An article by Scott Rochfort in Sydney Morning Herald from May 3rd, discusses the Aussie move upmarket:
The wine industry has set itself the ambitious target of boosting exports by an extra $2 billion a year by mid-2011, after unveiling a new industry blueprint aimed at raising the quality and value of Australian wines consumed overseas.
At the launch of Wine Australia: Directions to 2025 in Sydney yesterday, the chairman of the task force charged with reinvigorating Australia's $2.9 billion a year export trade, said the industry had to shift its focus from export volumes to opportunities to crack the growing appreciation for premium wines.
The Australians have made themselves the poster child of how to bring a once insular national wine industry to the global foreground in a relatively short amount of time. Chile, Spain, and Italy would kill for the kind of discipline that the Australian Wine and Brandy Corporation has been able to instill in it's member wineries. That discipline, honed in a very competitive "fighting varietals" and lower market space will be quite a force to reckon with as they set their sights on the soft underbelly of high price/high margin business.
People may scoff at the niche high end Aussies presenting a threat, but to that I would counter that thus far 1) The high end has been more of a nice trophy than a commercial priority, and 2) Their success with small production wines has been limited by the fact that they are small production wines.
The 49-point strategy will focus on developing a marketing plan aimed at improving the understanding of Australia's wine growing regions - and more expensive drops. It could also see the industry lift its marketing expenditure to more than $300 million a year. Mr McLintock said the strategy aimed to raise awareness of Australian wine, particularly in the US, in a bid to encourage drinkers to "trade up".
Just think, Wilson only needed 14 points to get the league of Nations off the ground... Imagine what he could've done with 49 points! Oh yes, that, and with Australia moving together like a Roman phalanx, $300 million is LOT of consumer education. Pretty soon, you'll know exactly where the Goulburn Valley is.
A main aim is to get Australian wines out of the sub-$10 a bottle price bracket they dominate in the US. Mr McLintock said the plan was to increase the proportion of premium wine as a total of exports from 15 to 30 per cent in the five years. Mr McLintock also rejected criticisms the targets were too ambitious. He argued the figures were on the conservative side. "We are not making assumptions, the research is telling us it's a fact." Mr McLintock said the new strategy was a result of the industry's own success. He noted the Strategy 2025 report in 1996 had predicted annual wine sales would hit $4.5 billion by 2025. They are expected to hit $5 billion by June. "What we're talking about here is not a volume-led strategy but a dollar-led strategy," he said. "This is about a call to action for the industry," he said.
This will be an exciting time for well positioned players in the US and Europe, but will be tough for companies who enter the competition on a back foot. The winners of this game will have efficient supply chains, marketing and sales functions that can acurately segment and communicate authentically with consumers, and above all, at any price point, offer value.
Wine drinkers will both gain and suffer as a result of this new competition. Outlets will become more consolidated (both on- and off-sale), Large efficient producers will buy up or chase out the mid-sized players, and small producers may rely more on non-traditional distribution, such as direct sales. This will all serve to restrict the array of truly differentiated products available to consumers.
On the other hand, the price:quality ratio will be greater than ever before.
I'll be watching to see how this shakes out, but one thing is for sure, it wont be boring, or bloodless.
(For reference, here are the export numbers to April '07 in A$)
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