While China has recently captured attention in the wine industry following the removal of tariffs on 29 March, Australia’s domestic market remains a cornerstone of the country’s wine industry, accounting for 42% of all Australian wine sold. This robust local market continues to offer significant opportunities for importers and producers alike.
Peter Bailey, Manager of Market Insights at Wine Australia, provided a detailed analysis of the domestic wine market, highlighting key trends and consumer behaviors shaping the industry.
Domestic Market Overview
The Australian domestic market is the largest consumer of Australian wine, holding a 40% share of total sales. However, like many mature wine markets globally, it has experienced a decline in consumption. This trend is attributed to shifting consumer priorities, including a growing focus on health and wellness, as well as economic pressures from rising living costs.
According to data from IWSR, wine consumption in Australia peaked in 2016 and has been declining since, with the trend accelerating post-COVID-19 in 2020. Despite the drop in volume, the value of wine sales has steadily increased since 2005, with a brief pandemic-induced interruption. This growth reflects a shift in consumer behavior, with Australians opting to spend more per bottle while consuming less.
Recent retail data from Circana for the 12 months ending September 2024 shows that Australian wine sales in the off-premise market grew by 0.5% in value, despite a 2% decline in volume. In contrast, imported wines saw a 3% drop in value and a 2% decline in volume. As a result, Australian wine increased its value share of the domestic off-premise market to 76%, while maintaining an 85% volume share.
Varietal and Style Trends
The performance of different wine varieties in the domestic market reveals distinct consumer preferences:
Sauvignon Blanc: Leading the market by value with a 14% share, Sauvignon Blanc sales grew by 0.4%. New Zealand dominates this category with a 58% share, but Australian Sauvignon Blanc saw a 2% increase, capturing 42% of the market.
Shiraz: The second-largest category by value, Shiraz sales declined by 2%, though the 15–15–19.99 price segment saw a 2% increase. Australia accounts for nearly all Shiraz sales.
Chardonnay: With an 8% value share, Chardonnay sales grew by 2%, driven by strong performance in the 15–15–29.99 price range. Australia holds an 85% share, while the US and New Zealand follow with 8% and 6%, respectively.
Cabernet Sauvignon: Sales fell by 1%, but the 15–15–19.99 segment grew by 4%. Australia dominates this category, accounting for nearly 100% of sales.
Emerging Trends
Consumer preferences are shifting toward lighter reds and alternative varieties:
Pinot Noir and Grenache saw significant growth, with sales up 4% and 9%, respectively. Australia holds 77% and 81% shares in these categories.
Prosecco led growth among white wines, with sales up 10%, driven by Australian-produced Prosecco, which holds a 76% market share.
Rosé also flourished, with sales up 5%, making it a competitive category. Australia leads with a 58% share, followed by France (22%) and New Zealand (16%).
Challenges in Sparkling Wine
Sparkling wine sales faced headwinds, with overall value declining by 4%. A sharp 11% drop in Champagne sales overshadowed a modest 0.4% increase in Australian bottled sparkling white wine, which holds an 85% market share.
Conclusion
Despite global challenges and shifting consumer habits, Australia’s domestic wine market remains resilient. Consumers are increasingly prioritizing quality over quantity, opting for premium wines even as overall consumption declines. This trend underscores the strength of the Australian wine industry and its ability to adapt to evolving market dynamics.
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