Pushing premium

17 January, 2014

We would like to apologise to any of our readers who are cricket fans for mentioning the “A” word at all. Not only did England hand the Ashes to the Aussies on a plate, but we were probably drinking their wines while we did it. Well, not the cricket team as such — but the rest of us.

Australia remains the biggest importer of wine into the UK, and last year returned to volume growth – up 1.7% to 17.6 million cases in the year to December 7, while sales grew 5% to £1.1 billion, according to Nielsen.

Down Under is best known for consistent, good quality and, above all, affordable brands. These remain the vast bulk of what sells in the UK — 70% of sales are priced at £4–£6 and the average bottle price is £5.28, in line with the overall average of £5.31. But key players are looking to grow premium wine sales.

Australia remains the biggest importer of wine to the UK

With plenty of wine available and the pound currently strong against the dollar, Australia is well able to maintain cheaper wines — but rising taxes, unstable exchange rates and uncertain vintages always put prices under pressure.

Treasury Wine Estates UK general manager Dan Townsend says: “The sub-£5 sector is the most challenging. We pulled back from it two years ago — it is largely not commercially viable if you are serious about building brands.”

Dan Buckle, owner of Circe Wines in Mornington Peninsula, says: “‘Affordable’ brands are not the future for Australian wines in the UK. Value, yes, but rather in the fine wine category. Australian fine wine has a big opportunity in the UK, by offering personality, sense of place, quality, diversity and sheer drinking pleasure.”

Higher-priced wines are seeing good growth — albeit from a small base — with £8-plus wines up 7% year on year. “There is definitely a move to trading up and premiumisation,” says Julian Dyer, UK general manager for Australian Vintage. “People are willing to pay more for a bottle and understand the increased benefit. Australia has all the right ingredients to compete with traditional Old World countries at the top end.”

Accolade Wines UK general manager Paul Schaafsma agrees. “While premium sales of Australian wine are relatively small, the £8–£9 price bracket saw the largest year-on-year growth,” he says. “We’ve seen growth in online wine shops, both specialists and supermarkets, who have a greater focus on more premium wines.”

David Gleave MW, managing director of Liberty Wines, which focuses on smaller regional producers, is confident about premium sales. He says: “The strength of the Australian dollar over the past four years has rendered many cheaper wines poorer value, while premium wines continue to offer great value, even with higher price tags.”

Tesco product development manager James Griswood says: “Premium wine sales continue to grow across the board, from a small base.

“When customers buy into premium wines they are treating themselves and want it to feel special. The whole experience has to exceed what they would get from their usual bottle. It’s important to ensure there is clear differentiation and hierarchy in wines that customers can understand.”

Wine Australia is focusing on fine wines in its Dine Australia initiative, which launches at the Australia Day Tasting on January 30.

The campaign aims to promote food and wine matching, and will see Michelin-starred chef Roger Jones and former sommelier Luke Robertson pairing wines with Australian- inspired dishes. The push links up with Tourism Australia’s new Restaurant Australia campaign, highlighting gastronomy Down Under.

Wine Australia UK director Yvonne May says: “We are keen to encourage trade and consumers to turn to Australia for their fine wines. If we want to raise the game and start to increase our profit margins, while enjoying better recognition and international credibility for our top-end wines — and all the £8-plus wines that lie in between — then we need to create buzz around readily understood quality cues. Regionality is the obvious one and deserves sustained messaging.”

The food-themed campaign will also address the on-trade, which many see as Australia’s biggest challenge — and a key to boosting more premium sales in the off-trade.

Schaafsma says: “The on-trade remains Australia’s most challenging arena. Australia is declining by 16% (CGA, November 2013) but traditional Old World origins are seeing more support here. Helping restaurants and the wider on-trade see the demand for, and the quality of, Australian wines should be a focus.”

Amelia Jukes of Hallowed Ground, which specialises in premium boutique wineries from Australia and New Zealand, stresses the importance of winemakers travelling to the UK to share their knowledge with consumers.

“It’s sad to see so many producers at the top end withdrawing from our market. It is our loss and we need to work harder than ever to beat the Australian fine wine drum as there is no doubt that wines are worth it,” she says.

Townsend adds: “If you are serious about wine retailing then you should be serious about Australia. It has a great story to tell about its wine quality, right through the range of price points, and getting that message across and encouraging consumers to try new wines is a nettle to be grasped even harder.”

Wines to watch at the Australia Day Tasting

Cool climate: Great Southern Chardonnay from Howard Park

Coonawarra Cab: New range from Brands Laira at £10

Aussie blend: McHenry Hohnen Rolling Stone 2010 from Margaret River

Summer Light: 5.5% abv from Australian Vintage

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