Leading asset finance broker, Savvy, has released a new report ‘Wine in Australia: Still the Taste of the World?’ which says that despite the significant negative impacts the Australian wine industry has faced recently, projections for annual revenue growth are positive.

Savvy’s report performs a deep dive into a number of recent figures and reports to shed light on the current state of the wine industry in Australia.

The report states: “The Australian wine industry is worth $6.9bn, taking in $409.8m in profits as of the final quarter of 2021. This represents a 5.9 per cent profit margin for producers and wineries.

“In terms of how wine impacts the broader Australian economy, the wine industry generated $1.1b in wages, spread out across 14,754 employees and 1954 businesses. The overall annual profit growth of the market has been negative however at -8.2 per cent between 2017-2022.

“Annualised growth in terms of revenue over 2017-2022 showed a dip of 0.6 per cent, while projections show annual growth over 2022-2027 to increase by 2.5 per cent.”

Savvy also says that the trend towards higher premium wine output has supported the industry, stating “people with higher disposable income usually drink wine, as it’s considered a premium, non-essential product,” adding “wine demand has also increased, particularly white wine among young female drinkers”.

Looking at the question of ‘who profits most from wine sales in Australia?’ the report says: “The major market segmentation for wine is major retailers such as Coles or Woolworths (28.1 per cent), domestic wholesalers (22.5 per cent) and other markets (16.9 per cent).

“Market concentration in Australian wine is low, with the four major Australian wine producers taking up a 34.3 per cent share of industry revenue in 2021-22.

“The four major producers are Treasury Wine Estates Ltd. with a market share of 13.5 per cent. They produce some of Australia’s most premium brands including Penfolds, Wolf Blass, Lindeman’s, and Rosemount Estate.

“Accolade Wines was in second position in terms of 2020 total wine production, according to Wine Titles.

“Casella Wines Pty. Ltd., in third position as of 2020 in terms of total wine production, shares 7.7 per cent of the market and makes wines such as Yellow Tail and Casella 1919. Yellow Tail has performed well in the United States due to its unique and aggressive “Blue Ocean” strategy of marketing.

“Pernod Ricard Pacific Holdings has a seven per cent market share and is the subsidiary of French luxury spirits and wine group Pernod Ricard SA. They own the respected brands of Jacob’s Creek, I am George, and St Hugo.

“Underneath the ‘Big Four’ are medium-sized wine companies including Australian Vintage Limited (four per cent share), Kingston Wine Estates and De Bortoli Wines. A dozen or so smaller producers also contribute to total production, adding variety to the market.

According to Bill Tsouvalas, finance expert and founder of Savvy: “While the fundamentals of the wine business remain good, the industry has really been impacted by first the China trade tariffs and now the ongoing pandemic. This has been reflected in the decline in business equipment lending we’ve seen in that sector, compared say to the craft beer market, where producers are increasing in number and expanding production capacity.

“This may have as much to do with the comparative maturity of the industry – Australian wine producers have been established much longer and probably now have excess production capacity.”

Head to the Savvy website to find out more about its ‘Wine in Australia: Still the Taste of the World’ report.

Andy Young

Andy joined Intermedia as Editor of The Shout in 2015, writing news on a daily basis and also writing features for National Liquor News. Now Managing Editor of both The Shout and Bars and Clubs.

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