Overview :

With not much social gatherings, parties and occasions, it’s a challenging time for the Australian wine industry. Meanwhile, it’s the time to revisit and realign their strategies according to market shift and changes according to consumption, sales etc.


Hence, it is high time to understand the current trends and to identify a new approach based on the business questions (below) that will determine the future of the wine industry, at least for a short term.


This article answers 2 major questions:

  1. What are the new trends in Australian Wine Industry (Consumption, Sales and Preferences?)
  2. What are the key business questions that need to be assessed by Australian wine companies?

In addition, the role of wine in Australian Tourism is significant and let’s have a short recap:


As per Wine Australia,
Total number of visitors went to winery: 8.4 million (2018-19)
Visitors spend in Australia: $9.6 billion
Average nights stayed in Australia: 7 nights


Now, let’s deep dive in to the trends,


Trend 1 : Shift from On-Premise to Off-Premise:


It is key to analyse the trend especially in Australia, where the on-premise sales account for approx. 20 % of total wine sales by volume.


However, there are wine companies that wanted ‘On-premise’ category to remain top priority. For Example: As per Treasury Wine Estates 2019 annual report , ‘On-premise’ category will remain top priority for TWE by starting initiatives such as “Wine on Tap” .


Hence, it is key to investigate the below business questions for future developments, considering hygiene and social distancing rules will be in play for the medium term.


  • What is the level of shift from on-premise to off-premise model?
  • What are the steps required by wine companies to handle this shift?
  • How far it will impact the current and future business?  

Trend 2 : Growth in Online Sales:


With social distancing and restrictions in cafes and restaurants, it is expected that the online sales could increase significantly.


One study in the USA showed that sales on e-commerce switched from 20 % of direct-to-consumer (DTC) sales to 80 % over a two-week period starting on 21 March.


 Although we have seen this trend during the Australian bush fires, it is likely to increase further during this crisis.


For Example: Let’s see what people search in Google – Based on Google Trends 🙂


* Search on “how to remove red wine from carpet” is increased to +3,200 % between March to SeptemberJ
* Search on “wine delivery melbourne’ is increased to +1,150 % between the same period.
* Search on ‘Wine and food pairing’ reached “Breakout” (means the search term grew by more than 5000%)

This trend has raised the below questions,


  • How well wine companies are equipped to handle this shift?
  • Will this shift help wine companies to increase sales?
  • Can wine companies use this opportunity for NPD (New Product Developments)?  

Trend 3 : Change in Variety Preference:


Considering the switch to off-premise consumption could likely reduce the consumption of certain varieties that are associated with special celebrations such as Pinot Noir, Pinot Gris etc. This trend has raised the below questions,


  • How wine companies can handle the wine reserves of these varieties associated with celebrations?
  • Do wine companies have short term plans to reduce the production of varieties that are used in celebration OR expand the production of varieties that are familiar now? If yes, what could be the volume? If No, Why not?

Trend 4 : Change in Consumption Pattern:


From an Economic Perspective: Since consumers turn towards "Value for money” due to unemployment and prioritization towards savings, this could temporarily put a pause on the ‘ premiumisation trend ’ which is a part of the wine industry.


From Domestic Market Perspective: Although, not a favorable situation from export perspective, it is expected that the consumers could focus towards domestically produced wine in order to extend their support to local businesses during this economic crisis.

This trend has raised the below questions,


  • Is it time to restructure strategies such as ‘Premiumisation’ to 'Routes to market' (RTM)?
  • Is it the right time for NPD (New Product Development) to target consumers that are price conscious?

Trend 5 : Assessing Risk and Capitalizing new opportunities:


Example for Risk Assessment: Closely monitor the current tension between Australia and China, since China is considered to be one of the key growth areas for major wine companies.


Example for New Opportunity: Announcement of Australian Government on Free trade with Indonesia: Although the wine export to Indonesia is still relatively small, it is expected to have a CAGR of 32% for Australian wine and the country is forecasted to be the world’s top 5 economies by 2050.


  • Why not Indonesia would be a new opportunity for wine companies to scale the business?

Thanks for your time on the read and feel free to post you suggestions, comments that could add value to the readers.