I have a French–Australian neighbour whom I bumped into after a recent trip he made to his home country.

“I can’t believe it!” he said. “I go over there and everybody is drinking Australian wine!”

According to Jonathan Scott, general manager of the Australian Wine Export Council (AWEC), my neighbour’s claim is exaggerated: Mr Scott estimates at between 5 and 10 percent the percentage of non-French wine drunk in France. However, even in this most difficult of continental EU markets – and in the rest of the non-English speaking EU – Australian wine is beginning to have a presence.

“They’re important markets and we are winning a market share,” Mr Scott said.

On the back of significant success in the UK and Ireland – where Australian wine now has a 20 percent share of the market – Australian wine exports to the EU have, according to ABARE statistics, increased almost five-fold since 1994 (when the Australia–European Commission Trade in Wine Agreement
was signed).

Europe is now a $1 billion market for Australian wine (with the UK alone at $820 million [2001]); approximately 50 percent of our entire wine export market. However, on the continent, Australia’s market share is yet to really take off. As the UK and Irish markets embrace an expanding range of Australian varietals and regions, the Australian wine push on the continent remains at awareness level.

“A lot of these countries are unaware we make wine,” Mr Scott said. “Most consumers see wine as having a home and we’re at the stage of working with trade, doing point-of-sale stuff, tastings . . .”

He said that after success in the UK and Ireland, Australian wine obviously faces significant challenges in the rest of the EU. With English the preferred business language in much of Europe, the challenge in countries outside the more entrenched markets (such as Italy, France and Spain) has more to do with changing long-term habits than with breaking down language barriers.
Markets such as Denmark, Sweden, the Netherlands and Belgium have for a long time been biased towards European wines. New world wines – including Australian – have made in-roads into these markets in the past 5 to 10 years, but old world wines still dominate consumption.

“It’s a slower road and the fact that they’re non-English speaking just adds to the challenge. But you don’t resign from the challenge,” Mr Scott said.

Germany, Australia’s biggest continental EU market, now imports more wine than it produces. Lawrie Stanford, information and analysis manager with the Australian Wine and Brandy Corporation (AWBC), said “Germany is a strong European prospect, but it’s proving a little more difficult than we may have anticipated a couple of years ago.“

David Woods, international trading director with BRL Hardy, said Germany is a competitive market in which to establish an Australian beach head. He added that problems in the German economy are also proving problematic. Still, it’s a market Australia must pursue.

“If Australia was selling as much into Germany on a per capita basis as it is to the Netherlands we’d be struggling to keep up with it.”, he said, adding that 2002 figures show the Netherlands is a $37 million market for Australia.

According to Mr Scott, Australian wine’s strong branding has placed (and will continue to place) the industry in good stead in the EU. Mr Scott said effective branding had allowed Australia to develop a “franchise of consumers” who recognise Australian wine’s consistency and reliability. It seems that reliance on our appellations in the continental market is something for further down the track, if at all.

“Some old world European producers, rather than being strong on brand, are very strong on appellation, and the appellation in many cases has become a substitute brand. The problem that a consumer will often find is that the appellation has a plethora of wines at different price points.”

Mr Scott said when compared against Australian brands European wine appellations can prove confusing and counterproductive to the task of developing consumer confidence and effectively marketing products. Mr Stanford said the Australian wine industry is aware that marketing is the key issue and that every effort was being made to establish best position.

“Up until now we’ve been constrained in terms of supply,” Mr Stanford said. “However, that issue has obviously faded due to the current over supply. We’re now in a position where we can focus on marketing. It’s a shift in emphasis and we know that the job is there and we’ve worked hard at thinking about it through things like ‘The Marketing Decade’” (a strategy document available at www.awbc.com.au)

My French–Australian neighbour is under 30. So were the French friends with whom he was drinking on his recent trip to the continent. Mr Scott said AWEC has since the inception of its marketing campaigns been aware of the need to market Australian wine to an emerging generation.

“In the UK we’ve been sponsoring the University Wine Challenge which takes knowledge of wine in a fun way to universities around the country. In other markets we’ve worked with things like backpackers fares and alike.”

Mr Scott added that especially in Europe tackling the youth demographic was essential – and not just because young drinkers had ahead of them a long stretch of purchasing years. In countries with well developed wine cultures it’s obviously a difficult task to shift older drinkers from their standard fare. But Australian wine can have an impact on younger consumers due to an age old phenomenon: youth rebellion.

“There is a lot of evidence to show that in a country like France, where wine consumption has been such a strong fabric of life, younger consumers are perhaps saying, ‘Well, I’ll drink something different to what my parents drank . . .’”

In the UK, Australian wine is clearly more than the latest fad for young pop stars before they move onto vintages from other global hot spots. But is this a possibility in the rest of the EU?
“I don’t think so,” said Mr Scott. “However, there’s no room for complacency by anyone in the wine industry. There is no God-given right, no natural progression that says a young consumer will move from Bacardi and Coke and RTDs to wine when they turn 25 or 30.”

Mr Stanford said return customers are already a reality in Europe and they’ve been quickly made aware of our wine’s consistency and reliability. He said Australia’s developing ‘clean and green’ image will also play an important part in EU success.

“The environment is a big issue,” he said. “The industry is gearing up to understand its environmental credentials a lot better and to put them in place. There was a two-day conference in December which was the second of the industry’s environmental conferences . . . [that’s] a sign that it’s attending to those sorts of issues, and in Europe ‘clean and green’ is very important.”

In a further push to strengthen EU wine exports, Australia is currently contesting aspects of EU wine labelling legislation, claiming it presents a barrier to trade. The aforementioned 1994 bilateral agreement was signed with a clause that stipulated the phase out in 10 years of the use of certain geographical indications. Australia is currently working to water down some of the EU wine labelling regulations that impose strict conditions on the use of common descriptive words used on wine labels.

In the continued push to raise awareness of Australian wine in the EU, AWEC has undergone some significant recent changes. Setting up offices throughout Europe has been spurned in favour of a continental HQ in the Netherlands (one of Australia’s key EU markets) to complement the UK base.

“We have an office in Germany and it reports to the continental European office in the Netherlands,” said Mr Scott. “We run activity through the Scandinavian markets, but we no longer have full-time staff operating from Scandinavian countries. We’re going to run that activity – and activities in other EU countries – from the Netherlands.”

Mr Scott said the approach represents a substantial change to the way AWEC does business. And according to Mr Woods at BRL Hardy it’s a positive move.

“It’s acknowledgment of the fact that the UK is a huge market that needs a dedicated team and that what has made us successful in the UK may not be the sort of thing that make us successful in mainland Europe.”

According to the AWBC, increased EU production looms as a significant issue for Australian exporters. Mr Stanford said there were signs EU countries were increasing their premium wine production after a considerable period of reduced production. However, Mr Scott remained unconvinced that EU production was rising and he added the wine he sees being produced represents “more of the same”.

“There’s certainly a stated aim that EU production has to lift its quality, but we’re not seeing drops in yields that are likely to lead to higher quality.”

So maybe my French neighbour’s friends – and hopefully their friends throughout the continent – will more than ever seek out Australian wine . . .