Australian wine drinkers are thumbing their noses at pricey wines and reaching for the discounted bottles available as part of price promotions in the retail sector. Even though Australians are willing to spend more per bottle than their German or British counterparts, there is likely to be a price deflation. Soni Sangwan reports.
Two separate reports published by Wine Intelligence state that this
growing dependence on discounting is undermining the growth of the
industry. According to Australia Portraits 2011 (a detailed
segmentation and profile of Australia’s wine consumers) as
the consumer uses price to determine purchase, he is becoming less
experimental and less involved.
“Today the market is at a crossroads – do you focus on engaging
consumers with the product itself, or do you focus on the deal?” asks
Stephanie Duboudin, Australia country manager at Wine Intelligence.
“Australia has been the ‘Goldilocks’ market for several years now –
pushing up the average bottle price in the off-premise whilst engaging
wine consumers in understanding why trading up is worthwhile,” she
Wine Market Landscape 2011, a sister publication of Wine Intelligence,
further notes that retailers are demanding more price promotions and
are seeking to introduce more own-label and exclusive brands at low
prices – something that is feeding the consumer’s thirst for less
Although established houses are still seeing profits and consumers are
willing to spend more per bottle than consumers in Germany or the UK,
there is a likelihood of a price deflation in the off-premise.
Paul Henry, Wine Intelligence associate director, explains, “As the
retail challenge in Australia begins to look similarly daunting to
other maturing markets – price and margin compression, dominant buyer
advantage, popular brands as traffic-drivers – brand owners must
employ new consumer engagement strategies or risk losing equity and
share to own-label and/or buyers’-own-brand.”