine, then that wine is Australia’s strongest competition. Just as we would like Australians to drink more domestic chardonnay rather than New Zealand sauvignon blanc, Californian producers would like to see the $449.46 million worth of wine that Australia exported to the US in the year to end of June 2016 disappear and be replaced with their produce.
Interestingly, California tracks its domestic sales as “shipments to the US”. It produces an estimated retail value that in 2015 totalled US$31.9 billion ($42 billion). California wines hold about 60 per cent of the US market.
In nine-litre cases that translates to 229 million. Just as Australian premium wines have shown growth, the Californian shipments above US$10 a litre are also increasing. The above-US$10 sector accounts for about 25 per cent of shipments and about half of revenue.
According to the Californian Wine Institute report released last week, millennials are reaching legal drinking age and now make up about a third of consumers over 21 years of age.
Wineries are tailoring their wines and marketing to appeal to this younger group, which is seeking new and more upscale offerings. Something Australian wineries should note.
To show the depth of competition, more than 160,000 wine labels are approved annually by the Alcohol and Tobacco Tax and Trade Bureau for sale in the US.
Add to this, distributors are consolidating and smaller wineries are looking more to direct-to-consumer (DTC) shipping, which, when Pennsylvania’s DTC law comes into effect on August 7, will be legal in 44 states and the District of Columbia.
Nielsen figures quoted in the Wine Institute report show sales volume increased 2 per cent in the calendar year 2015 while revenue increased 6 per cent. The number of supermarkets selling wine increased from 1700 in 2011 to about 30,000 in 2015.
According to Nielsen, in measured US food stores, the most popular table wine types by volume were:
- Chardonnay: 21 per cent share
- Cabernet sauvignon: 14 per cent
- Red blends/sweet reds: 10 per cent
- Pinot grigio/gris: 9 per cent
- Merlot: 8 per cent
- Pinot noir: 5.5 per cent
- Moscato: 5 per cent
- Sauvignon blanc: 5 per cent
- White zinfandel: 4 per cent
Sauvignon blanc accounted for the strongest volume gains, followed by red blends, pinot noir, pinot grigio/gris and cabernet sauvignon.