Wineries, breweries closing down as decline in alcohol consumption starts to bite

Wineries and breweries closing their doors as move away from alcoholic drinks starts to bite In short: The decline in alcohol sales is accelerating and businesses are starting to close their doors. It's being blamed on tough economic times, young people drinking less and a rise in popularity of non-alcoholic drinks. What's next: Grape growers are calling for government assistance to help with the transition away from solely making wine. Since opening his Hunter Valley winery about five years ago, Nathan Heuston said his business has plummeted. "We were averaging, especially on our busy days, up to 220 people," he said. "This year we've even had days where we've had no-one." Mr Heuston said his winery went from generating about $20,000 a week, to about $2,000 a week. "We were taking a tenth of what we require to pay our bills. How do you recover from that?"he said. This pain is familiar across the industry, with iconic Tasmanian brewer Boag closing its doors last week and trade data in June showing wine exports having dropped to their lowest levels in 22 years as cost-of-living pressures bite. Fitch Solutions data shows the amount of wine people are drinking worldwide has been in decline for almost a decade In Australia, total alcohol consumption fell by about 10 per cent in the three years to 2024. "And the fall in the 2024 financial year was the sharpest we've seen on record," IBISWorld senior analyst Michael Doyle said. The reduction stems from younger Australians drinking less, tighter budgets with growing cost-of-living pressures and the rise of non-alcoholic alternatives. It has forced businesses like Mr Hueston's to make changes such as cutting staff and production. "This year we did about 20 tonne whereas [previously] we've been doing 60 to 70 tonne in production," he said. "All we're going to make is what we've planted in our new vineyard. We haven't bought any barrels for last year and this year coming." 'Most difficult set of circumstances' All corners of the industry have been impacted by this trend, with the Independent Brewers Association confirming more than 80 breweries have shut down since June 2023. Seven hotel bars in Hobart entered voluntary administration earlier this year. Liquor sales at Coles dropped 3.3 per cent last financial year, and Endeavour Group, which owns BWS and Dan Murphy's, saw sales at its retail outlets only increase modestly, up 0.7 per cent. The grape and wine peak body, Australian Grape and Wine, has described this period as "the most difficult set of circumstances" the industry has faced in "generations". "We're really concerned about what this means for Australian grape growers and wine makers," chief executive Lee McLean said. Meanwhile, those businesses producing non-alcoholic alternatives are seeing gains. Non-alcoholic beer sales are projected to almost double in the four years to 2028, from 150 million litres to around 300 million. It is the fastest growing beverage across the alcohol sector, accounting for 45 per cent of total non-alcoholic beverage sales in Australia in 2023, and around 10 per cent of all beer sales, according to ANZ. Co-founder and chief executive of Heaps Normal, Andy Miller, said his non-alcoholic beer sales were growing at about 20 per cent each year. "[We] saw an opportunity for a product that didn't feel like a compromise to fill that gap," he said. And consumers have been taking note. "We're now distributing non-alcoholic beer on tap which is, I think, another really significant shift in the way that people consume these beers and socialise in on-premise venues," Mr Miller said. "What we're seeing in some of the more progressive venues around the country is that the non-alcoholic Heaps Normal draft is outselling other alcoholic counterparts." Adapting to a changing landscape For beer and wine makers to remain viable, the peak body Australian Grape and Wine anticipates the industry will be "a different shape and size" in the coming years. "[We are] trying to reclaim a little bit of market share in our existing markets such as the US or the UK," Mr McLean said. "But also looking to open up new markets like India and those in Southeast Asia, which still hold a lot of promise for Australian wine exporters." Alcohol Beverages Australia executive director Alistair Coe said some businesses were already making changes based on consumer preferences. "The industry continues to innovate, with greater product diversity … and the growth of low and no-alcohol products," he said. But Mr McLean warned not every business would survive. "The message that we've been giving to government over the last little while is that grape growers and wine makers in many of these regions that are suffering need a hand to make a transition," he said. "Whether that is a transition out of the industry or a transition to do something else with their property, whether that be growing a different crop or looking at other alternatives for that block of land." As for where the industry is going and with the pressure of high inflation, Mr Doyle expects more pain. "People just don't have the money to spend on alcohol like they may have used to," he said. "I would expect to see a continual slow decline in per capita consumption." In a statement to the ABC, Minister for Agriculture, Fisheries and Forestry Julie Collins acknowledged the challenges the industry has faced in recent years. "The government has delivered over $105 million in funding to support the grape and wine sector," she said. It included the Wine Equalisation Tax rebate and a new mandatory code of conduct for wine-grape purchases. "Our government will continue to work closely with industry on future opportunities." [Image text:] 072 WINELAB HUNTER A har O HUNTER WINELAS