UK loses out to America as Australian wine number one

18 May, 2007

Smaller harvest puts pressure on discount sector which established market

The USA has finally overtaken the UK as Australian wine's number one export market - and there are signs that emerging markets such as China, Korea and India could eventually be more lucrative options than the UK for Australian producers.

The 2007 harvest could be down by as much as 45 per cent, which will put pressure on the discount wines that have helped establish Australia as the dominant player in the UK off-trade.

Export figures for April show the UK losing its pre-eminent position for the first time and it seems doubtful that the market - unpopular with some Australian producers due to its cut-throat pricing - will ever top Australia's priority list again.

Kirsten Moore, Wine Australia's regional manager for the UK and Ireland, said the UK needed to think harder about its approach to Australian wine. "I don't think the shift will happen overnight but the question is certainly being asked: can we afford to be in the UK any more? It's too difficult and there are other opportunities. America is a big value opportunity and China and emerging markets are huge opportunities."

She said more efforts were required to emphasise Australia's depth of offering as it emerged from a culture of servicing the UK market with bulk wine. This responsibility lay, she argued, with marketers as well as retailers.

"There will still be a surplus, but it will be a manageable surplus. Thankfully we're not seeing a huge effect on quality. It allows us to focus on the quality wines and not the opportunistic promotional activity.

"The trick is convincing consumers that there is more to Australia. It's down to us to prove why Australia is still a compelling option.

"We've spoken a lot about regionality and we've got some of the oldest vines in the world and great winemaking heritage. Why that isn't translated in the UK market is sometimes a little bit baffling because the country is able to deliver across all price points - but consumers reach a certain price point and look elsewhere."

Moore said Australian wineries had "evolved" from being mass producers of cheap supermarket wine and had "got back to doing what Australia does well".

She said the UK was overlooking Australian Rieslings and sparkling wines and could also do more with Tasmania. She accepted that Australia's 24.5 per cent share of the off-trade would be hard to grow, but said producers were determined to hold on to their number one spot in the UK.




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