10 Jun 2010

Australian Wine - where to now? Part 1

Australian Wine - where to now? Part 1

Gone are the days when we needed to fight off the trophy hunting consumers, beating down our doors to access high scoring Aussie delights. The conundrum of crashing export numbers to global markets in various price tiers, and producers going out of business, is certainly not something the world could ever have predicted 10 years ago when this category was ablaze with success and opportunity.

A 12.2% decline in shipments to the USA in 2007 and another 11% decline in 2008, has the Aussie government reeling and the salvation of their once dominant business model is now nothing more than a wine stained business plan on a paper napkin.
 
Added to the category’s popularity decline and downward spiraling price points at the register, you have the longest drought in over a century wreaking havoc on growers across a broad spectrum of regions – not just the bulk growers in marginal areas.
 
Survival is the all important order of the day in Australia.
 
So where did it all go wrong and more importantly, is there a solution to the problem? This thread examines some of the reasons for the problem and offers the views of one particular business. We are convinced that there is a smorgasbord of opportunity in this category and we’d like to convince you of that and then explore the possibilities with you.
 
Yellow Tail makes up more than 40 percent of the Aussie wine business in most supermarkets in the United States, and retails well below the average locally produced bottle of wine. Corporate and copycat brands make up a further 45 percent of the Aussie set - how can you blame American consumers for associating Australian wine with the word “cheap”. Last year 85.5% of exports from Australia to the USA were generic appellation wine from South Eastern Australia. It’s just so frustrating when you see such an outstanding boutique wine industry being tarnished by consumerism and commodity trading, yet you know it has much, much more to offer.
 
The early success of wines such as Rosemount Diamond Shiraz in the 1990s introduced Americans to the idea that you could buy good Aussie wine under $10. We’re all consumers, looking for the next best thing ... then enter Yellow Tail, something just as exciting quality wise, but for less money. Shortly after Yellowtail’s rise, producer giant, Foster’s panicked and dropped prices on established brands like Lindemanns and Rosemount. Copycat brands were introduced and prices began to spiral downward. As a result Australian wine is now no longer seen as a quality consumer product in the US.
 
Apart from the obvious cost factor, we see two key marketing flaws. Firstly, the goofy label phenomenon is embarrassing and truly cheapens the product. Secondly, it’s the lack of romance and connection with Aussie culture in many Australian wines.  Consumers need stories, they need to know where a wine has come from, who made it, where the grapes were grown. Non-appellation wines dehumanize the experience for the consumer. You need to talk about faces and places. I believe this to be the single largest marketing flaw of the Australian wine industry.
 
Although I believe that creating romance can be as simple as a quirky name that comes with a story behind it, it’s also about understanding the importance of time and place. Consumers need to attribute the bottle they put on the table to a region they can picture, taste and smell and find on a map. Regionality is very important.
Giving a wine a story is one thing, but when an American consumer puts a bottle of Italian wine on the table, he is transported to a certain part of Italy, a vineyard, a village … he sees it and smells it. That’s the kind of romance Australia needs to create for the consumer. In my opinion the top five Australian wine companies, the big guns who are the largest contributors to Wine Australia, along with opportunist brand developers, are certainly to blame for the cheapened view of Australian wine in this country.
 
In part 2 there are a few examples of family produced wines from specific appellations which represent regionality, personality and value. Read on…

Posted by John 10:42:00

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