Oversupply, private label products, the high Aussie dollar: Australia's wine production industry has been doing it tough, but its fortunes are about to change, according to IBISWorld.
The market researcher says things are looking up for wine producers in Australia, and predicts that domestic wine production is expected to improve over the next five years.
According to IBISWorld, operators are addressing the oversupply problem by reducing production and closing underperforming wineries, which should gradually bring the industry back to balance.
Furthermore, it says, the depreciation of the Australian dollar is reviving industry exports and making cheaper imported products less competitive in the domestic market.
“Over the next five years, consumer shifts towards premium wine products and increased online liquor sales are expected to benefit local wine producers. Online wine retailers have found success by stocking premium, niche and independent wine labels that may not be available at mass-market, bricks-and-mortar liquor retailers,” the researcher says.
It also noted that Cellarmasters, which was acquired by Woolworths in 2011, has generated rapid growth by focusing on the online fine wine market.
Independent online wine retailers, such as Vinomofo, are also growing strongly and establishing supply contracts with a range of domestic wine producers, and in March 2014, Vinomofo was voted Online Business of the Year at the Australian Startup Awards, indicating the growth potential and expanding markets for online wine retailers.
“The emergence of new online wine retailers, and the shift in consumer tastes towards more premium wine labels, is shaking up the downstream market for wine producers. These trends, coupled with the wine production industry’s expected return to balance, are expected to provide a host of opportunities at both the wine production and retail levels over the next five years,” IBISWorld says.
IBISWorld says things are looking up for wine producers in Australia.
