Victim of its Own Success
“
It’s a fact that the wines sent to our
shores were dominated by large corpora-
tions jumping on a bandwagon to crank
out mass-produced, inexpensive wines
with catchy labels,” says Jim Chanteloup,
Australian wine buyer for K&L Wine
Merchants, the California-based retail
and online wine seller. “Then came the
battle cry ‘those wines all taste the same,’
and you know what…they did! But those
wines were not an accurate vision of the
real wines of Australia.”
It wasn’t just low-end wines that
doomed the category. According to
Nick Spencer, winemaker at Eden Road
Wines, it was also the “high-octane Aus-
tralian wines that received high scores
from influential wine critics” which led
to stratospheric prices and the predomi-
nance of “the blockbuster style which
Australia very quickly became associated
with at the premium end.” The signifi-
cant drought which plagued vineyards
from 2004 through 2009 exacerbated
this style, leading to even bigger, higher-
alcohol wines.
Palates were maturing, however, and
Australian importers weren’t focusing on
many grown-up (read: balanced, cool-cli-
mate) options, believes Jean Reilly, MW,
consulting wine buyer for New York’s
Morrell & Company: “Australian wines
were the introduction to wine for a whole
generation of consumers just getting into
wine. But tastes evolve and that genera-
tion started eschewing Aussie wine, simi-
lar to the backlash against Chardonnay.”
Success was a double-edged sword
“
Some of the Australian wines and mar-
keting behind them that brought the cat-
egory’s rapid success are also the reason
Australia has suffered in recent years,”
says Renae Hirsch, winemaker for Henry’s
Drive in Padthaway. “Those fruity, over-
ripe and approachable wines originally
held a lot of appeal, but they didn’t have
the substance to be long stayers in the
marketplace.” In other words, people got
tired of jammy Shiraz and moved on.
The Next Chapter
Today, the dark cloud hovering over Aus-
tralian wine appears to be lifting and a
growing number of retailers are report-
ing renewed Hayward-like enthusiasm
for the category. Australia’s bottled U.S.
imports halted decline in 2011, posting
18%
growth in the $20 to $30 category.
Sales were up 33% in the $16 to $20 range
in the first quarter of 2012. The press has
come around, too—articles have appeared
in
The Wall Street Journal
and
The Wine
Advocate
indicating a positive outlook for
Aussie wines (a welcome shift, says Hay-
ward, since Aussie wines had become the
“
punching bag” of critics).
With a new crop of boutique brands
entering the market, back-stocked inven-
tory finally sold off, and sales of premium
wines growing much faster than cheaper
wines, it seems the country’s wine indus-
try is hitting its sustainable stride.
“
We see Australia entering its third
stage of development,” says Angela Slade,
regional director, NorthAmerica forWine
Australia. “When these wines entered the
market, they over-delivered for the price
and they excited people. Stage two was
the introduction of many wines with icon
pricing; intense reds sought after for high
scores and cult status.” In the aftermath
of the recession and trade backfire which
eroded the category, Slade now sees the
beginning of stage three: a settling down
in the market and growth from a smaller,
more permanent base. “Regionally-labeled
wines are showing the greatest lift and this
is the area we are working to develop,” she
says. “We are taking a back-to-basics ap-
proach that involves education and hand-
selling. It’s time to roll up our sleeves.”
A Healthy Culling Out
If there is any silver lining to the U.S. dol-
lar tanking—at times going lower than the
Australian dollar—it’s that many Aussie
wines that may have been hurting the
category’s image simply disappeared. “It
became nearly impossible to make wine
for $4.99, which helped drive the critter
category out of existence,” says Zahaba.
Oversupply—a glut that also fueled
the creation of many cheap brands—has
at last been worked through the system.
Australian wine production has fallen
from a high of 1.42 billion liters in 2005
to 1.07 billion liters in 2011. “The over-
supply slowed us down for several years,
Left:
Barrels at Eden Road in Canberra;
right:
Michael Fragos, chief winemaker at Chapel Hill in McLaren Vale.
Australian wines exports to the U.S. for
the 12 months to June 2012:
the growth stats
Australian exports to the U.S.
6%
White wine exports
18%
Chardonnay
14%
Cabernet Sauvignon
9%
Sauvignon Blanc
36%
Semillon
19%
Source: US IRI Sales Data
