Data shows younger generations are drinking less wine

ABC NEWS (Australia)

There's too much wine in the world, and grape growers are going broke and pulling out vines. Wine production has now outstripped consumption with health-conscious young people hitting the bottle a lot less than their parents' generation.

Transcript

00:00 Young people are drinking less, but not just young people.

00:04 Moderation of alcohol, including wine, but other alcoholic beverages,

00:09 has been on the decline.

00:11 And that trend has been before COVID even.

00:14 So, also caused by, particularly with wine, more competition

00:20 with things like RTDs or seltzers.

00:23 We're seeing that seltzers and RTDs are more popular

00:26 with the younger generation.

00:28 But also a lot of competition from spirits.

00:30 So, things like celebrity-backed tequila brands

00:33 have also seen a lot of competition in this space.

00:37 As well as cost inflation and that cost-of-living crisis

00:40 impacting young consumers' ability to go out and spend money.

00:45 So, it's the under-30s that are the core to this.

00:48 Is it that they're perhaps more health-conscious as well?

00:51 Yeah, we're definitely seeing that young people are more health-conscious.

00:56 And that really is leading into why they're consuming things like RTDs.

01:00 Because they're being advertised as no sugar or low-calorie.

01:05 And so, they're very appealing to the younger generation

01:08 who are concerned about their health when they're drinking.

01:11 I think it would be fair to say as well that wine is an acquired taste.

01:16 I mean, anybody who drinks it when they're young

01:18 probably makes a funny face when they first taste it.

01:21 But so, it's an acquired taste.

01:22 Whereas these drinks that the younger people, the under-30s are drinking,

01:27 are very specifically targeted to their taste.

01:30 Yeah, definitely. There's lots of different varieties of wine.

01:33 And so, we are seeing differing styles changing and that demand changing.

01:37 So, the biggest producer...producing...

01:40 ..sorry, variety in Australia is Shiraz.

01:44 And that's a red wine that's a very heavy style.

01:47 But we're seeing that the popularity of Shiraz

01:50 is declining in favour of more lighter styles.

01:52 So, white wines, rosé, sparkling wine as well.

01:56 Yeah. Is it the case as well that it has become very popular

02:00 over the last decade to have boutique wineries?

02:03 You know, they have popped up all over Australia and New Zealand as well.

02:08 And actually, we're just producing too much now.

02:11 So, we do have an oversupply issue in Australia.

02:14 That's more led from the bulk wine segment.

02:17 But on the more specific, more niche category,

02:22 we are seeing that that is a more positive story.

02:25 So, yeah, they've seen some growth there.

02:28 And consumers in Australia,

02:30 the domestic consumption has remained quite stable,

02:33 accounting for lower per capita consumption but rising population.

02:38 And we should also mention as well that there was the glitch

02:41 of China not taking any wine imports for a couple of years.

02:45 So, that has affected the beers.

02:47 Yeah, that had a massive impact on Australia's exports.

02:50 They produce...

02:52 They're a major export destination for Australian wine.

02:55 In that same year that they had... that they put on the tariff,

02:59 we had our record wine-producing year.

03:02 So, it was lots of supply,

03:04 and then suddenly our biggest demand,

03:06 the big demand area, wasn't there anymore.

03:09 Is the wine industry trying to do something

03:12 about the under-30s not drinking wine?

03:15 I mean, the bottles are cool for their, you know,

03:18 bottles of vodka or bottles of alcohol pops,

03:20 but wine bottles are particular...

03:24 ..tend to be... I mean, there obviously are exceptions,

03:26 but quite straight and simple and ordinary.

03:29 Yeah, so, there's definitely more innovation in packaging.

03:32 That's one area that younger consumers

03:36 are more willing to change what they're buying from.

03:39 So, there is potential there.

03:42 But there is a lot of innovation in the category that's happening,

03:46 and that will take some time.

03:48 What sort of stories are you hearing from wine producers,

03:52 those that feel that they can't continue

03:54 and those that are literally pulling out their vines?

03:58 Yeah, we're seeing that because the wine prices and grape prices

04:01 are so low that we're going to have to see some reduction in area.

04:05 About 8% of the total vineyard area in Australia

04:09 is expected to decline in the next five years,

04:12 driven by those low prices being uncompetitive.

04:15 Yeah, right. So, the price of wine is low,

04:19 at an historic low, is it?

04:21 I mean, particularly in Australia,

04:23 I think across Europe and places like South Africa,

04:26 wines are more expensive.

04:27 Yeah, so, wine grapes are really what's driven lower.

04:31 Red wine grapes in the bulk regions

04:34 are about 54% lower than their peak in 2020.

04:38 So, quite significant cost pressure for growers,

04:42 and as well as that, more globally,

04:45 production and consumption have been out of balance

04:49 for quite some time.

04:50 So, production for the past decade

04:52 has been above consumption for the past 10 years,

04:56 and that's really significant.

04:57 So, Pia, what of the future?

04:58 Is it possible to estimate how much of our wine crop will lose?

05:03 Yeah, so, we're expecting that we'll see an 8% decline in acreage,

05:07 and then also production will decline because of that.

05:11 And a push, I guess, from the industry

05:14 for a change in people's drinking habits

05:16 to try and increase the amount of wine being drunk.

05:19 Yeah, well, there's definitely a lot of work being done

05:21 to grow export markets,

05:23 because there's a lot of other destinations

05:26 that would appreciate trying Australian wine.

05:28 Certainly is. Alright, Pia, really interesting to talk to you.

05:30 Thanks for coming in. Thank you.

05:32 [BLANK_AUDIO]

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