Australian winemakers look past China, U.S. woes and toast the home market

[October 27, 2020]    By Stefica Nicol Bikes and Byron Kaye

POKOLBIN, Australia (Reuters) - Faced with sluggish sales to top export markets, virtually no foreign tourists, and decreasing restaurant sales due to COVID-19, Australian wineries are increasingly looking to locals to secure their livelihoods as coronavirus curbs ease.

Australian winemaker Savannah Peterson stands at her cellar door in the Hunter Valley, New South Wales, Australia, October 19, 2020. Photo taken October 19, 2020. REUTERS/Stefica Nicol Bikes

With overseas holidays out of bounds, locals are hitting cellar doors - or the part of the winery where visitors can sample drinks - like never before, said vintners in the Hunter Valley wine region, 160 km (100 miles) north of Sydney.

"As far as our average sale is concerned, that has doubled (in recent months)," said Bruce Tyrrell, managing director of Tyrrell's Wines, adding they adapted their wine tasting service to comply with social distancing rules.

It comes as exports to China, which buys 40% of Australia's wine exports, have been hit by worsening diplomatic relations during the coronavirus pandemic.

Meanwhile, top Australian winemakers have reported profit slumps in the United States as they have had to heavily discount products to compete in a market where supply is outstripping coronavirus-hit demand..

Australian wine exports declined 1% to A$2.84 billion ($2.02 billion) in the twelve months to June after several years of rapid growth, according to government-backed industry body Wine Australia.

This was led by a sharp slowdown in Australia's sales to China over the same period - up only 0.7% versus the previous year's 18% growth - while exports to the United States fell 0.4%.

Local appetite for wine meanwhile has risen sharply, with domestic sales up 7.1% to A$4.9 billion for the year to August, according to market researcher IRI.

Colin Peterson, director of Petersons Wines, said cellar door sales and China exports both dived during the shutdowns of early 2020, but now customers were "sick of being locked up so our sales are going up".

"I don't think it will make up for what we lost in that 12 week-period but we're certainly well on the way to getting back to where we were," he said.

Savannah Peterson, winemaker at Savannah Estate Wines, said her cellar door had seen a 200% spike in sales since lockdowns in the region eased in mid-2020.

"It's really good to be able to support in our own backyard and give all of those producers as much of our support as we can," said local tourist Ben Sweeten during a visit to Savannah Estate Wines.

($1 = 1.4057 Australian dollars)

(Reporting by Stefica Nicol Bikes and Byron Kaye; Editing by Ana Nicolaci da Costa)

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