Wine glut and the rise of cleanskins
The wine industry has been dramatically affected primarily by an oversupply, but also by a strong Australian dollar that is hurting export sales. Coles and Woolworths have a booming market in their own label and unbranded wines – “cleanskins”. By bottling up wine for retailers to sell unbranded, winemakers can clear excess stock without damaging their brand integrity. And consumers have embraced cleanskins, which for many people have replaced branded cask wine at the budget end of the market and offered savings over more expensive labelled bottles.
But some believe cheap cleanskins and own brand wines are hurting the industry. “The two major supermarkets are now in an increasingly strong market position to dictate to suppliers,” says Mark McKenzie, Executive Director of Wine Grape Growers’ Australia. “The dominance of supermarket-owned wine brands made under contract is squeezing wine producers’ profits. And while consumers are enjoying low prices now, there will be a huge cost to the variety of Australian wines available.”
“The chronic oversupply is all our own doing – we’re not blaming the retailers for that,” says Stephen Strachan rom the Winemakers’ Federation of Australia. “But retailers are using the surplus to introduce their own brands to the market, which ultimately comes at a cost to established brands. For an established brand-owner it is soul-destroying to see your brand unnecessarily discounted in the marketplace, undoing all of the hard work you have done over the last five or even 10 years.”
The supermarkets deny such claims. “Cleanskins intrinsically exist due to the chronic oversupply in the Australian wine industry, and blaming retailers for the wine glut is drawing a rather long bow,” says a Coles spokesperson. “The reality is that cleanskins are an avenue for producers to sell their excess wine, with less long-term impact to their brands. While we offer a sizable range of cleanskins, they are only a small part of our overall wine range. We continue to support Australian wine producers, large and small.”