Producers say Australian wine needs a new image to revive an industry in crisis

Could a Hollywood star revive Australia’s wine industry? A prominent winemaker thinks so, amid calls for a bold new push to sell Australian wine to the world.

Actor Chris Hemsworth and wife Elsa Pataky at the Jacob’s Creek vineyard in the Barossa Valley. Picture: Cristian Prieto

Australian wine producers hope the new year will mark the beginning of a turnaround for the embattled industry after three years of punishing Chinese tariffs which have created a glut of red wine and left exporters scrambling to find other markets.

While the Chinese government’s review of its duties on Australian wine has offered some hope the once-dominant market could re-open in the coming months, local producers are treating a potential trade breakthrough with caution.

Making up ground lost to competing wine-producing countries during the trade halt, in a rapidly evolving market, won’t be an easy task. Many industry players believe a return to the pre-Covid trade boom, when annual exports to China reached $1.2bn, is a long-term proposition at best.

They say the issues facing the industry run much deeper than the trade stand-off with China.

With alcohol consumption on the decline globally, and younger drinkers shunning wine altogether, attracting a new generation of consumers is seen as one of the keys to reviving the fortunes of the sector.

After years of shrugging off its reputation for being a cheap and cheerful alternative to old-world wine producers, local winemakers say Australian wine needs a new identity to win a bigger piece of a shrinking global pie.

Australian Grape and Wine chief executive Lee McLean

Australian Grape and Wine chief executive Lee McLean says winning over a younger demographic should be a focus.

“I think it’s fair to say more work does need to be done, as a nation, to get people interested in Australian wine again,” he says.

“One of the key things that we want to try to figure out is how do we attract new consumers to the category?

“There’s a whole bunch of young people out there who probably aren’t drinking wine in the way that their parents and grandparents were; how do we make wine interesting to that cohort of people? We think there’s a good opportunity for us to do that, in a responsible way of course.

“Certainly something that we are working on, as an industry, with Wine Australia and others is what does a national brand and strategy look like for wine, and how do we go about tailoring that in a way that allows everyone in this really diverse industry that we’ve got here in Australia, to fall under that strategy and be part of it?”

While Mr McLean welcomes the potential reopening of the Chinese market next year, he warns it won’t be the silver bullet many hope for.

“In between the time those import duties were imposed and today, the market in China has changed reasonably considerably,” he says.

“People in China, as we understand it, are buying less by volume. They’re still buying reasonably premium wines, but they’re just buying less of them.

“So you combine that with a loss of market share to some competitors over the last couple of years — the French and Chileans have done pretty well in China — and it’s going to be a different market for us.

“Hopefully it does come back, and it will possibly become our largest export market, but we’re not going to get back to that $1.2bn figure anytime soon.

“The reality is we absolutely need to keep diversifying and finding new opportunities where we can. It’s going to be the sort of thing that we need to keep working on for a number of years, to break down trade barriers and to grow market opportunities in places like India.

“That’s going to be a long-term proposition, but hopefully it leads to a rebalancing of our export footprint.”

China’s exit has left a huge hole in Australia’s annual export volumes since Chinese authorities imposed tariffs of up to 218 per cent on Australian wine in November 2020.

The latest figures from Wine Australia reveal exports slumped to $1.79bn in the 12 months to September, down from a peak of $3.1bn in the 12 months to October 2020, before the tariffs were introduced.

Sales to China have plunged to just $7.3m.

The decline has led to a glut of Australian wine — mainly red varieties — with estimates suggesting 450 million litres of surplus wine is currently sitting in storage.

McLaren Vale winery Maxwell Wines, which previously generated close to 15 per cent of its total sales from exports to China, has turned to one of Australia’s traditional export markets to fill the gap.

Maxwell Wines owner Mark Maxwell at his McLaren Vale vineyard. Picture: Matt Turner

The family-owned company recently signed a distribution agreement with US importer and distributor Southern Glazer’s Wine & Spirits, and has plans to roll out its premium wine across five US states.

It marks a return to the US market for Maxwell founder and owner Mark Maxwell, who describes the deal as a “game changer” for his business, as a new renaissance for Australian wine in the US emerges.

“We were in America until 2008, and when the GFC came a number of medium-sized importers just closed shop,” he says.

“Although America has a lot of economic issues, like most of the world, there’s still a lot of people there that understand wine.

Actor Chris Hemsworth could have the sort of profile capable of repositioning Australia’s image as a wine producer.

“What we’ve had in the past from Australia though, is we haven’t had a quality image for a number of years — we’ve had the so-called ‘critter wine’.”

Mr Maxwell says a new high-profile ambassador is needed to lift the profile of Australian wine in overseas markets.

“I’ve been banging on about this for a long time,” he says. “We had a very amazingly good ambassador for Australian wine — American journalist Robert Parker Jr — and then he faded away and since then we haven’t had an ambassador for Australian wine.

“I have thought of somebody who I think would be recognisable and seems to have a good image, and it’s Chris Hemsworth.

“We’re looking for some sort of marketing edge. I think we need to lift our profile; just putting stuff on Instagram, that’s probably not enough.”

Treasury Wine Estates chief executive Tim Ford.

Meanwhile, the nation’s largest winemaker, Treasury Wine Estates, whose brands include Penfolds, Wolf Blass, Wynns and 19 Crimes, is making its own push into the US. It recently agreed to a $1.6bn deal to acquire California’s high-end Daou Vineyards.

Treasury chief executive Tim Ford says the acquisition, and the company’s broader push towards the premium end of the market, are designed to capitalise on the global shift away from budget wines and towards the higher-priced segment.

“We’ve made a lot of inroads in building our premium and luxury wine portfolio, including the recent acquisition of luxury US winery Daou Vineyards, and I’m looking forward to growing our position as a global luxury wine leader,” he says.

“Whilst the cost of living will continue to be a challenge, history tells us that premium and luxury products hold up well in times like these and we expect to continue to see consumers purchasing these products, whilst moderating their overall alcohol intake.”

Treasury is continuing its foray into no and low-alcohol wine in a bid to win over more health-conscious consumers.

TWE has already launched no and low-alcohol varieties across several of its labels, including Wolf Blass, Pepperjack and Squealing Pig, as part of a $10m investment in the emerging segment.

“We’re excited by the potential for no and low alcohol wine to continue to improve and be a popular choice for consumers looking to reduce their alcohol intake,” Mr Ford says.

“We’ve committed to investing $10m in research and development in the no and low alcohol category, including an in-house state-of-the-art low-alcohol production facility in the Barossa Valley, recognising the potential of the category.”

While Mr Ford has previously warned it would be a slow recovery once trade to China reopened, Treasury is positioning itself for a return to the once-dominant market, having identified the key wines from its portfolio that will spearhead its push if the tariffs are removed.

“We believe that wine consumers in China still have a very high regard for Australian wine and we have a plan in place to regrow our Australian wine presence in China if the tariffs are removed, however we recognise this will take time,” Mr Ford says.