In this post, we will be describe the wine market and the presence of Spanish wines in Australia, taking into account that they are one of the main exporters and producers of wine of “the New World”, and therefore an interesting market with growing sophistication and preferences in the industry.
Firstly, Australia is known for being a market with multiple opportunities, and is globally described as an open economy. Equally, it has a stable political and legal system, which favours external investments. Another aspect that leads us to conclude that exporting our wines to Australia is the right decision is the fact that it got an excellent rating (A1) by COFACE. Additionally, according to the “Doing Business” indicator of the World Bank, Australia is in the 12th position out of the 189 countries of the list, which means Australia is an economy that can stimulate business. It is also considered a world power due to its economic growth, its high degree of human development, its income levels and its consumption possibilities, given its average GDP per capita growth of 2.6%.
WINE SUPPLY IN AUSTRALIA
Australia is the 6th largest wine producer in the world, with a yearly production of 12.6 million hectolitres. For the last 4 years, Australian wine imports have increased, as a result of a local production decline, and are led by those coming from New Zealand, mainly owing to the geographical proximity and the trade agreements signed by both countries. French and Italian wines also have a great influence, much more settled than Spanish wines, with more imports, awareness and sales in the country. The vineyard surface in Australia experienced a regressive phase, with ongoing declines from 2009, when it exceeded 160.000 hectares. Just to give you an idea, the country had 142.233 hectares in 2013.
WINE DEMAND IN AUSTRALIA
Australia is the fifth non-EU country with a largest consumption of wine, which highlights their appreciation, interest and demand for the product. It is also remarkable that the Australian market of wine is made up of 15 million consumers, including potential clients located in the 5 most densely populated cities in the country: Sidney, Melbourne, Brisbane, Perth and Adelaide.
It has been revealed that beer has been the favourite beverage for decades, three times more consumed than wine, but currently figures are decreasing slowly but steadily in favour of wine consumption.Middle-aged and young men prefer beer before they turn 50, while women older than 30 prefer wine. White wines are very popular in the country, mainly because they are produced there and also because imports are growing, but Spanish red wine is widespread in the points of sales. The preferred format is the glass bottle, more than soft packs or cardboard box, which had been common in the past. High-quality wines require better presentations that match their level and origin, nothing similar to the formats used with higher capacities. The stelvin cap tends to be chosen more frequently, as cork is not well-received due to the potential damage it can cause to wine.
FACTORS TO CONSIDER IF YOU WANT TO SELL SPANISH WINES IN AUSTRALIA
When selling wines in Australia, companies need to bear in mind several factors.
There are not commercial or legal obstacles that can curb the wine trade between the EU and Australia (there is an Agreement on Trade in Wines in place). However, imports and sales of spirits are strictly regulated. With regards to the imports, the Federal Government needs to grant licenses, while it’s the State/Local Government’s responsibility in case of wholesale and retail commercialisation.
The main tax and tariff barriers are the following: Ad Valorem Tax (5% on the FOB price), Wine Equalisation Tax (WET, 29% on wholesale price) and GST (10%, equivalent to VAT).
Wine commercialisation takes place mainly through direct sale, agents, distributors, imports (this is one of the best options to enter the Australian market), wholesalers and retailers. The most relevant companies in the sector are Woolworths Limited and Wesfarmers Limited, with a total share of 60%.
In order to elaborate this post, we have used a 2014 ICEX report as a reference. Besides this, the team has researched and updated the information by revising the official Australian Government website, sales channels, commercial partners, as well as other sources in order to provide the most accurate information on how to introduce Spanish wines in Australia.