Selling a fine-wine story to US
Producers are keen to get Americans excited about the regional subtleties of Australian wines.
Producers are keen to get Americans excited about the regional subtleties of Australian wines. WHEN Wine Australia invites you to go "Around Australia in 80 Sips" it is a hard offer to knock back. From the time you have wound your way from Margaret River reds to Yarra Valley whites amid the smell of hot meat pies you can easily forget that you are actually at an events space on New York's 42nd Street.There is a reason why this event is being held here. It has something to do with Australian wine exports falling to their lowest in a decade last year (down 10 per cent from 2010 to $1.89 billion).You see, despite Australia being the fourth-largest wine exporter in the world, fewer people have been opting for an Australian drop in their carafe.Wine is big business that many count on to thrive irrespective of what the broader economy is doing. You are selling a product that people use to toast the good times and drown their sorrows during the bad.So if wine is so resilient to tough economic times, why is Australian wine being snubbed overseas?Rebecca Farrow, general manager at Sticks in the Yarra Valley, says Australian wine has developed a reputation in many countries for being lower end."I think the Australian wine industry is partly to blame because we offloaded during the glut. A lot of the bigger wineries offloaded their excess wine into these overseas markets," she said.If you go into any wine shop in New York you will see what Farrow means. The Australian offerings will almost always include Yellow Tail, Jacob's Creek and Wolf Blass.That is because Americans buy a lot of these labels. They have developed a taste for wines that many in Australia would look past.When Yellow Tail started exporting in 2001 it sold 112,000 cases, a number that jumped to 7.5 million in 2005. It became the No. 1 imported wine in the US by 2003.Farrow says while Yellow Tail is an enviable success story, it has "no doubt damaged the perception of Australian wine"."When Yellow Tail first came out, the quality of the wine for the dollar you paid was good. But as they kept ramping up volume, you just can't maintain that quality and retailers here have been saying this week that the quality has dropped away," she said. "It means we have to work hard to get that message across that Australian wine isn't the same and while the Yarra Valley is cool-climate, medium-bodied reds, South Australia will do those big, riper, high-alcohol reds."We need to let people know that Australia's wine story is one of regionality. That way they will understand that when you choose a Yarra Valley chardonnay it is designed to be consumed with food and it isn't that bottle of sav blanc that you sit down and have with your girlfriends," Farrow said.There is some evidence to show that the education push is paying off. The latest figures from Wine Australia show that if foreigners do opt for an Australian wine, they are becoming more likely to choose a premium-priced bottle. While wines under $20 a bottle, which were selling well, have fallen away there is strong growth in the $20-$49.99 range (up 48 per cent), $50-$99.99 (up 33 per cent) and more than $100 (up 27 per cent).The strength of the Australian dollar is not helping exporters but Farrow says Sticks, which has been exporting to the US for seven years, plans to continue telling Americans the Yarra Valley story."I think anyone thinking of exporting into the US will benefit from coming over here and speaking face to face with the consumer. There is strength in numbers and it would be great to see more smaller wineries exporting to help get the message across," Farrow said.Luke Higgins, regional sales manager for Lion Nathan USA, agrees that educating Americans about the different wine regions in Australia is the first step towards boosting exports."We tend to focus on telling the message to our distributor network so they know exactly what they are selling," Higgins said. "But we find the sommelier set are really the first ones to turn their heads. It is something of a badge of honour for sommeliers to know different wine regions and we are starting to hear Tasmania being mentioned, you will hear the Yarra Valley mentioned, you will hear Margaret River mentioned."Higgins believes Lion Nathan bought US wine importer Cumulus Wine in 2008 because the company felt the three-tiered distribution system in the US was proving to be a substantial obstacle in getting the right message to the end buyer. Since the repealing of prohibition, the US requires producers to sell only to distributors who then sell to retailers. Retailers are the only ones allowed to sell to consumers."In buying the importer we really wanted to get closer to the marketplace because we think the story is compelling. The three-tiered system in the US can be like a game of Chinese whispers at all levels so we found it more efficient to find a way around that," Higgins said.Lion Nathan USA has also bought two US wineries, Argyle in Oregon and MacRostie on the Sonoma coast of California. It provides a hedge for the company if the Australian dollar stays around parity with the US."There is no doubt that the US is a long-term proposition," Higgins said. "Anyone looking for short-term gains is not looking here. But I think we have hit the bottom and if we can get people talking about what different regions in Australia have got to offer then I think you will see things improve. There are signs that this is happening."It seems the Australian wine industry is no longer satisfied to carry this cheap, brash knockabout reputation and instead wants to present itself as a nuanced and refined regional dame.Exports will tell how successful this strategy is and, more importantly, whether Americans are buying email@example.comTwitter: mathewmurphy81
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free