When Henry Hudson relocated to the United States from Australia a few years ago, he found that the wines he’d enjoyed down under weren’t always available in his new country of residence. So he decided to do something about it. Hudson partnered with Tom Donegan, an Australian sommelier now based in Los Angeles, and Rob Geddes, a Master of Wine, to form Hudson Wine Brokers in early 2014.

The firm, which represents nine Australian wineries, aims to gain traction in a highly competitive U.S. market that hasn’t been friendly to Australian wines in recent years. “We set out with a deliberate strategy of trying to highlight Australia’s regionality rather than be pigeonholed into Barossa Valley or McLaren Vale Shiraz, which is where the perception lies,” Hudson says.

Hudson Wine Brokers sought a mix of small producers new to the U.S. market and players who had once had a presence, but bailed when the market for Australian wine tanked in the late 2000s. Hudson says the wines are representative of their respective regions. “They’re all family-owned boutique wineries and produce wines that we believe are true to terroir,” he notes.

The company is one of several Australian wine importers attempting to gain or regain footing in the U.S. market by eschewing the low-priced entrants that initially brought Australian wines to the fore and instead focusing on higher-priced, boutique-style wines. That strategy is working, at least anecdotally. While bottled wine shipments from Australia fell 9.9 percent to 11.5 million cases in 2014, according to Impact Databank, the story is different for wines at premium price points. Chris Adams, CEO of New York City retail shop Sherry-Lehmann, says Australian wine is still struggling, but “there is a little bit of dynamism” for higher-end wines, although the growth is off a much diminished base. Bruce Cunningham, vice president of sales and marketing at The Wine Trees Portfolio, agrees. “There is some momentum,” he says, adding that the strongest growth is in the $15-to-$25 category.

Peter Deutsch, CEO of Deutsch Family Wine & Spirits, also notes the vibrancy of the super-premium tier. “The higher-end Australian category is beginning to gain some traction,” Deutsch says. His company markets No.-1 Australian wine brand Yellow Tail and will be rolling out the super-premium Peter Lehmann brand in the United States next spring. Yellow Tail producer Casella Wines purchased the Barossa Valley label last year. “The wines are outstanding—there is incredible pedigree,” Deutsch says. “We will be putting our energies and focus into Peter Lehmann and building that brand in the $15-and-up segment going forward.”

Brand Leaders

Deutsch acknowledges that Yellow Tail has experienced softness in the past six months, but he has every confidence that the brand will return to growth in the near future. “We’re moving forward on an aggressive new advertising campaign,” Deutsch says. “In partnership with our distributors, we’re doing our best to reset shelves so that we have the proper eye placements and location, which have a big impact on the consumer. We’re not going upscale.”

Yellow Tail is by far the dominant Australian wine in the U.S. market. While depletions are down 2.9 percent to 8.3 million cases in 2014, according to Impact Databank, the brand’s performance is actually better than many of its competitors. Four of the top five Australian wines—which all compete in the under-$10 price bracket—declined in 2014. No.-2 label Lindeman’s fell 3.3 percent to 1.63 million cases, while third-ranked Fish Eye slumped 10.4 percent to 1.2 million cases and fourth-ranked Jacob’s Creek dipped 9.5 percent to 715,000 cases. No.-5 brand Little Penguin rose 0.7 percent to 492,000 cases.

The only offering among the top 10 to gain volume in 2014 was Penfolds, which advanced 11.1 percent to 216,000 cases. Treasury Wine Estates (TWE) has been making significant investments behind the brand in recent years, with a focus on the line’s higher-end entrants. “From our perspective, we’re very enthusiastic about Australian wines over $20,” says Barry Sheridan, vice president of marketing for the Americas.

The Penfolds line includes wines below that $20 price point, but the excitement surrounding the brand is largely focused on the higher-end labels, including Grange and other entrants. “We’ve been growing our on-premise distribution on Bins 389, 407, 8 and 9 pretty aggressively over the last two years,” Sheridan notes.

More broadly, Sheridan says that as a “luxury icon,” Penfolds isn’t saddled with some of the notions consumers have about Australian wines. “In the end, we’re selling brands, not countries,” he adds. “A label like Penfolds can transcend some of the churn that goes on around the Australian category.”

A New Identity

That churn is what many marketers are hoping to avoid going forward. Bottled shipments of Australian wine in the United States peaked in 2005 at 18.9 million cases, according to Impact Databank. Aside from a slight upward blip in 2013, the market has been on a downward spiral since 2007.

Angela Slade, regional director of North America for the trade group Wine Australia, says producers are now looking at the long game in an effort to stabilize losses and focus on building a premium, sustainable position in the U.S. market. “There’s an absolute and continued shift with our focus on premium wines and on value measurements,” she says. “We’re seeing growth at the higher price points. It may take a while for those numbers to track through and become consistent, but we continue to see quiet successes. We’re telling a premium story from a regional and historical perspective. That’s been a gap in the market.”

Sheridan notes the shift in both TWE’s portfolio and in the overall market. “Australia is changing its mix,” he says. “A far more interesting, ambitious set of winery brands and styles are appearing in stores. The winemaking business in Australia is becoming as adventurous as it is in the United States. That’s a good sign for the country’s brand.”

The recent decline in the Australian dollar against the U.S. dollar is also helping. “We’re finally getting a little breathing room on the margin front, and that’s allowing people to reinvest,” says Rob Buono, president of importer Old Bridge Cellars. The company markets 18 wine brands from Victoria, Western Australia, Southern Australia and New South Wales.

Given a more inviting trading environment, several importers are ratcheting up their Australian offerings, hoping to take advantage of the nascent super-premium sector of Australian wines. Little Peacock Imports, which markets only Australian wines, started with five producers and
nine wines, but has since grown to 19 producers and nearly 60 wines. Gordon Little, who cofounded the company with his wife, Lauren Peacock, says the environment has improved substantially in his four years in business. “It gets a bit better every year,” he says. “There are still challenges. Stores and restaurants don’t need to have an Australian section, and no one needs to have an Australian Shiraz, but there is still plenty of opportunity.”

Gavin Speight, wine and marketing director at Old Bridge Cellars, says there are “pockets” of excitement about the new wave of Australian wines in the marketplace, with buyers now focusing more on the regionality of the wines. “The country’s blue chip wine areas—the cooler-climate regions—seem to be on the rise, and in the same way, interest in Barossa Valley and McLaren Vale is coming along as well,” he says. What’s not resonating currently is Australia’s signature grape, Shiraz. “Consumers love Shiraz when they drink it,” Speight notes. “They haven’t turned away, but the gatekeepers believe that consumers don’t want it, and that’s the problem.”

Gatekeeper Response

Australian wine marketers say reception to their efforts is mixed. “It’s definitely a sell,” says Cunningham of The Wine Trees Portfolio, pointing to his efforts to broaden distribution. “But unlike a couple of years ago, people are now willing to listen. The market obviously got very gun-shy toward Australia for many reasons, but what’s finally being realized is that wineries have created varietal definition from different regions. Sommeliers and wine buyers are understanding the true nuance of what appellations in Australia can do, and they’re taking the country more seriously.”

Speight of Old Bridge Cellars agrees. “People are asking to expand their Australian range again,” he says. “There’s still a long way to get back to where it was, but it’s going in the right direction.”

Some on- and off-premise operators are firmly behind the category. At California retail outlet K&L Wine Merchants, New Zealand, Australia and South Africa wine buyer Ryan Woodhouse says he “never gave up on the category.” His company works with an importer who brings in wines specifically for K&L from both small and large producers, some of whom were building their brands in the United States, but dropped out when the market fell a few years ago. “It takes a lot of effort and energy,” Woodhouse says. “The wines from that category don’t sell themselves anymore, although a few do. We believe in the wines and we put the work into selling them. We’ve been showing some great rewards from that strategy in the past few years.” He notes that wines above $20 a 750-ml. bottle are performing particularly well.

Tony Rossi, wine director of the seafood restaurant C Chicago, says Australian white wines in particular offer “tremendous value.” Popular labels on the restaurant’s list include the 2014 Jim Barry The Lodge Hill Riesling ($47 a 750-ml. bottle) and the 2014 Brokenwood Sémillon ($46). “Consumers are definitely interested,” Rossi says, adding that the Australian entrants offer good value. “The quality is fantastic.”

Del Frisco’s Restaurant Group has more than 75 Australian wines on the Del Frisco’s Double Eagle Steak House wine list, including eight vintages of Penfolds Grange (ranging from $850 for the 2007 vintage to $1,195 for the 2008 vintage). Wine director David O’Day says that because the restaurant chain focuses on the top producers from Australia, sales never dropped off and remain on an even keel. “The premium wines have always commanded attention,” O’Day says. “We’re up over last year with Australian wine. It remains a consistent category.”

Marketers are hoping that other restaurateurs and retailers begin to have the same confidence again. Although she acknowledges that the shift will take time, Wine Australia’s Slade believes the country’s wines are ready to prove their mettle in the competitive super-premium wine sector in the United States. “Our slow, grassroots rebuilding strategy shows what we can do at the premium price points,” she says. “I don’t think American consumers have consistently seen that level of quality, and we offer them discovery and excitement.”