The 2020s have been one of the worst periods in Australia’s wine history. An industry that had spent half a century ditching its cheap and cheerful image to become the world’s sixth biggest producer of quality wines has been devastated by both natural and manmade disasters that have triggered bankruptcies, ruined livelihoods, exposed producers to ongoing financial and management crises and seen investors lose fortunes.
But after five years of continual crisis the industry is gradually changing by switching from being production led to putting consumer demands to the forefront and switching from big buttery Chardonnays and 14%-plus Shiraz toward fresher styles.
“We’ve got to innovate. We’ve got to change the way we present products in both the wine and formats”, Tom Dusseldorp, the CEO of Australian Vintage (AV) said recently.
Matt Fowkes, head of buying for UK retailer Majestic, agrees: “There is a massive opportunity for an Australian white resurgence and stylistic evolution of heavy reds”, he says. “By leaning into cooler-climate expressions winemakers can keep up with trends and retain their reputation as the world’s most adaptable wine growing nation.”
Peaks and troughs
The complexities of the changing climate, excess production, oversupply of commodity wines at the wrong price points and UK duty rate changes penalising higher alcoholic content have hit producers and their importers hard. Bottles retailing at £10 and above account for about 2% of the UK wine market and Neilsen figures show that last year 57% of the fall in demand came from just seven brands.
But on the positive side, Australian wine priced at £7.50 to £9 has grown by 70% in the past year and £10+ has grown by 29%.
“All the declines are coming from the Boomers who drank a huge amount of Cabernet Sauvignon or Shiraz,” says Dusseldorp.
AV’s chief commercial officer, Aaron Lohrey concurs: “Our portfolio mix is changing as we focus on innovation in lighter, lower alcohol wines to improve margin and reduce reliance on red-heavy products.”
There is a danger of over-reaction. “Reducing ABVs as a way of supporting lower consumer prices can sometimes have a negative impact on sales as customers see it as a lower quality wine. There has been a bit of that in the UK,” says Fowkes. “Australia is still one of the best producers of Shiraz and Chardonnay globally and Australia’s cool-climate Chardonnay is some of the best you’ll find anywhere in the world,” he says.
“Producers will have to work really hard given the current market dynamics, but those styles are still in demand and absolutely have a bright future if they can tell their stories well.”
Plummeting grower profits
Between 2022 (before the changes to duties were implemented) and 2024, the volume of Australian wine shipped to the UK fell by just 2% but the levels of alcohol changed. According to a survey for Wine Australia, in 2022 the average level of alcohol in still red wine for the UK was 13.6% with whites at 12.6%. They dropped in 2024 to 12.8% for reds and 11.8% for whites. In 2022 less than 5% of Australian wine shipped to Britain was below 11.5% ABV. In 2024 that proportion had risen to 42%. The UK remains Australia’s second largest export market following the reopening of China, taking 14% of shipments in 2024.
But while the 2m tonne crush in 2021 was worth AU$700 per tonne, last year’s 1.6m tonne harvest yielded an average AU$50 less. Yields fell, but so did returns. Growers in their hundreds gave up because viticulture had become unprofitable.
Last November, Riverland Wine, a growers’ association in South Australia, wrote an “Urgent Open Letter” to the state government saying that the price of Shiraz grapes in the region had dropped by more than two-thirds since 2020. It expects prices from this year’s harvest to be even worse. “Right now the Riverland…is breaking,” the letter said.
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