The UK has seen a big dip in its imports from Australia. We can blame problems in global supply chains and economic angst for some of the decline. But maybe there are other issues that producers need to address. Graham Holter reports
Is the UK falling out of love with Australian wine? The latest export figures seem to suggest so. Volumes fell by 15% in the year to June 30, and value was down 10%.
To put that into context, global Australian wine exports decreased 10% by volume and 19% by value. This, according to Wine Australia, was “not unexpected”. The performance was affected by shipping delays, rising transport costs and spiralling inflation. There has also been a “significant decline” in exports to China, thanks to punitive tariffs, which skews the figures fairly substantially.
But take China out of the equation and Australia’s overall export value is actually up by 5%, and down by just 3% in volume terms. So why is the UK – Australia’s most important market after the USA – looking so anaemic?
Delays and shortages
The Vinorium in Kent is a major importer of premium Australian wines, with around 40 exclusive agencies. Owner Stuart McCloskey says that 2022 is “by far the worst year” he has experienced for Australian sales.
This is partly because the business is now unable to re-export Australian wine to its 1,000-plus customers in the EU, thanks to Brexit. “It’s just impossible, really,” he says. “The cost is through the roof.”
Then there is the issue of shipping delays, adding costs that neither The Vinorium nor its producers are keen to meet. “The wine is on the water for an average of four months now,” McCloskey says.
“Global shipping is a disaster and it’s putting a lot of people off. It’s just so expensive. We’re actually now working with an Aussie shipper because no one in the UK is doing their job very well.
“We brought a container across from Australia in March and it arrived here in June after almost 16 weeks on the water. And the UK leg from the port up to our bond at LCB was almost the same cost as the journey from Australia.”
Availability is also a headache. “Smaller producers have had a couple of tough years,” he says. “2019 was a really hard vintage; 2020 [which was badly affected by smoke taint from bush fires] was super-small and we’re now seeing quite a few of them favouring cellar-door sales against exporting because they can make full margin.
“A lot of them have said to us, we’re not giving you an allocation this year. Or we can give you five cases of this and five cases of that and you think: what’s the point? You can sell that in two minutes, and it just doesn’t work.
“On top of that a few of our producers didn’t produce a 2020 vintage. With our second biggest producer, Utopos [in the Barossa Valley], we’ve shipped almost two containers in the past 18 months and basically 2020 was written off. So we’ve lost 6,000 bottles which we would have sold for £35.”
Consumers are spooked
McCloskey says the business has been badly hit by a downturn in consumer confidence brought about by global events. He’s pragmatic about this: “I think we got away with it so well during the pandemic and it’s our turn now to have a bit of a kick in the bum”, he says.
“The impact of the Ukrainian war is the biggest issue we’ve seen. The drop-off of orders has gone through the floor. It’s quite incredible really.
“Historically our order average per bottle is £33. It’s never really dropped off over four or five years. We don’t really have stock below £10, it’s just a waste of our time. But now we’re seeing, because of the rise in the cost of living, people are not spending £30 to £35 on a regular basis. Customers who would buy from us weekly have just disappeared since the invasion.
“For us the biggest tell-tale is new ecommerce sales. Historically we would bring in 20% to 25% new business every day from all search engines. In June I think it was zero. It’s not just our customer base, it’s maybe the wider world looking at those super-premium wines and thinking: actually we can’t afford this. It’s a luxury too far.
“We’re flabbergasted with the figures that we’re seeing.”
McCloskey expects to bring in “odd parcels here and there” but overall he will ship £2m less Australian wine than in a normal year. The plan is to run down stock levels and then, at the end of the year, make a decision about what to do next. Mothballing the business and keeping staff on at a full salary is one option on the table.
He admits to feeling a sense of “letting people down” in Australia. But he adds: “The market is not right for shipping super-premium wines. There isn’t the audience.”
Happy with flat sales
Tony Wellings, owner of The Antipodean Sommelier, which works with a number of independents, recently had meetings with some Australian producers trying to enter the UK market. “Their wines were good, but I think they were being a bit unrealistic on pricing,” he says. “It was super-premium stuff. Some of the Italian varietals from New South Wales would come in at about £40 on the shelf.”
His entry-level Aussie wine, A Grower’s Touch, retails for around £10 and around 1,600 cases hit the market last year.
“I’ve gone out of stock a couple of times this year because it’s been more difficult to get shipments in due to lead times,” Wellings says. “Instead of 52 days it’s taking 70 or 80 days, and a lot of that is down to the shipping company who seem to be sending one ship in three up to northern Europe. The rest drops in Valencia or Malaga, which is a pain.”
Overall, Australian sales are flat, “which I’m quite pleased about because in 2021 we definitely had a Covid upside of the indies going absolutely crazy and we were 25%, 30% up. We’ve maintained sales in a year when things have got a little bit more difficult.”
Wellings adds: “The only premium wine we’ve got at the moment is Charlie O’Brien’s stuff at Silent Noise and that just continues to grow – it’s about 500 cases for us and it’s between £13 and £15. That’s about 35% up in sales. So we’re not seeing a downturn but that’s maybe because we’re still growing our brands. We haven’t got masses of distribution yet.”
Does Wellings sense any lack of enthusiasm for Australian wine among his customer base?
“I think the indies are still interested if the brand’s right, the product’s right and there’s value, certainly between £10 and £20. Up to £15 is where I would concentrate at the minute to try and get some traction with the indies. Beyond that you are starting to struggle because I don’t think the consumer gets it.
“When I started dealing with New Zealand, Sauvignon Blanc was going absolutely bonkers and it continued for eight or nine years. Australia had been forgotten. Brand Australia became a bit damaged with all the half-price stuff that wasn’t really half-price. Seven or eight years ago the indies wouldn’t touch Australia, it just didn’t work for them.
“Maybe these UK export figures are skewed mainly by the mults because the vast proportion of Aussie wine is still channelled through them, and they are still beating the shit out of it, really.”
“From an export perspective there’s no demand for these lean styles that get applause from Halliday”
Watery Shiraz? No thanks
Stuart McCloskey at The Vinorium is worried that Australian winemakers are perhaps forgetting what they do best. When he produced a report into the buying habits of his customers, accounting for £23m in sales over a five-year period, it emerged that almost three-quarters of that money had been spent on Shiraz. That’s the bolder, traditional Aussie Shiraz rather than the leaner, more modern style.
“When you give people true cool-climate Shiraz, customers run away from it,” he says. “We’ve bombarded customers with wines that are very Mediterranean, some that are like Bordeaux blends – everything you’d want from Europe but from Australia. We’ve had to delist almost all of those producers because we haven’t sold their wines.
“I’ve been on a few Aussie podcasts and said that these lean styles are super-popular, especially from Margaret River, they get a lot of applause from people like Halliday and domestically they’re quite strong.
“But from an export perspective there’s no demand for them and when we’ve brought them across, barring super-collectible wines, actually customers want richer, more textural styles. Not the old vanilla fruit bombs of 15 years ago … but they want something that Australia’s just not producing.
“We’ve said to our winemakers: you’ve got to make a decision. Either you’re producing wines for your export market or your domestic market. Or you’ve got to put a barrel away for The Vinorium and we need more lees contact, more texture – more time in oak, essentially, because we want slightly richer, fatter styles and we don’t want it tasting like water.
“Everyone’s so obsessed with being scored by a critic and it goes back to the old days of Parker, to a degree. But we’re seeing it more and more now and I think that’s why Australia’s got itself into a bit of a pickle, especially on the cool-climate side of things.
“They’re having to please these critics, but at the end of the day critics don’t buy the wines. Produce wine for consumers, not for critics. A lot of winemakers in Australia now should be giving themselves a bit of a kicking because they’ve actually let themselves down.”