Speaking to OLN about sales trends at Majestic over the past year, How said Australian wine had not performed as well as other countries.
Shoppers are increasingly rejecting Australia's traditionally oaky, high-alcohol wines in favour of fresher styles, he said.
"They are moving much more towards lighter styles, such as Sauvignon Blanc, Merlot, Tempranillo and Pinot Noir, rather than Shiraz," How said. When asked how he thought the Australians should address this, he responded: "The ball is in their court. What we need are better wines and better value."
Independent retailer Colin Barnes, of Cooden Cellars in Eastbourne, East Sussex, said: "I can see where Tim How is coming from, but our business is probably different. We can point people in the direction of more elegant wines from Australia.
"You've just got to look for the cooler climate areas, where wines are less big and blousy. Victoria and Tasmania can also produce elegant wines, although not many will come into the sub-£5 price bracket."
Wine Australia's UK director Kirsten Moore said oaked, powerful Australian wines were still popular.
She said: "It's a style that's still favoured and demanded and it sits very well with Australian conditions, but to brand Australia as a one-trick pony is to be a little bit blinkered."
Moore said Australia was responding to consumer trends. "There are elegant examples of Pinot Gris, sparkling wine and Rieslings from Tasmania, Chardonnay and Pinot Noir from the Mornington Peninsular and Bordeaux blends from Margaret River, " she said.
Wine Australia has been working with Majestic managers on a wine ambassador programme."We need to change perceptions of Australian wine, and that starts at the top," she said.
Constellation has blamed the tough UK market, and oversupply of Australian wine, for disappointing third-quarter European sales figures.
ACNielsen statistics for the 12 months to Nov 2006, however, show Australian wine enjoyed a sales increase of 5 per cent to £1,052 million in the UK off-trade.