Why less is more for Australia

25 January, 2008

Forget big branded blockbusters - retailers and consumers are demanding subtler, less alcoholic wines, as Rebecca Evans discovers

Australia's UK success story continues, with Oz wines outselling those from any other country - but grumbles from retailers have hit the headlines in the past year.

Majestic and Thresher are among businesses who've noticed declining consumer interest in Australian wine. Oversupply at the lower end of the market has given the country's wine industry as a whole something of an image problem and prompted Wine Australia to dream up a string of new strategies aimed at driving value. Meanwhile, a dedicated band of independent retailers have ignored the hype and continued to seek out and sell innovative, interesting and well-made wines from Down Under - and they have plenty of ideas on where Australian wine should go next.

Londoners keen to sample the latest that Australia has to offer are well advised to visit one of Philglas & Swiggot's three branches, in Richmond, Battersea and Marylebone. Husband-and-wife team Mike and Karen Rogers opened their first shop in Battersea in 1991, at a time when Australia's representation in supermarkets was patchy. Since then, they have built up a reputation as Australian experts because of their varied and imaginative range.

Mike Rogers says: "We were interested [in Australian wine] from the beginning. Partly out of patriotism, because my wife is Australian. She could see the seductiveness of Australian wine and she could see it being transferred to the UK palate."

In the early days, Philglas sold Blass, Penfolds and other key brands, but steered clear of duplicating wines sold in supermarkets. "We've never sold Jacob's Creek, not because it's not any good, but because it was ubiquitous in supermarkets." Gradually, the range expanded to include some of the smaller-production wines such as "Petaluma, Cape Mentelle, that kind of stuff".

The pair didn't set out to specialise in Australian wine, but found customers were very excited by what they were tasting, and the positive comments kept flowing in.

"Australia was a no-brainer," Rogers says. "Everybody came back and said 'what a discovery - thank you very much' or 'we've never had anything quite like it'."

As the category gained momentum the pair were able to adjust the shop's range further towards the upper end of the market, moving towards smaller companies.

Now Australian wine represents 20 per cent of the wine sold at Philglas & Swiggot, and the range has gone even further upmarket. The average bottle price is around £13 - roughly in the middle of the shops' total price range.

Oz wine, however, appears to have been a victim of its own success.

"Australia has created a wine-drinking nation in the UK because its accessible, understandable straightforwardness has given people much confidence in the very process of drinking wine," says Rogers. "What Australia has brought about is a nation of wine drinkers, confident wine drinkers. Very many more people are prepared to experiment with the Old World."

This has led to a decline in demand for the top-priced branded Australian wine.

"I reckon that all points towards our customers, they are much more confident and more experienced wine drinkers," Rogers says. "Our customers are quite sophisticated people. Where the idea of a brand works well is at lower price points. At the top end, people still have this idea of the mystique of terroir and discovering new things." Philglas customers would rather spend their cash on discoveries from Europe than Australian wine at the top of a brand pyramid, Rogers says.

"My view is we can still sell Grange because there are people who buy it almost as a luxury, or a competitive, financial thing because they can say they got it at the best possible price and they can brag to their friends.

"The sophisticated wine drinker wants to go off-piste. They want to discover new things and don't want to feel as if they need the reassurance of the brand."

Customer trends point towards food-friendly wines with lower alcohol, more tannin, more acidity and less oak, Rogers says. "Customers are saying 'I want a wine to go with food'. If I suggest an Australian wine, they say 'I don't want those big Australian wines'."

The solution, he suggests, is for Australian winemaking to grow up a little bit and "offer wines which are more sophisticated". The UK is a maturing market but definitely has lots of potential for Australia to grow its market share, he believes.

Wine Australia's Directions to 2025 report sets out a growth plan for its wine business, grouping wine into four main types it believes will succeed in the future - Brand Champions, Generation Next (innovative wines), Regional Heroes and Landmark Australia (fine wines). Rogers believes branding and innovation, in particular, will be vital to the Australian wine industry.

He says: "Brands will be very important. The term brand in its purest sense just refers to a name people are familiar with." Rogers points out that people often think of brands in terms of the large-scale commercial wines, but well-known producers such as Two Hands are just as much brands, "because people recognise it". Australia must also refresh its offering so "people look at it with fresh eyes and say 'I still love Penfolds' or 'Rosemount isn't dead'," he says.

Another key point for Australian wine producers to address is innovation - particularly in terms of revitalising the style of Oz wines. Rogers says: "Why are we not selling all these top-end wines? The reason is there seems to have been this fashion for creating a turbo-charged wine. Reduction, 16 per cent alcohol, the idea that more is more.

"We're a little past that as far as the market's concerned. I think there are still a lot of the top wines who feel as though in order to justify their price they have to give us massive alcohol, massive fruit, big, hefty blockbuster-style wines.

That's moving Australia so far away from the core of what we know as top wines that it doesn't deserve to exist.

"I think the concept of innovative wines is important in the sense that we should give people what we know they want. Something food-friendly. Australia should strive to deliver subtlety and complexity but not throw the baby out with the bathwater. It should still be drinkable, still be seductive. Sometimes less is more.

"My view is the future is about achieving the very difficult balance of fruit, complexity, subtlety and lower alcohol. Particularly lower alcohol. Customers actually come in asking for this.

"The other part of innovation is using different grape varieties. Australia is very experimental, but has been experimental with a fairly small group of grapes. The future has room for them to explore other varieties like Sangiovese. Nebbiolo or Arneis. Tempranillo would do well in Australia. They should also recognise the massive growing sector that is rosť, but food-friendly rosť rather than jammy, ruby-red rosť."

Rogers is less hot on the idea of pushing regionality.

"In my experience, people don't care about regionality. They do with France, but they don't care about it with Australia. I'm not saying regionality doesn't deserve to exist, but it's low down on the decision-making process as far as Australia is concerned. It would be wrong to make it the main selling point."

Rogers is keen to point out that, despite recent difficulties first with oversupply then widespread drought, Australia is building on a success story.

"They have gone from nothing to being the biggest supplier of wine to the UK. They are right in there, it's going very well and they have done it by investment and growth. The number of hectares under vine compared to 20 years ago is massive."

And whatever nature has to offer future vintages, the Australian wine industry

will still have its most valuable resource - people. "The Australians are natural marketers. That's just as much a factor in their growth as the wines themselves."

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