Sales Are Up for Wines from Down Under

0206ausAustralian wines have had notable success recently in the U.S. market and more are on the way.

View of vineyards in the Hunter Valley, New South Wales. PHOTOS COURTESY OF AUSTRALIAN WINE EXPORT COUNCIL

By Dan Berger

The good news about Australian wines is that Americans love them; that sales, if plotted on a growth chart, remain headed in a northeasterly direction, and that demand is even growing in the superpremium sector.

And fortunately, the only bad news is that more and more brands are popping up here as a result of a massive surplus of wine in Australia. This means that greater competition may well hold down retailers’ profits as competition heats up and everyone discounts.

But one fact is obvious: no retail shop can afford to be without a number of lines of Aussie wines. Consumers are demanding them.

Australian wine’s rise to popularity in the United States is based on its price-quality relationship along with its juicy California-esque style. But price is an important part of the attraction.

One factor here is the weakness of the Australian dollar, making all Down Under products more reasonably priced here. Meanwhile, the surplus of wine has the added benefit to American buyers of a strongly motivated Australian industry eager to move a product that has a degree of perishability: not all wine improves over time.

One reason for Australia’s surplus of wine is the fact that in a large area known as Sunraysia, three hours north of Melbourne, grapes grow in massive amounts. Australian wine makers, those clever blokes, take this fruit and blend it with high-quality grapes from cooler wine regions such as Padthaway, McLaren Vale, Yarra Valley and Clare Valley to make stellar bargains.

Scenes from Margaret River,
Western Australia

The Barossa Valley,
South Australia.

These wines have had a decade of remarkable growth in the United States, mainly with wines in the $5 to $10 price range. So much so that the latest figures show that 8.7 million cases of Australian wine was sold in the United States in 2001, a 24% increase over 2000. And if early 2002 sales figures hold up, the Aussies will sell 10.5 million cases here, yet another 20+% growth rate — a growth rate that started more than a decade ago.

Getting a handle on any group of wines with odd-sounding names (some of the top brands use aboriginal words in their names) isn’t easy, so here is look at some of the better-known brands.

Penfolds/Rosemount: The merger of these two powerhouse companies under the name Southcorp more than a year ago caused a bit of turmoil for some wholesalers and retailers, because the company then had brands that competed in the same price niches. But sales of all this company’s brands in 2001 ultimately never wavered and rose significantly. The former company’s largest selling brand, Lindemans, reached nearly 1.6 million 9-liter cases in 2001, a 12.9% increase over 2000. And even though prices for these items in the $8 price niche slipped a bit, the wines improved in overall quality. Key to the Lindemans portfolio is Bin 65 Chardonnay, the No. 1 Australian imported wine. But the line also includes an excellent Cabernet and a deeply flavored Shiraz. Meanwhile, wines under the Rosemount Estate brand rose nearly 20% to 1.5 million cases in 2001. Rosemount had been the most successful exporter of Australian wines over the last half-decade, based on percentage of wine produced. The Hunter Valley-based brand now markets some 50% of its total production in the United States. Its wine maker, Philip Shaw, who now can assist all of Southcorp’s brands, is a brilliant blender.

Meanwhile, the Penfolds brand, under-marketed here, remained a half-million-case brand in 2001, but with consolidation in its lines, that surely will change. The line includes the prestigious Grange, a red wine of incomparable depth and aging potential. It is Australia’s flagship wine, made almost entirely of Shiraz, and thus sets the tone for all high-powered reds from Australia. It typically sells in the $125 range, and up.

However, the consolidation now puts two important wines into the marketplace, the $8-niched Rawson’s Retreat, and the $13 Thomas Hyland line. Both are exceptional wines for the money.

John Gay, president of Southcorp’s U.S. operations, noted that the company’s sales increases in 2001 over 2000 were done without discounting “until the final quarter, when things got ugly.”

He noted that for the last decade, the growth of Australian wine was largely due to the success of the Lindemans and Rosemount wines, with Rosemount having “the greatest points of distribution, both on- and off-premise; you could find them anywhere you went.

“And one of the things that people have trusted is the quality-value relationship, which has always been true with Rosemount and Penfolds wines. People knew that they paid a $15 price but got a $20 taste.”

He said the improvement in the quality of the company’s brands that are price sensitive, such as the Koonunga Hill line (at about $10), allowed the introduction of the even softer-priced Rawson’s Retreat, which is discounted to $5.99 in many locations.


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