Australia Struggles to Go Premium
It's a familiar tale. Industry giants unleash a highly successful brand onto the world, subsequently forging a monolithic and overarching identity for an entire country. In Australia's case it was Yellow Tail, a cheap-and-cheerful brand launched by the Sicilian immigrant Filippo Casella and his son John. The massive success of Yellow Tail led to a surge of imitation brands, all of which helped to reinforce the image of Australia as the maker of sunshine-in-a-bottle wines.
And so like their counterparts in Penedès, Australia's quality-conscious firmament have spent the last 15 years attempting to overturn this gross misrepresentation. "Australia, like many countries, has a domestic wine industry that is more diverse and interesting than the one that it is globally recognized for," agrees Nicholas Crampton, winemaker at Woods Crampton. "We are extremely proud and passionate about our Tasmanian sparkling, our Riesling, our Chardonnay, rosé and Pinot Noir."
Yet the ghost of Yellow Tail lingers on even today – the perception of Australian wine as a fruit-bomb caricature, at a time when sommeliers have really soured on this genre, has arguably been a major stumbling block for their fine wine industry. "The reality is that 'premium' isn't just about quality, it's about image too, and Australia simply hasn't created a strong image around its super-premium wines," says Christine Parkinson, Group Head of Wine for the Hakkasan Group. "Consumers are aware of Supertuscans, and Napa cabs, but if you asked them about premium wines from Australia they probably wouldn't have a clue."
Or would they? The latest data from Wine Australia suggests that Monty Python's "a wine for laying down and avoiding" cliché is perhaps being put to death. What is particularly eye catching is the rise of global exports (in 2018) by 10 percent in value, with overall sales growing in several key markets, including Northeast Asia, Europe and Southeast Asia. Significant gains in value were seen in China, Canada and New Zealand, although Australia continues to struggle in the US.
"These figures demonstrate strong international demand and they highlight how Australian wine exporters have worked diligently to develop and maintain international markets," said Andreas Clark, CEO of Wine Australia. "This demand translated into growth in almost all price segments."
It's hard to argue against this assertion – the figures do not lie. However, that doesn't mean they entirely tell the truth. Exports of Australian wine priced at over $200 actually fell by 7 percent in 2018, while a great deal of Australia's growth is dependent on the current Chinese love affair with antipodean wine. And that suggests something basic, uncomplicated and simple. Australia is hedging its bets on newer markets like China, while failing to convince enough consumers in the west that expensive Shiraz and Cab is worth a punt.
"I haven't really seen any evidence that would support these figures," says Parkinson. "I sense that there is growing appreciation of the newer styles of fine Australian wine, but on a very, very small scale. Our Shanghai Hakkasan has increased its listing of these wines, however, and I think it could be China that is responsible for the value growth Australia is experiencing."
Of course, politics also plays its part.
"The growth in Australian exports to China is largely due to the 15 percent tariff increase on US wines going to China that was instigated in April 2018," argues Hong Kong-based sommelier John Chan.
"The demand for American wines then slightly dropped; in return the demand for alternatives was stimulated. Other than the Chinese market, top Aussie wines are always sought after in many Asian countries. However, in Hong Kong, (unaffected by the tariff increases), I think the growth of American wines has been more noticeable. I still believe 'easygoing wines' account for the majority of Australian exports."
Wine buyer Peter Mitchell MW expands upon the theme. "With the premium Australian brands that we work with, demand remains patchy," he says. "I don't think Australia has 'overturned its image'... I still believe that much needs to be done in terms of getting consumers to appreciate how brilliantly these top wines age (in many cases better than their European counterparts), but a lack of availability of mature stock severely hampers this."
But that's not right, says Cedric Nicaise, wine director at the Eleven Madison Park hotel, New York. He argues that there is a cultural shift in wines from Australia that consumers are taking note of. "Producers are hitting the market with some really great terroir-driven wines that are changing, or at least starting to change perceptions," he observes.
"I would add that at least in New York Syrah is having a serious moment and there could be some trickle down with that."
So what is right? Is expensive Australia resurgent in traditional markets, or is it a case of lies, damned lies and statistics? The truth is we don't know – who has the resources to question every consumer in the market for Australian wine? However, if we discount the luxurious ($200 plus, for sake of argument) segment for one second, there is real evidence that the ghost of Yellow Tail is being laid to rest.
An analysis of Wine Australia's latest figures show that exports of Pinot Noir and Viognier/Roussanne rose sharply, offering encouraging signs that the diversity message is disseminating into consumer mindsets – at least those in the market for quality wine.
Nicholas Crampton argues that as a greater number of wineries shift their focus to "affordable luxury," so too will Australia's cheap-and-cheerful image further wane. "I think increasingly we recognize our future is not as a low-cost player but that we can deliver outstanding consistency, quality and value in the mainstream premium segment [$15-30 in Australia]," says Crampton.
He cites Mourvèdre as just one example of a variety that now thrives in South Australia – Bandol's newest competitor?
"In conjunction with Hatch Mansfield, our UK distributor, Robert Oatley Vineyards have seen consistent, solid growth year on year for the last few years," enthuses Katie MacAulay, UK business development manager at Robert Oatley Vineyards.
"This growth is reflected in all sectors of our wine range including Pennant, our flagship duo of wines [$40-50], which are now being snapped up by the Fine Wine sector. However there is still a lot of work to be done on getting the message across to every sector of the market that Australia is making world class wine."
Her counterparts in the off-trade largely concur. "Premium sales of Australian wine are a small part of our sales, but knowledge and education are both increasing. Famous top-end wines like Grange, Grace and Klonakilla have always had a niche, but the small-production boutique wineries of quality are definitely an area of growth," says John Chapman, operations director at the Oxford Wine Company.
Nevertheless, while the trade are encouraged by responses to what they term "mainstream premium" Aussie wine, few would deny that expensive labels struggle to get traction in the premium on-trade. This will be the core challenge for producers and buyers over the next five years, to convince greater swathes of consumers that pricey Australian wine justifies its price tag – a problem of course facing many New and Old World categories today.
Mitchell MW argues that as many of Australia's iconic Shiraz and Cabernet wines take at least 20 years to reveal their true quality, a dearth of mature stock on the market has sullied their reputation. "Few consumers have ever tried the wines fully mature – It is only by comparing them with their international rivals when they are ready to drink that more understanding of their qualities will be appreciated," he says.
"My advice is to get more influencers (sommeliers/journalists etc.) to taste the wines fully mature."
Meanwhile Parkinson believes that greater industry classification is required, and that a complete lack of formal hierarchy has done super-premium Australia no favors. "I have always thought the Langton's classification could be better used – after all, classification has been a great tool in Bordeaux," she says. "I also think that perhaps varietal labeling, which has been so powerful at entry level, could take a back-seat for some premium and super-premium wines. Maybe it's time for the regions to take the spotlight for some of the top-end wines?"
Ultimately though, it is clear that in the short to medium term at least, Australia's firmament of icon wines are likely to remain a niche part of the upmarket dining and retail scene – at least in Europe and the US. But growth in mid-range Australian wine imports is a welcome slice of good news – following well-publicized difficulties, brand Australia seems to be clawing back consumer good will and interest. Much will depend, of course, on whether the trade is prepared to work harder with producers in promoting these excellent, characterful wines, but independents at least seem up for the challenge.
"In the end, it's all about getting consumers to taste the wines. For example, we recently held a very successful tasting with Wirra Wirra, featuring some very premium wines, and sales were strong," says John Chapman.
So where are we on this? Can Australia continue to make up for lost ground? Changing entrenched views and perceptions is surely a thankless and never-ending task.
I think Churchill said it best: "This is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning."
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