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Australian wine ‘cheaper than water’
Wine is being sold for less than the price of bottled water at a number of Australian retailers, with a dip in international demand having driven down prices.
As reported by the BBC, wine has been found on sale in the bargain buckets of one Australian retailer for just one Australian dollar – the equivalent of 53p. A 350ml bottle of water sells for around AU$2.50 in the country.
The BBC also reports that a well-known Australian white wine is selling for AU$2.99, while four-litre bag in box wines are on sale for less than AU$17.
Wine prices have plummeted in Australia due to a dip in international demand caused by the strength of the Australian dollar against the American dollar, which has led to a glut in the domestic market.
“A lot of the export volume that we were previously selling to overseas markets has come back to the domestic market as international demand for our wine has dropped off, Paul Evans, chief executive of the Winemakers’ Federation of Australia (WFA), told the BBC.
As a result, competition between local wine producers has increased.
The Australian tax system on alcohol has also contributed to the problem, with wines sold at cheap prices only taxed a small amount rather than being taxed on their alcohol levels.
Also exacerbating the problem is the competition between Australia’s two major retailers: Woolworths and Coles, which together account for over 70% of the country’s wine sales.
“There is a considerable mismatch between the market power of the retailers and winemakers, which is negatively affecting the industry as a whole,” Evans told the BBC.
“It reflects in margins and profitability for winemakers, which cascades down to grape growers. We’ve seen very low profitability there, and in some cases, loss-making at both of those levels in recent years,” he added.
The WFA is working with the government to try and tackle the problem.
“The situation is disconnecting the important link in a consumer’s mind between the quality of wine and the price they’re paying for that wine,” Evans said.
“It’s going to be very hard for consumers to go back to pricing that’s more relative to the intrinsic value of the quality of that wine they’re consuming,” he added.
Water is 1,000 times cheaper than the cheapest wine in Australia.
Bottled water is either brilliant marketing or a brazen scam.
Wine is cheaper than air, if you are a scuba diver and buy your air compressed in tanks.
Brian Miller
Brian’s response is technically correct of course, but his comment about the price of bottled water is somewhat disingenuous. If a $1 bottle of water is a “brilliant marketing or a brazen scam”, surely the same could be said of a $100 bottle of wine or a $1000 handbag. After all, there’s a very clear ceiling on the cost of production of almost any wine.
The problem with the wine industry is that we use the same four letter term – and 75cl glass packaging for almost everything from the most cheaply-made Riverland red to Grange and Latour. Bottled water is a visibly different product from the cheap stuff that comes out of the tap.
There will always be cheap wine. The key lies in keeping it separate from the premium stuff. Australia was brilliant in pioneering the use of Bag in Box, and calling it a ‘Cask”. In an ideal world, cheap wine should all be sold in cardboard or plastic.
Interestingly, you don’t find craft beer in cans/tinnies.
The same is said of handbags, and correctly.
To really compare like-with-like, wine from a kitchen tap (technically possible) would costs 1,000 times more than water.
In Paris, LA and London you can pay more for water than for wine, if you choose to.
Australia is no different.
When I first moved to Adelaide I was told that the best way to drink South Australian water was after it had been through a grape.
Editor : Please change “costs” to “cost”.