The great Australian shake-up
A spate of recent hirings, firings and retirings across Australia’s leading wine companies reflect the ongoing turbulence in the region. Can Oz uphold its reputation as “the world’s most adaptable winegrowing region”? Ron Emler reports.
The 2020s have been one of the worst periods in Australia’s wine history. An industry that had spent half a century ditching its cheap and cheerful image to become the world’s sixth biggest producer of quality wines has been devastated by both natural and manmade disasters that have triggered bankruptcies, ruined livelihoods, exposed producers to ongoing financial and management crises and seen investors lose fortunes.
But after five years of continual crisis the industry is gradually changing by switching from being production led to putting consumer demands to the forefront and switching from big buttery Chardonnays and 14%-plus Shiraz toward fresher styles.
“We’ve got to innovate. We’ve got to change the way we present products in both the wine and formats”, Tom Dusseldorp, the CEO of Australian Vintage (AV) said recently.
Matt Fowkes, head of buying for UK retailer Majestic, agrees: “There is a massive opportunity for an Australian white resurgence and stylistic evolution of heavy reds”, he says. “By leaning into cooler-climate expressions winemakers can keep up with trends and retain their reputation as the world’s most adaptable wine growing nation.”
Peaks and troughs
The complexities of the changing climate, excess production, oversupply of commodity wines at the wrong price points and UK duty rate changes penalising higher alcoholic content have hit producers and their importers hard. Bottles retailing at £10 and above account for about 2% of the UK wine market and Neilsen figures show that last year 57% of the fall in demand came from just seven brands.
But on the positive side, Australian wine priced at £7.50 to £9 has grown by 70% in the past year and £10+ has grown by 29%.
“All the declines are coming from the Boomers who drank a huge amount of Cabernet Sauvignon or Shiraz,” says Dusseldorp.
AV’s chief commercial officer, Aaron Lohrey concurs: “Our portfolio mix is changing as we focus on innovation in lighter, lower alcohol wines to improve margin and reduce reliance on red-heavy products.”
There is a danger of over-reaction. “Reducing ABVs as a way of supporting lower consumer prices can sometimes have a negative impact on sales as customers see it as a lower quality wine. There has been a bit of that in the UK,” says Fowkes. “Australia is still one of the best producers of Shiraz and Chardonnay globally and Australia’s cool-climate Chardonnay is some of the best you’ll find anywhere in the world,” he says.
“Producers will have to work really hard given the current market dynamics, but those styles are still in demand and absolutely have a bright future if they can tell their stories well.”
Plummeting grower profits
Between 2022 (before the changes to duties were implemented) and 2024, the volume of Australian wine shipped to the UK fell by just 2% but the levels of alcohol changed. According to a survey for Wine Australia, in 2022 the average level of alcohol in still red wine for the UK was 13.6% with whites at 12.6%. They dropped in 2024 to 12.8% for reds and 11.8% for whites. In 2022 less than 5% of Australian wine shipped to Britain was below 11.5% ABV. In 2024 that proportion had risen to 42%. The UK remains Australia’s second largest export market following the reopening of China, taking 14% of shipments in 2024.
But while the 2m tonne crush in 2021 was worth AU$700 per tonne, last year’s 1.6m tonne harvest yielded an average AU$50 less. Yields fell, but so did returns. Growers in their hundreds gave up because viticulture had become unprofitable.
Last November, Riverland Wine, a growers’ association in South Australia, wrote an “Urgent Open Letter” to the state government saying that the price of Shiraz grapes in the region had dropped by more than two-thirds since 2020. It expects prices from this year’s harvest to be even worse. “Right now the Riverland…is breaking,” the letter said.
Growers are facing the dual disaster of the climate warming and producers wanting lower, better-quality tonnage. The first in a series of crises came with “Black Summer” bushfires of 2019 to 2020. Winemaking was hit by fire and smoke, especially in the Adelaide Hills, where up 30% of the vineyards were lost and much of the harvest was ditched. Then the global lockdowns for coronavirus in 2020 triggered a fundamental switch to consumers experimenting with cocktails at home, with wine being the big loser, especially in the Australian domestic market for commodity bottles below AU$10.
That pattern repeated itself globally, leaving cellars overflowing and wineries refusing to take grapes. By the end of 2024 there were more than two billion surplus bottles of Australian wine looking for a market. That is changing, but slowly.
AV’s Dusseldorp said recently that by forcing through new contracts, whereas last year he would have 100m litres of wine in tank in Mildura (much of it excess) after this year’s harvest he will be in deficit by “20 to 30 million litres”.
China tariffs
What was even more damaging for Australian wine was Beijing taking offence at the Canberra government demanding an international investigation into whether China was the cause of Covid.
In a political retaliation it accused Australia of dumping wines below cost and imposed tariffs of more than 200% on them. Overnight 40% of Australia’ s export market disappeared for three years.
In 2024, due to overproduction and falling consumption, growers uprooted millions of vines. But a huge glut of wine remains and exporters continue to wrestle with the drastic changes needed.
Treasury Wine Estates
Last autumn, after five years of being buffeted at the helm, Treasury Wine’s CEO Tim Ford stepped down, and the long-serving finance director Stuart Boxer retired.
They had sought to reshape Australia’s biggest group into three divisions, the premium flagship Penfolds and Treasury Americas ranges and the less viable Treasury Collective labels such as Wolf Blass and Lindemanns, which they tried – and failed – to sell off.
Treasury spent more than AU$1.8 billion to buy Frank Family Vineyards and Daou to add to Beringer and Sterling Vineyards in California and give the group a more global base. But sales in America have dramatically underperformed expectations, running at only half the rate that analysts had predicted and at Christmas new chief executive Sam Fischer cancelled the dividend and wrote off the entire AU$649m goodwill of the US enterprise.
Meanwhile, the hoped-for revival in Chinese demand has failed to materialise. Distributors are said to have millions of bottles of surplus stock and Fischer says Treasury will reduce its inventory in China by 400,000 cases by the end of 2027. Treasury has rationalised output and cancelled grower contracts as well as moving into production of no and low alcohol wines, but its shares have nosedived from AU$18.50 in 2018 to AU$ 3.70 today.
The company was recently forced to deny that its high debts could force it under, and big shareholder and former chief operating officer Robert Foye demanded the board be overhauled to stop the shares falling further. However, the group received a fillip at the end of 2025 when French billionaire Olivier Goudet took an AU$244m (£122m) stake in Treasury, saying that he was investing for the long term.
Accolade and Pernod Ricard
Treasury is far from alone in its challenges. In 2018 arch-rival Accolade was bought by US investment group Carlisle for AU$1.2 billion but by 2024 soaring debts forced it to cut its losses and sell to a consortium led by Bain, who paid a rumoured 40 cents on the dollar of the liabilities.
At the same time in 2024 Pernod Ricard was seeking to exit wines by selling its Australasian and Spanish interests, including Jacob’s Creek. At a rumoured price of AU$500m, this portfolio was sold to Accolade which become Vinarchy, which is the largest exporter of Australian wines to the UK. Its sales (under the Accolade banner) fell by 8.4% to £422.4m in the year to last June and auditors expressed reservations about the British business continuing as “going concern”.
Partner Content
At home Vinarchy has slashed grower contracts and wants to cull 60 brands by the end of next year to focus on three “global pillars” – Jacob’s Creek, Hardy’s and Campo Viejo. Amanda Almond, Vinarchy’s managing director for the EMEA region, says: “We are continuing to expand lighter-style wines and lower ABV options in response to a genuine increase in consumer demand for moderation options.”
It is pertinent that labelling for the four styles in the Jacob’s Creek range, recently relaunched in Britain, feature their taste profile rather than varieties. “They are lighter, fresher styles designed for modern drinking occasions….with new packaging and clearer, taste-led cues to make the range easier to shop”, says Almond.
“We are focused on delivering value for customers through products that earn their space on shelf and perform.”
Australian Vintage
Australian Vintage (AV) has suffered a most torrid time over the past five years, going through four chief executives, one of whom was rehired after being fired for a “gross error of judgement.”
The McGuigan owner is in the process of making the biggest changes of all the Australian producers.
After standing at AU$0.81 in June 2021, the shares went through a period of suspension as the company fought for survival in 2024. AV then suffered a body blow when new Accolade owner Bain overnight pulled out of merger talks to instead take over the Pernod Ricard wine interests. AV’s shares have lost 90% of their value since 2021, which it has blamed on consumers drinking less heavy or bold red wines.
“The next generation is consuming alcohol differently”, says CEO Dusseldorp, and to target them AV is majoring on Poco Vino, a 187ml single serve bottle across six varieties. It has also launched Lemsecco Spritz.
“We are selling around 12,000 bottles of Poco Vino a day globally,” says Lohrey, who says it is a “disruptive innovation.”
“This brand has the potential and on any metric should be the biggest brand in the business in the next five years”, says Dusseldorp.
Lohrey says he is “optimistic” about the UK market. “The quality of wines and convenience is more important than ever, and we are well positioned in the UK”.
However, Poco Vino is not an entirely Australian product. AV uses a “make where sold” model, sourcing the wines from Europe (France and Italy), the US (California) and Australia.
Green shoots of optimism
Paul Schaafsma, founder and CEO of Benchmark Drinks and the entrepreneur behind Kylie Minogue’s successful wines says: “There are green shoots of optimism for Australia in the UK.”
Majestic’s Fowkes agrees. “I think there is an incredible future for Australian wine. Yes, there are challenges but that always brings opportunity. Australia still has so many unique and fascinating wine styles, and it produces some genuinely iconic wines known and loved around the world. There’s so much heritage and history there, so many amazing stories.”
There is a huge base on which to build. The UK population drink more than 400 bottles of Australian wine every second and 45% of UK wine drinkers in the off-trade have opened a bottle in the past year – that’s higher than from any other country of origin.
Schaafsma is planning a revival of interest by sourcing his latest offerings by collaborating with the biggest grower in the under-recognised Western Australia region.
A former head of both Accolade and Australian Vintage, Schaafsma, is sourcing his All (Good) Things range from Western Australia because of the quality that can be achieved in a region where the Freemantle Doctor wind generates fresher, more approachable wines. He foresees a big future for the state, which still only produces less than 3% of Australia’s total annual crush.
“The quality we can get is just extraordinary,” he says. “And we are able to sell it at a sweet spot that promotes down to £7.50 a bottle, which is where the consumer really wants to buy a commercial premium Australian product.”
Launched through the Tesco group on a six-month exclusive, Schaafsma says: “I don’t think consumers want to fall out of love with Australian wine because at a commercial and premium commercial level, they are comfortable with it.”
Majestic’s Fowkes concurs. “Australian winemakers are navigating a customer and market recalibration,” he says.
“While global demand for volume has cooled, we are seeing a real uplift in our premium tiers. The trend of people drinking ‘less but better’ plays directly into Australia’s strengths – an ability to produce world-class wines that can offer better value than more traditional old-world regions.
“We’d love to work with more producers and Wines of Australia to shine the spotlight on the quality and the heritage of even more Australian wines.”
Related news
Australian Vintage scores £12.5m in refinancing
