Over the past half a century, globalisation engineered by the evolution of technology has been a social and economic transformation; products flow all over the world, including wine.
The pandemic has changed all that. The World Trade Organisation (WTO) forecasts a 9.2 % decline in global trade from 2020.
The Australian wine industry has leaned on global export as a driver for success, but factors such as geopolitics, macroeconomics, and pandemic restrictions have impacted trade and movement and changed the way people view products produced overseas.
Added to the uncertainty around the future of the export dollar is the loss of the international tourist dollar impacting Australia’s regional wine industry. Tourism Research Australia recently announced Australia lost $33.7 billion between January and June 2020 in tourism dollars.
The instability and uncertainty are forcing the Australian wine industry to rethink how to make up those lost dollars. The obvious answer is to encourage local spending.
There is a movement to support local industry and buy Australian, and the figures are backing this up. Australians are spending their dollars at home, and the knock-on effect is supporting local product and job creation.
Wine Intelligence conducted a survey in July and August 2020 asking 1000 Australian wine drinkers whether they actively considered the origin of their wine purchase decisions compared to pre-COVID; 31 per cent more Australians bought Australian wine while imported wine sales were down 17 per cent.
The same survey conducted in the UK, US and New Zealand also noted a shift from purchasing imported wines to choosing the domestically produced option.
Since COVID-19 Australians are also consuming more wine and purchasing it online. Wine Intelligence reported a higher consumption frequency, up 16 per cent in August 2020, compared to pre-COVID 19 figures in March 2019, while e-commerce for the wine industry ‘comes of age’ as a direct result of COVID-19 as it ‘rapidly becomes a new and habitual way of purchasing wine.’
The Wine Australia Direct to Consumer (DTC) survey results back this up with DTC outperforming other channels by 7 per cent and growing by 49 per cent in value between 2019 and 2020. Whilst this is positive news for wineries, visitors were down by 23 per cent prompting local governments and industry associations to address the loss in tourism dollars. It also notes, however, that wineries have been on the front foot to combat the impact of COVID-19 stepping up e-commerce capabilities and implementing COVID-safe practices around tastings and bookings.
Welcome news for the Australian wine regional tourism is that the Government’s 2020 Federal Budget will devote more than $250 million to a Regional Tourism Recovery Package, including $100 million for infrastructure projects that boost regional tourism to encourage Australians to spend their local dollars in their own backyard.
Wine industry associations are doing all they can to support local wine businesses as they weather the storm. McLaren Vale Grape, Wine and Tourism Association, for example, has proactively supported local wineries and businesses to boost sales and visitation during this period. General Manager Jennifer Lynch says the industry is doing everything they can to harness opportunity once restrictions start to ease.
“McLaren Vale’s reputation as one of Australia’s most visited wine tourism regions is founded on sharing exceptional wine, food, our beachside lifestyle, and our warm and generous hospitality. COVID-19 has impacted our community and regional DNA, so it’s been a very challenging time for our region’s businesses.
“We have seen many businesses take this time to complete renovations and reassess their operations and value proposition, with a renewed enthusiasm to welcome visitors back to the region when restrictions were lifted. A key promotional message has been to support local business by buying direct from the producers via online channels, and it’s been pleasing to see our businesses banding together to enable the best of McLaren Vale’s offering to be enjoyed at home,” Ms Lynch said.