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How COVID-19 is changing Australia’s domestic wine market

The COVID-19 pandemic has significantly impacted the Australian wine market and Australian wine producers.

The impact on individual producers depends on their product and channel portfolio. Those with a heavier bias toward the on-trade channel have, relatively, been harder hit due to the closure of all licensed venues in Australia on 22 March.

As a result of the closure of the on-trade and with people forced to remain at home, the main avenue for purchasing wine domestically has been from the off-trade channel. In the off-trade, panic-buying saw spikes in sales from mid-March to mid-April. While the value of wine sales increased by 0.7 per cent in the 4 weeks ended 9 February 2020 and by 1.4 per cent in the 4 weeks ended 8 March, sales increased by 17.4 per cent in the 4 weeks ended 5 April. This is the latest data available on the domestic market.

Those with a portfolio weighted toward value/commercial wines have been in a better position as the growth in value/commercial wines has been stronger than for fine wines in the domestic market (see Figure 1). All price points benefitted from the surge in sales, with the notable exception of wines above $50 per bottle. The fastest growing segment was at $6–9.99 per bottle, with the value of sales growing by 31 per cent in the 4 weeks ended 5 April compared to 8 per cent in the 4 weeks ended 8 March.

Figure 1: Sales value growth rates by price point in the Australian off-trade market

Source: IRI MarketEdge

Wine Intelligence conducted research in late March and April 2020 into how wine consumers’ behaviours and attitudes have changed, or not, as a result of the impact of COVID-19 in the Australian market.

Among the key findings are:

  • wine consumption frequency is largely stable, with younger consumers drinking less and middle-aged consumers drinking more
  • the wine occasion without food at home is growing, while more formal occasions have declined significantly
  • typical spend per bottle for home consumption is down across all occasions compared with pre-virus spending on each occasion
  • the biggest channel winner for wine purchase is online (see Figure 2), driven by younger male, wine-engaged urbanites
  • looking further ahead, nearly half of consumers say they will be placing higher priority on saving money
  • however, around a quarter of consumers say they are prioritising holidays, treating themselves and trying new foods.

Figure 2: Change in channel usage (during lockdown March 2020 compared with pre-virus behaviour for all Australian regular wine drinkers

Source: Wine Intelligence

The pessimistic economic outlook is driving saving intentions and the decline in average spend per bottle. Australia has seen widespread job losses due to COVID-19; almost 600,000 jobs have been lost and the unemployment rate has jumped from 5.2 per cent to 6.2 per cent. The jobless rate in Australia has hit the highest level since September 2015. Wine Australia will delve into the impacts of the pandemic on the global economy in next week’s Market Bulletin.

Wine Australia will be hosting a free webinar on Wednesday 20 May, 4 – 5 pm (ACST). Join Wine Intelligence CEO Lulie Halstead as she discusses findings from the latest Wine Intelligence COVID-19 impact reports on the Australian (as touched on above), USA and UK markets.

Published by Wine Australia
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