European wine exerts pressure on Australia’s wine industry

Expressed in figures, in 2007, the wine import accounted for 6 percent, and since, it has increased to 16 percent. Surprisingly, the imports of French wines have decreased by 58 percent. In parallel, the export volume of Australian wines has decreased since 2007, which - not only but above all – the strong Australian dollar is made responsible for.

“It is a double strike”, Sam Clarke, CEO at Thorn Clarke, who produces Barossa, comments on the situation. “The decrease of export volume has been balanced out by the import volume.” However, this is not an Australian problem. Our wine industry is suffering because over years people have naively entered the wine business, hoping their plans to work. Now, we have too many producers with negative equity capital. Moreover, the values of the vineyards have extremely decreased. In the Barossa Valley, the value of the vineyards has decreased by 40 percent.

Nonetheless, let’s go back to the trade. Partially due to an aggressive marketing, the prices for European wines have strongly decreased in order to be competitive on the Australian market. Some of the prices have decreased by 30 percent. Moet & Chandon champagnes, for instance, are available for less money than the Chandon products from Yarra Valley, Australia. Top wines from the AOC Bordeaux are available for 20 to 30 AUD (about 16 to 24 euro), and high-end wines from Tuscany or from the Rioja region cost as much as the high quality drops from Australia.

While a spokesman of Wine Australia, the marketing organization of Australian wine traders, jokingly appeals to the Australians’ patriotism to drink less foreign wine but more domestic wine, the big international trading companies have a pragmatic point of view. “It is totally silly to appeal to the Australians’ patriotism – the important thing is that Australians drink wine in general. It doesn’t matter if it’s a French or an Australian wine,” Troy Christensen, CEO of the Accolade company, says, and he adds: “From an Australian vintner’s point of view, for instance, it is not deplorable that his compatriots drink wines from the Rioja region because the more their palates get used to this kind of wine, the more they will turn to Australian wines from tempranillo grapes - and Australian tempranillos are really good.”

Sporadically, people from the Australian wine scene propose to control wine imports. This idea, however, is not supported by anyone. Whereas the big wine traders like Coles and Woolworths have started to import wines they produced themselves in order to be able to offer them still cheaper, the heads of the Australian wine industry have to rethink their price structure. Troy Christensen says about that: “In Tasmania, excellent champagnes are being produced that are sold at 50 AUD, whereas a Moet & Chandon is available at as few as 30 AUD.” (red.yoopress)