New research by IWSR has revealed the top consumer Australian winemakers should target in the United States.

Australian wine exports to the US increased by 13% in volume to 140 million litres in 2022 according to Wine Australia. The US was Australia’s largest export market by value, at $390 million, while exports above $10 per litre grew by 4% to $50 million.

According to IWSR, the US wine drinking population has recovered from COVID-era lows thanks to a revival of the on-premise. It reports that the premiumisation trend continues, while there is renewed momentum within the under-40s.

“Since the pandemic, there has been a bounce-back in overall wine participation rates in the US: the number of regular wine drinkers (RWD) grew by 14 million between 2021 and 2022,” IWSR said.

“This momentum is mainly coming from those under the age of 40, and the wine industry is seeing a growing influence not just of the most engaged consumers (aged 25-54), but also of LDA Gen Z to an extent.”

Premiumisation is a noticeable trend across the US wine landscape, with the $10 price point per bottle being a clear divide. Below this level, volumes are falling and are forecast by IWSR to continue to do so; above it the reverse is true.

“Increasingly, the US is becoming a two-pronged wine market, where less-engaged, more price-sensitive (and often older) consumers are reducing their activity or leaving the category altogether, and more engaged, regular (typically younger adult) consumers exert an ever-greater influence,” IWSR said.

“While the most engaged Gen X and Millennial consumers make up just under 30% of total regular US wine drinkers, they account for nearly 60% of the total wine spend.”

The demographic shifts outlined above have had a significant impact on what US wine drinkers are purchasing. Experimenting with different wine styles is a key trend for all age-groups under 55 and very few like to stick with what they know.

This willingness to experiment has meant that the big established names of the wine world – whether countries, grape varieties or brands – no longer have the resonance with US wine drinkers that they once did. The return of the on-premise and the addition of newer wine drinkers post-pandemic has brought in people who are less familiar with established mainstream brands and are increasingly purchasing wine outside of grocery and chain stores, where those brands are more visible.

IWSR said sparkling wine is a well-established bright spot, while no/low is one to watch

Sparkling wine recorded its 21st consecutive year of both value and volume growth in 2022. The more premium segments ($40+ for Champagne, $10+ for other sparklers) are forecast to see the strongest growth over the next five years.

Another wine sub-category with a positive outlook is no/low-alcohol wine. Though the overall no/low sector (across all alcohol categories) is still very small (just 1% of total US beverage alcohol volumes), more than half of all US beverage alcohol drinkers state they want to moderate their intake.

IWSR said brand owners looking to tap into the momentum driven by younger adult consumers who are (re)discovering the wine category will need to adjust go-to-market strategies. The relationships younger LDA wine drinkers hold with alcohol differ from previous generations.

Younger LDA wine drinkers are:

1) More adventurous but less knowledgeable: wineries looking to talk to the new arrivals to the category have room to be more creative in their brand and messaging, particularly to communicate the value of their more premium products. These consumers are open-minded but yet to develop a knowledge base. Wine drinkers are becoming less interested in well-known brands and varietals.

2) Interested in moderation: low-alcohol wine does particularly well in the US, prompting some low-alcohol brands to highlight ABV rather than hide it. Examples within the wine category include Kim Crawford Wines’ Illuminate range, which uses lower ABV as a differentiating factor in its branding. T

3) Open to alternative packaging: younger adult wine drinkers are more likely to purchase wine in formats such as cans and pouches which suit small-consumption or on-the-go drinking occasions.

4) Experience-led: the on-premise will need to provide experience-led drinking occasions to provide differentiation from the at-home occasion. Offering more creative tasting experiences and/or a wider range of wine varietals, can help drive excitement amongst younger LDA wine drinkers.

Celebrating 25 years of Kim Crawford Wines