Good Grape Wine Company

October 19 2006

The Meteoric Growth of Australian Wine

I live in an area of Indianapolis that is urban and home to the area’s best known entertainment district. This part of town also happens to be bisected by a street that divides the area into two neighborhoods--kind of like the "Soc’s" and the "Grease" from the movie "The Outsider’s."

There are two sides of the track, so to speak.

If you’re heading south, the right side of the street and the ensuing blocks to the west hold a wealthy enclave of beautiful neighborhoods, brick Tudor style homes and a nice mix of young Yuppies and upper-middle class Empty-nester’s. On the left side of the street is another neighborhood--this area more transitional, very mixed demographically and generally rich in patina and various walks of life. This is the area I live in. It’s classic post-WWII housing. My house has six panel doors, glass door knobs, original glass tile in the upstairs bath and vintage nautical blue wallpaper in the hall closet. This is to say, it’s vintage, but there’s no leaded glass like our friends to the West have ... it does have a dining room that holds four people if everybody eats with their elbows tucked, but that’s an axe for my wife to grind another day ...

My neighbor to the immediate left is a newly married in her 60s, an ex-Nun and a math teacher who a buddy of mine had in school--they affectionately called her ‘Sarge.’ My neighbor to the right is a computer analyst at a hospital. The neighbor to my rear is a Chef that is now the Dean of students at a new culinary school in town and the neighbor across the street is in her mid-20s and works for an accounting firm. We’re all work-a-day folks. No BMW’s here.

But, when you combine the two areas in a sweeping three mile circle what you get is some pretty good demographics in between the Joe Average’s, midwestern bohemia and the Yuppies. The demographics are so good in fact that the neighborhood association for the "Soc’s" lured a nice grocery store to the corner-- the corner I use everyday—to replace a neighborhood icon grocery store that closed a couple of years ago. The rationale is simple, according to an article from the Indianapolis Business Journal, our weekly business fishwrap:

More then 86,000 people live within a three-mile radius of the intersection of 54th Street and College Avenue, in households with an average income of $64,140, according to demographic research prepared for IBJ by the local office of St. Louis-based Colliers Turley Martin Tucker.

Within a one-mile radius of the intersection, the average income is even higher-$79,005. And roughly 57 percent of adults 25 and older have a bachelor’s degree or higher. "You don’t get opportunities to go into areas like that very often," said John Byrne, a Colliers retail real estate broker who lives in the area and looks forward to shopping at the new store.

Affluence is in the eye of the beholder, I think, because my neighborhood is far from posh, but, to retailers this is a target rich environment. And the grocery store is going to take advantage of it. Some might even say those demographics look like wine drinker demographics. Probably very true. The grocery store concept going in, The Fresh Market, is known for its gourmet takeout foods AND its well-crafted selection of wines.

But, interestingly, as I continue to read articles about how Australian imports continue to well-outpace domestic growth of wine, I’m struck by how this is occurring. Sure wine growth is growing for everybody, but how can Australian’s be lapping American wine?

This article from Winebusiness.com sums it up: Imported wine sales are on the rise and are taking market share from domestic wines. Imports currently account for 21 percent of case volume and 26 percent of dollar sales in the ACNielsen-tracked food store retail channel*. Australian wines, as always, are expected to be a large part of the imported wine landscape in the future. Since August 2003, case sales of Australian wines have grown 62 percent and established the country as the leading importer of wine into the United States, with a 9 percent market share.

"Australia has always succeeded in the export market, more so than the U.S. has," said Stuebing Smyth. "I would expect that success to continue and build as more Australian brands are looking to export here."

So, how does my neighborhood, demographics and Australian wine come together?

The picture at the top of this post is a billboard from right across the street from where this new supermarket will be built--an industry billboard for Australian wines--a Rosemount Shiraz and a Penfolds Chardonnay--both popularly priced under $10 and both likely candidates to be carried at the grocery store.

That’s good business--advertise where your customers are at, gather economies of scale for the industry and give a simple message--"Flavors of Australia." Oh, and, of course, deliver in the bottle, which they do.

Austrlian wine imports are up because wine is a business and the Aussies treat it like one. And, ironically enough, The Fresh Market happens to be featuring Aussie Red’s this fall? Smart businesses, both of them.

How about California getting in on the action?

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