Australian Grape & Wine welcomes the recommendation by the Senate that the Government should invest in expanding existing markets including through the promotion of wineries and cellar doors domestically, along with the recent commitment by the Albanese Government to boost Austrade’s support for wine exporters. Such assistance is strongly justified given the current economic climate for both growers and producers of wine.
Hot off the press is the latest ABARES Agricultural Commodities Report March 2025. Despite some positive short-term trends, without intervention, the real value of wine grape production and wine exports is expected to trend down further over the medium term to 2029–30. This situation paints a gloomy picture for many growers and producers across Australia. The full report can be accessed here.
We often talk of exports, but light on the horizon also lies in the fact that Australia has a relatively strong domestic market. The Government’s announcement that it plans to increase the Wine Equalisation Tax (WET) producer rebate to $400,000 is appreciated, however as the majority of wine businesses are beneath the cap, it will only be a handful of businesses reaping the full benefit. More targeted action is needed to rebalance supply and demand and drive a sustainable recovery, including on the domestic market.
Consistent with global trends, Wine Australia’s production, sales and inventory 2023–24, estimates that domestic consumption of Australian wine declined by seven per cent in the last five years, which is faster rate than other alcoholic beverages. Whilst a trend towards drinking in moderation is something that must be supported, we can soften the impacts by gaining more traction amongst the cohort of consumers that are drinking less but spending the same by seeking higher value offerings. But we are yet to fully capitalise on this opportunity and the decline in domestic sales value is being exacerbated due to competition from other alcoholic beverages and from imports.
Our pre-budget submission called for assistance for both growers and winemakers which included to grow demand at home – we commend the Senate for highlighting the importance of this in their release. Our submission suggested substantially more funds would be needed than has been committed to date, calling for $78 million over three years for export market stimulus, $30 million in sustainability support to prevent risks to growers and regions associated with vineyard abandonment and $20 million for a domestic marketing campaign to boost food and wine tourism and fully capitalise on the domestic market growth opportunity.
Forty-two per cent of all Australian wine is sold here in Australia (or sixty-one percent by value) making it the largest and most lucrative market for most Australian wine producers. Australian wine also has an estimated eighty-two per cent share of the Australian domestic market by volume, which is a higher share than both the United States and France can lay claim to. However, the issue is that wine that comes in from competitor nations is generally claiming a good chunk of high-end sales including en-premise, eroding Australia’s share of the premium wine markets which is exactly where we are striving to be positioned.
According to Wine Australia’s Import Monitor (free for levy payers) in the year to December 2024, Australia imported $878.2m of wine, the majority being from France, New Zealand and Italy. The average value in the off-trade retail for imported wine is $23.32 per litre, compared with $12.20 per litre for Australian wine (Circana YE December 2024).
Wine Australia provides regular updates via their Market Insights Reports, with a Domestic Market Dashboard due for release later this year.
