Industry

Australian Wine Bounces Back in the U.S.

The U.S. market for Australian wines has been polarized - either Yellow Tail or Mollydooker.

By Adam Lechmere January 29, 2015
Wine-Searcher
Australian producers are celebrating the fact that their country "is no longer a dirty word in the United States" as wine exports pick up after years of falling sales.  

Australia is second only to Italy for exports to the U.S., with sales of 16.6 million cases. Over the entire still wine category, figures from the U.K.'s International Wine and Spirit Research (IWSR) show a decline for 2014, but that decline is decelerating.  

Since the global financial crisis overtook the wine industry in 2008, sales of Australian wine have slumped in the United States. Statistics from IWSR show the market for Australian wine in the U.S. fell by more than 22 percent between 2008 and 2013.  

Now, in certain sectors, Australian wine is showing a "solid growth trend", according to Angela Slade, director of Wine Australia in the U.S., with sales up in all categories. A year ago, at the end of December 2013, wines retailing at up to $7.99 were up 31 percent, and wines at $8 and above, were up 11 percent.  

"2013-14 has been a watershed year for Australian wine in the U.S. market, with renewed enthusiasm in key markets across the country," Slade said.  

Speaking at the Australia Day Tasting in London this week, producers and Wine Australia officials told Wine Searcher that there was good reason for optimism. "We can now go back into the States and make money," in the words of one.  

It has been "the perfect storm", Cameron Ashmead, managing director of Barossa's Elderton Wines said. "The high Australian dollar coupled with the financial crisis meant that Americans just couldn't afford Australian wine. But now we're seeing a marked increase in business."  

Producers agree there is a new willingness to engage with Australia, especially with premium ($15 and above) and super-premium ($30 and above) brackets. This is welcome news, Neil Hadley MW, export manager of Wakefield Wines said, as in the last decade, U.S. consumers had come to see Australia as supplying either entry-level wines or very expensive, cultish offerings.  

"It's been polarized - either Yellow Tail or Mollydooker," he said. "It's been incredibly difficult to get anyone to add a serious Australian wine in the mid-range to their portfolio."  

Hadley said he was about to go to New York to talk to a new importer with national distribution. "We're going to have a serious conversation. That's something you couldn't have imagined only a year ago. It's an exciting opportunity."  

While chains such as Whole Foods Market and Trader Joe's will concentrate on wines at the cheaper end, such as Yalumba's Y Series, which sells for an average $12, the biggest opportunity for the more expensive wines is in the on-trade.  

While such wines still needed to be "hand-sold", Nick Waterman, chief operating officer of Yalumba said, top-end wines like their Signature Cabernet Sauvignon-Shiraz, with an average retail price of $44, "are seen as very good value when you compare them with Napa wines."  

Above all, it is restaurant managers and retail wine managers - the "gatekeepers" - who need to be persuaded to get behind Australian wine, Brian Walsh, chair of the Australian Grape and Wine Authority told Wine Searcher. Australia flooded the market with cheap wine in 2007, "and then when the downturn came, we were the ones left sitting on the shelves, and the average gatekeeper had stock he couldn't sell."  

But producers now feel such hurdles can be surmounted. As Waterman put it: "It's been difficult but things are changing. Australia is no longer a dirty word in the U.S."