Australia Aims for the High End
The Australian wine industry reportedly has some untapped opportunities in the U.S. market that would help it grow in both volume and value. According to investment bank Rabobank, Australians need to break away for the image of cheap wine and begin supplying more expensive, high quality bottles to secure a sustainable future.
The Australian wine industry already has the relatively low-priced, high volume segment of the export market cornered, said the report, but higher value Australian wines have “significant” potential in the U.S. The U.S. is the highest retail value wine market in the world, with dollar wine sales growing from $11 billion in 1991 to $30 billion in 2007.
Rabobank found that there is a gap in domestic wines prices in the $9-12 price point in the US, which gives Australian wines “a clear opportunity.”
“Over the last twenty years, the US has been increasing its wine consumption at a faster rate than any other major market, and in recent times most of that growth has been at the high-end of the market,” said report author and Rabobank analyst Vera Zelenay.
From 1991 to 2007 the US market grew by 83% (141 million cases) to 313 million cases. In the same period, sales revenues grew much faster than unit volumes, showing that
US consumers are trading up. Additionally, the US is expected to become the largest overall wine market in the world, surpassing Italy in 2008 and France around 2015.
Another component that makes the U.S. attractive to Australians: imports are gaining ground and steadily taking market share from Californian wines.
“The high average wealth in the US, combined with the relatively low per capita consumption of 9.4 liters suggests a significant market expansion opportunity for suppliers who can identify where and how to compete in this huge market and leverage brand, quality and distribution strength to best advantage,” the report says.
Australian exports have increased despite recent droughts and a strong Aussie dollar. However, Zelenay said the growth has been based on volume rather than value up through 2007.
“For the Australian wine industry this means improving its global perception in order to grow in value, encouraging consumers to trade up and to choose Australian when moving to a higher price point.”
“A more premium focused, value-oriented business will be less vulnerable to the type of production peaks and lows which have characterized the industry over the past five years,” she continued.
The report said the U.S. appears to be the best prospect for the Australian wine industry over the long term for several reasons. Its size and market share of higher price points, together with its low consumption per capita and the small proportion of wine drinkers represent a strong opportunity for growth.
“In spite of its current economic challenges, the trend towards trading up to higher priced wines continues, though at a slower pace. The market for higher priced wines is expected to continue growing over the next few years and the Millennials will be an important segment driving this trend,” Zelenay said.
However, challenges for Australians in the U.S. include our complex distribution system, elevated shipping costs from Australia, a weak US dollar and the looming recession.
“Australia is in fact in a much stronger position to launch this strategy than other exporting nations in the US market due to its hard-fought reputation for innovation and over-delivery on quality at a given price,” said Adam Morris, senior wine analyst for Rabobank.
FOSTER’S SEES A COMEBACK IN JULY
Foster’s Group showed signs of growth in the U.S., according to Nielsen data in the month of July. Foster’s US wine sales grew 2% in the month, thanks to brands such as Merdian and Penfolds (up 5%), Chateau St. Jean (21%), Gabbiano (8%), and Bohemian Highway (81%). Sales of Beringer and Lindemans remained flat, while Rosemount and Wolf Blass fell -15% and -10%, respectively.
Foster’s corporate affair spokesman, Troy Hey, told The Shout that recent growth is a reflection of the company’s commitment to its US wine biz.
“We’ve restored promotional and marketing investment since earlier this year and the results are showing in the US market,” he said. “Our Australian imports are performing well in a tough market. Our Californian brands, especially Chateau St Jean, Founders Estate and Bohemian Highway are again winning share.”
Australian imports were down -1% in the period and once again lost market share to the US, Argentina, New Zealand and Spain, among others.
MERUS REPLACES FOUNDING WINEMAKER, MARK HEROLD
Merus proprietor Bill Foley has replaced founder and winemaker Mark Herold with winemaker Camille Benitah and consulting winemaker Paul Hobbs, reports Wine Spectator. Last year, founders of the boutique winery, Herold and Erika Gottl, sold it to the Foley Wine Group following the couple's separation. Foley Wine Group also owns Foley Estate, Lincourt and Firestone Vineyards in Santa Barbara and a majority share of Three Rivers winery in Washington's Walla Walla Valley.
Because of a non-compete clause, Herold won't be making his own Napa Valley Cabernet for at least three years. However, he can continue current consulting projects and will return to making Napa Cabernet once the non-compete clause expires.
NEW ZEALAND BREAKING NEW RECORDS
New Zealand wine exporters are expected to hit the $1 billion market by 2010. According to local reports, NZ Winegrowers have boosted their offshore earnings by 14% in the past year to a record $797.8 million. Wine volumes have risen at a compound annual growth rate of about 20% over the past decade, with this year's vintage survey showing the latest harvest was up more than 30% on the 2007 vintage, which experienced considerable droughts.
Challenges for New Zealanders include the economy and a significantly larger vintage in 2008.
The largest export market is Australia by value, up 37% to $247 million. Exports to the UK, which used to be NZ’s largest market, grew only 8% on 2007.
WSWA SPENDS $240K LOBBYING IN SECOND QUARTER
The Wine and Spirits Wholesalers of America spent $240,000 in the second quarter lobbying the federal government on food safety and tax issues, reports the AP based on a report filed July 15 with the House clerk's office.
The organization lobbied for a bill that would, among other things, assess and collect fees on food imported into the U.S. and provide research on the development of tests of imported food. In addition, the wholesalers lobbied on a bill to provide additional tax relief to low- and moderate-income individuals, and to reform corporate income taxes.
WSD BRIEFS:
NEW HAMPSHIRE LIQUOR COMMISSION gained a new member this week, Dick Simard. Commissioner Simard brings over 25 years of experience in business to his new position, according to a statement.
SKYY SPIRITS welcomes Jason Daniel to its marketing team as Senior Brand Manager for Skyy Vodka. In this role, Daniel will direct the national marketing programs supporting the flagship brand, as well as the new Skyy Infusions and SKYY90.
Until tomorrow, Megan
“The world is full of people whose notion of a satisfactory future is, in fact, a return to the idealised past.”
Robertson Davies
--------- Sell Day Calendar ----------
Today’s Sell Day: 13
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
The Australian wine industry already has the relatively low-priced, high volume segment of the export market cornered, said the report, but higher value Australian wines have “significant” potential in the U.S. The U.S. is the highest retail value wine market in the world, with dollar wine sales growing from $11 billion in 1991 to $30 billion in 2007.
Rabobank found that there is a gap in domestic wines prices in the $9-12 price point in the US, which gives Australian wines “a clear opportunity.”
“Over the last twenty years, the US has been increasing its wine consumption at a faster rate than any other major market, and in recent times most of that growth has been at the high-end of the market,” said report author and Rabobank analyst Vera Zelenay.
From 1991 to 2007 the US market grew by 83% (141 million cases) to 313 million cases. In the same period, sales revenues grew much faster than unit volumes, showing that
US consumers are trading up. Additionally, the US is expected to become the largest overall wine market in the world, surpassing Italy in 2008 and France around 2015.
Another component that makes the U.S. attractive to Australians: imports are gaining ground and steadily taking market share from Californian wines.
“The high average wealth in the US, combined with the relatively low per capita consumption of 9.4 liters suggests a significant market expansion opportunity for suppliers who can identify where and how to compete in this huge market and leverage brand, quality and distribution strength to best advantage,” the report says.
Australian exports have increased despite recent droughts and a strong Aussie dollar. However, Zelenay said the growth has been based on volume rather than value up through 2007.
“For the Australian wine industry this means improving its global perception in order to grow in value, encouraging consumers to trade up and to choose Australian when moving to a higher price point.”
“A more premium focused, value-oriented business will be less vulnerable to the type of production peaks and lows which have characterized the industry over the past five years,” she continued.
The report said the U.S. appears to be the best prospect for the Australian wine industry over the long term for several reasons. Its size and market share of higher price points, together with its low consumption per capita and the small proportion of wine drinkers represent a strong opportunity for growth.
“In spite of its current economic challenges, the trend towards trading up to higher priced wines continues, though at a slower pace. The market for higher priced wines is expected to continue growing over the next few years and the Millennials will be an important segment driving this trend,” Zelenay said.
However, challenges for Australians in the U.S. include our complex distribution system, elevated shipping costs from Australia, a weak US dollar and the looming recession.
“Australia is in fact in a much stronger position to launch this strategy than other exporting nations in the US market due to its hard-fought reputation for innovation and over-delivery on quality at a given price,” said Adam Morris, senior wine analyst for Rabobank.
FOSTER’S SEES A COMEBACK IN JULY
Foster’s Group showed signs of growth in the U.S., according to Nielsen data in the month of July. Foster’s US wine sales grew 2% in the month, thanks to brands such as Merdian and Penfolds (up 5%), Chateau St. Jean (21%), Gabbiano (8%), and Bohemian Highway (81%). Sales of Beringer and Lindemans remained flat, while Rosemount and Wolf Blass fell -15% and -10%, respectively.
Foster’s corporate affair spokesman, Troy Hey, told The Shout that recent growth is a reflection of the company’s commitment to its US wine biz.
“We’ve restored promotional and marketing investment since earlier this year and the results are showing in the US market,” he said. “Our Australian imports are performing well in a tough market. Our Californian brands, especially Chateau St Jean, Founders Estate and Bohemian Highway are again winning share.”
Australian imports were down -1% in the period and once again lost market share to the US, Argentina, New Zealand and Spain, among others.
MERUS REPLACES FOUNDING WINEMAKER, MARK HEROLD
Merus proprietor Bill Foley has replaced founder and winemaker Mark Herold with winemaker Camille Benitah and consulting winemaker Paul Hobbs, reports Wine Spectator. Last year, founders of the boutique winery, Herold and Erika Gottl, sold it to the Foley Wine Group following the couple's separation. Foley Wine Group also owns Foley Estate, Lincourt and Firestone Vineyards in Santa Barbara and a majority share of Three Rivers winery in Washington's Walla Walla Valley.
Because of a non-compete clause, Herold won't be making his own Napa Valley Cabernet for at least three years. However, he can continue current consulting projects and will return to making Napa Cabernet once the non-compete clause expires.
NEW ZEALAND BREAKING NEW RECORDS
New Zealand wine exporters are expected to hit the $1 billion market by 2010. According to local reports, NZ Winegrowers have boosted their offshore earnings by 14% in the past year to a record $797.8 million. Wine volumes have risen at a compound annual growth rate of about 20% over the past decade, with this year's vintage survey showing the latest harvest was up more than 30% on the 2007 vintage, which experienced considerable droughts.
Challenges for New Zealanders include the economy and a significantly larger vintage in 2008.
The largest export market is Australia by value, up 37% to $247 million. Exports to the UK, which used to be NZ’s largest market, grew only 8% on 2007.
WSWA SPENDS $240K LOBBYING IN SECOND QUARTER
The Wine and Spirits Wholesalers of America spent $240,000 in the second quarter lobbying the federal government on food safety and tax issues, reports the AP based on a report filed July 15 with the House clerk's office.
The organization lobbied for a bill that would, among other things, assess and collect fees on food imported into the U.S. and provide research on the development of tests of imported food. In addition, the wholesalers lobbied on a bill to provide additional tax relief to low- and moderate-income individuals, and to reform corporate income taxes.
WSD BRIEFS:
NEW HAMPSHIRE LIQUOR COMMISSION gained a new member this week, Dick Simard. Commissioner Simard brings over 25 years of experience in business to his new position, according to a statement.
SKYY SPIRITS welcomes Jason Daniel to its marketing team as Senior Brand Manager for Skyy Vodka. In this role, Daniel will direct the national marketing programs supporting the flagship brand, as well as the new Skyy Infusions and SKYY90.
Until tomorrow, Megan
“The world is full of people whose notion of a satisfactory future is, in fact, a return to the idealised past.”
Robertson Davies
--------- Sell Day Calendar ----------
Today’s Sell Day: 13
Sell days this month: 21
Sell days this month last year: 23
This month ends on a: Fri
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 1:53 PM
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