Survival techniques for Australian wineries

Let’s start the new year with long-term prognostications about the future of wine, including Australian.

Yes, a big call, but one we each should be considering from our own points of view.

By this I mean, I have my opinion based on 40 years in the wine industry from 15 Midwest in the US to 28 years in Australia; and you have yours based on your experience.

I have lived through the globalisation and renaissance of table wine.

In the 1950s wine was consumed as a beverage in major wine producing countries in Europe, but as a luxury accompaniment to fine dining in those same countries as well as in a few places in the New World.

By the 1970s, wine was becoming a beverage of the up-and-coming baby boomers in non-wine producing countries, like the UK and Scandinavia, as well as in the US and Australia/New Zealand. Brands of wine began to displace ‘wines of place’ in these countries, while in traditional wine producing countries, table wine consumption shrank with the slow demise of the rural culture in wine producing areas.

Excess wine in traditional wine producing countries kick-started major growth in wine exports.

This was accompanied by large investments by France and its wine regions in training sommeliers and import buyers in new wine consuming countries, which led to French wine ascendancy in many markets as the most desired wine of origin.

Australian wine marketing focused more on brands than ‘wines of place’ as we grew from minimal exports in the 1980s through Strategy 2025 to over $3 billion in the 21st century.

From the early 2000s, Australia and other exporting countries grew their markets in the US, UK, Canada, Scandinavia, etc., and began developing markets in Asia and other alcohol drinking countries with growing middle classes.

Some of these markets will continue to grow and develop over the next 10 years or maybe more.

But times have changed.

The Baby Boomers, who were the wine consumption engine of this era, are now old (me included) and drinking less.

Generation X is the next generation, but there are fewer consumers, and they did not pick up wine as their main alcoholic beverage like their parents.

The largest new generation, the Millennials and those following, are what might be called beverage omnivores, where they have few set preferences and prefer different drinks, both alcoholic and non-alcoholic, for different occasions and situations.

This is different than Baby Boomers, who had preferences for different beverages, but these were fairly stable and focused on only a few alcoholic beverage categories.

Over time, Baby Boomer preferences migrated from a focus on beer and spirits to a more equal dispersion among the three big categories; wine preferences grew as beer and spirits diminished.

Along with Baby Boomer wine drinkers, we had the development of sensory science, advances in viticulture and wine science and the emergence of wine experts.

Before the 1960s, wine merchants and specialised retailers aided wine drinkers in their decisions of what wine to buy.

Since then, a new profession of wine writers and consumer-focused wine publications evolved to aid both consumers in their choices and the trade in their efforts to reach consumers.

As the number of dedicated wine consumers shrank in recent years, the number of wine writers and related publications also reduced.

Their replacements are becoming peer-based websites, blogs and influencers, more diverse, fragmented and less focused on wine.

This very short history of the development of wine as the alcoholic beverage of choice in many Western countries during the 1970s through the early 2000s and its growth in Asia and other places is necessary to understand the future.

There are many factors cited in the literature affecting the preferences of the next generations of potential wine drinkers.

I don’t need to review these in detail here, but we must acknowledge pressure from anti-alcohol groups, competition from big-branded alcohol producers in many other categories, low and no alcohol ‘wines’, greater competition for shelf space and trade representation as consumption shrinks but supply does not, increasing climate variability and overall warming affecting wine styles and cost of production, and more stringent regulations across many areas, just to name some of the key trends.

Where does this leave us for the future?

Although I focus on Australia, the same trends and strategies can be seen in most wine sectors.

It is already difficult for Australian grape and wine producers to compete in the lower prices points globally.

This will get even more difficult in the coming decade.

As consumers choose across growing categories of alcoholic and non-alcoholic drinks, branding will grow even more important.

Wine has already diverged into two parallel types: beverage wine and fine wine (or wine of place). Beverage wine as epitomised by big brands, will involve increasing expenditure on mental and physical availability in order to be heard among the many other big brand-led categories.

Brands will have to come to mind when consumers start thinking about purchasing, which is the concept of mental availability.

Being successful in mental availability will involve consistent media and social media campaigns, relevant packaging, events, efficient pricing and key sponsorships.

Physical availability – being where people shop when the brand comes to mind – will involve complex logistics across wide-ranging channels, retail stores, alcohol shops, restaurants, online and quick-delivery services.

This is expensive and will mainly involve large companies, although smaller companies may be able to succeed locally.