Do Aussie Wines Have an Image Problem?
Australian wines have been wildly successful in the U.S. in recent years, but there is a chance their luck is running out. Years of over-supply met with one of the worst droughts in recent history, a depreciating U.S. dollar and image problems have left the Australian industry scratching its head. Can Australian wineries improve their image with American consumers and make a comeback?
We spoke with Stephen Rannekleiv, Vice President Food & Agribusiness Research and Advisory for Rabobank International via email on the topic and found his insights fascinating. Here’s a snippet of his email (with his permission of course) for your enjoyment:
“The future of Aussie wine in the US? That's the $64,000 question. I think it really depends on 2 things.
1. As you point out, they are no longer in over-supply, but years of discounting have left them with an image problem. No one wants to pay much for Aussie wine. They fully recognize the need to move up in price points, as they have low volumes and much higher production costs and also exchange rate challenges as the US dollar continues to be quite soft- but the question is "how"?
If they can get their act together and really show the US that they have some good quality wines, I think they could do quite well. They have some top notch wines that sell at much more attractive price points than most of the top California brands. By all rights, they should be doing MUCH better in this market.
2. The other issue is just how long this recession thing goes on. The growth is still at the high end of the wine market, but it seems to be slowing a bit, and there are lots of signs of trading down in other categories (i.e. beer, where you see trading up and trading down simultaneously). If consumers start to become more price sensitive, but still want good quality, Australia might have some options. The issue for the Aussies will be to convince US consumers that they can deliver on quality, and I think that may be a tough sell. Australian wines seem to have lost some of their initial luster among the public, and I think consumers may be moving on, looking for the next destination to explore.”
So I guess, in summary, I would say that Australia has great potential. They have the opportunity to show the US market that they can deliver excellent quality wines at very reasonable price points. However, if they haven't been able to get that message across by now, I have to wonder about their ability to do so. I don't really see a strategy in place that will realistically change US consumers' minds about Aussie wine. I expect them to continue plodding along at mediocre price points in the US, in bottles with cute little critters.
Argentina, on the other hand... Now that's a different conversation. I think it goes to show that its always easier to start at the higher end of the market and move down than to start at the lower end of the market and try to move up.”
Thanks Stephen!
WINE AND HEALTH HITS THE WIRES
News on the health benefits of wine is always good press for the industry, and as luck would have it several things surfaced this week.
One study found that women who drink wine are less likely to develop dementia in middle-age, particularly women that drink wine exclusively. Women who reported drinking wine, beer and spirits were 40% less likely to develop dementia. The risk dropped almost 70% in women who consumed only wine. By contrast, women who drank liquor had an increased risk of dementia. The study is based on a random sample of nearly 1,500 women living in Gothenburg, Sweden who, beginning in 1968, were followed for 34 years.
So what makes wine so special? Researchers said antioxidants found in wine and not beer and liquor might help prevent dementia. Also, the wine drinkers may have certain characteristics the researchers are unable to measure.
Another study found that resveratrol, a compound found in red wine, may kill pancreatic cancer cells. Researchers at the University of Rochester Medical Center found that resveratrol in combination with radiation, but not alone, helped fight pancreatic cells.
"While additional studies are needed, this research indicates that resveratrol has a promising future as part of the treatment for cancer," lead investigator Dr. Paul Okunieff said in a university statement.
One study, however, gave the industry something to blush about. New research confirms what researchers have long suspected: alcohol increases women’s risk of breast cancer. Researchers from the University of Chicago found that post-menopausal women who drink even moderately (one or two drinks per day) raise their risk of developing the most common form of breast cancer. Women who had three or more glasses of alcohol a day increased their chance for developing breast cancer by 51%. Drinking was also blamed for the rising numbers of women with liver and fertility problems.
HSBC DOWNGRADES B-F
HSBC bank downgraded Brown-Forman to “neutral” from “overweight,” according to Reuters.
"Although company fundamentals remain solid, in our view, we expect Brown-Forman to be impacted by weakening consumer sentiment and higher costs over the near term," the brokerage said.
In the long term, the company will continue to benefit from its strong brand equity and pricing activities in the US, as well as from its growing international presence, HSBC said.
MAKER’S MARK APPOINTS NEW MASTER DISTILLER
Kevin Smith, who joined Maker’s Mark in 1998 as assistant vice president of operations and Master Distiller-in-training, has been promoted to vice president of operations and Master Distiller for America’s iconic bourbon. Kevin succeeds David Pickerell, who has left Maker’s Mark after more than fourteen years with the brand. He will report to Bill Samuels, Jr.
FUTURE APPOINTS INDUSTRY VET TO VICE PRESIDENT
Future Brands, the U.S. joint-venture between Beam Global and the Absolut Spirits Co., today announced the appointment of Pryce Greenow to vp, sales-west region. Pryce reports directly to Bill Newlands, senior vp of U.S. commercial development for Beam Global. Prior to joining Future Brands, Pryce worked at Beam Wine Estates and Allied Domecq Wines USA.
BACARDI EXTENDS DISARONNO AGREEMENT
Bacardi says it has renewed its contract with Illva Saronno S.p.A. for U.S. distribution rights to Disaronno Originale, an Italian Liqueur. Bacardi first secured Disaronno distribution rights in 1998.
Until tomorrow, Megan
“A man's silence is wonderful to listen to.”
Thomas Hardy
--------- Sell Day Calendar ----------
Today's Sell Day: 12
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
We spoke with Stephen Rannekleiv, Vice President Food & Agribusiness Research and Advisory for Rabobank International via email on the topic and found his insights fascinating. Here’s a snippet of his email (with his permission of course) for your enjoyment:
“The future of Aussie wine in the US? That's the $64,000 question. I think it really depends on 2 things.
1. As you point out, they are no longer in over-supply, but years of discounting have left them with an image problem. No one wants to pay much for Aussie wine. They fully recognize the need to move up in price points, as they have low volumes and much higher production costs and also exchange rate challenges as the US dollar continues to be quite soft- but the question is "how"?
If they can get their act together and really show the US that they have some good quality wines, I think they could do quite well. They have some top notch wines that sell at much more attractive price points than most of the top California brands. By all rights, they should be doing MUCH better in this market.
2. The other issue is just how long this recession thing goes on. The growth is still at the high end of the wine market, but it seems to be slowing a bit, and there are lots of signs of trading down in other categories (i.e. beer, where you see trading up and trading down simultaneously). If consumers start to become more price sensitive, but still want good quality, Australia might have some options. The issue for the Aussies will be to convince US consumers that they can deliver on quality, and I think that may be a tough sell. Australian wines seem to have lost some of their initial luster among the public, and I think consumers may be moving on, looking for the next destination to explore.”
So I guess, in summary, I would say that Australia has great potential. They have the opportunity to show the US market that they can deliver excellent quality wines at very reasonable price points. However, if they haven't been able to get that message across by now, I have to wonder about their ability to do so. I don't really see a strategy in place that will realistically change US consumers' minds about Aussie wine. I expect them to continue plodding along at mediocre price points in the US, in bottles with cute little critters.
Argentina, on the other hand... Now that's a different conversation. I think it goes to show that its always easier to start at the higher end of the market and move down than to start at the lower end of the market and try to move up.”
Thanks Stephen!
WINE AND HEALTH HITS THE WIRES
News on the health benefits of wine is always good press for the industry, and as luck would have it several things surfaced this week.
One study found that women who drink wine are less likely to develop dementia in middle-age, particularly women that drink wine exclusively. Women who reported drinking wine, beer and spirits were 40% less likely to develop dementia. The risk dropped almost 70% in women who consumed only wine. By contrast, women who drank liquor had an increased risk of dementia. The study is based on a random sample of nearly 1,500 women living in Gothenburg, Sweden who, beginning in 1968, were followed for 34 years.
So what makes wine so special? Researchers said antioxidants found in wine and not beer and liquor might help prevent dementia. Also, the wine drinkers may have certain characteristics the researchers are unable to measure.
Another study found that resveratrol, a compound found in red wine, may kill pancreatic cancer cells. Researchers at the University of Rochester Medical Center found that resveratrol in combination with radiation, but not alone, helped fight pancreatic cells.
"While additional studies are needed, this research indicates that resveratrol has a promising future as part of the treatment for cancer," lead investigator Dr. Paul Okunieff said in a university statement.
One study, however, gave the industry something to blush about. New research confirms what researchers have long suspected: alcohol increases women’s risk of breast cancer. Researchers from the University of Chicago found that post-menopausal women who drink even moderately (one or two drinks per day) raise their risk of developing the most common form of breast cancer. Women who had three or more glasses of alcohol a day increased their chance for developing breast cancer by 51%. Drinking was also blamed for the rising numbers of women with liver and fertility problems.
HSBC DOWNGRADES B-F
HSBC bank downgraded Brown-Forman to “neutral” from “overweight,” according to Reuters.
"Although company fundamentals remain solid, in our view, we expect Brown-Forman to be impacted by weakening consumer sentiment and higher costs over the near term," the brokerage said.
In the long term, the company will continue to benefit from its strong brand equity and pricing activities in the US, as well as from its growing international presence, HSBC said.
MAKER’S MARK APPOINTS NEW MASTER DISTILLER
Kevin Smith, who joined Maker’s Mark in 1998 as assistant vice president of operations and Master Distiller-in-training, has been promoted to vice president of operations and Master Distiller for America’s iconic bourbon. Kevin succeeds David Pickerell, who has left Maker’s Mark after more than fourteen years with the brand. He will report to Bill Samuels, Jr.
FUTURE APPOINTS INDUSTRY VET TO VICE PRESIDENT
Future Brands, the U.S. joint-venture between Beam Global and the Absolut Spirits Co., today announced the appointment of Pryce Greenow to vp, sales-west region. Pryce reports directly to Bill Newlands, senior vp of U.S. commercial development for Beam Global. Prior to joining Future Brands, Pryce worked at Beam Wine Estates and Allied Domecq Wines USA.
BACARDI EXTENDS DISARONNO AGREEMENT
Bacardi says it has renewed its contract with Illva Saronno S.p.A. for U.S. distribution rights to Disaronno Originale, an Italian Liqueur. Bacardi first secured Disaronno distribution rights in 1998.
Until tomorrow, Megan
“A man's silence is wonderful to listen to.”
Thomas Hardy
--------- Sell Day Calendar ----------
Today's Sell Day: 12
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Wed.
This month last year ended on a: Mon.
YTD sell days Over/Under: 0
posted at 1:04 PM
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