Critics continue to note a renaissance in the Australian fine wine industry, with new producers going against the older styles of their predecessors. Meanwhile trade on the secondary market continues to develop. Last month wines from Australia accounted for 2.3% of trade, surpassing more established regions such as the Rhone. By way of comparison, in 2011 Australia’s market share was just 0.1%.

Trade broadens

Prior to 2012 the Australian market lacked depth. 59.2% of Australian trade by value was reliant on the premium offerings from a single brand: Penfolds. The narrow nature of the market can be seen on the right hand side of chart below, showing that the number of brands that traded, as measured by LWIN7s, was 60% lower than today.

From this nadir Australian fine wine has risen again. The value and volume of Australian wine traded on Liv-ex, although still relatively small, is increasing.  And as growth in brands trading makes clear, the market has rebuilt with a different complexion. With more wines trading than ever before Penfolds now accounts for a lower 39.7% of trade.

Quality improves

Encouragement from Wine Australia has helped to expand the number of quality fine wines being produced in the region. The improvement in quality has increased trade. Brands such as Glaetzer have seen traded value increase over 500% since 2011. Langton’s Classification of Australian Wine has grown from including 123 wines for its fifth edition in 2010, to 139 wines in the sixth edition published in 2014. Four wines moved up into the ‘exceptional’ category to increase the total to 21.

In Liv-ex’s own classification two Australian wines, Penfolds Grange and Henschke Hill of Grace trade frequently enough at high prices to be considered ‘First Growths’. Italy and the Rhone respectively only contribute one wine each.

Price performance

Liv-ex does not currently compile an index exclusively for the price of Australian wines, so it’s difficult to generalise about price performance. Nevertheless, the increase in Market Price for some vintages of Penfolds Grange over the past year has been relatively dramatic and slightly bizarre. In general, the vintages with the highest scores have performed the best, with the 95 point 2007 being both the exception to the rule and the best performer.