Australians aren’t helping, as they are buying 3% less than they did last year. “Currently, there is an excess of around 262m liters of wine in stock, based on the 2024–2025 sales volume,” said Peter Bailey, Wine Australia Manager Market Insights, in the report.
The stock overhang isn’t just the result of weak demand, as several structural settings are making the problem worse.
The system is working against itself
Wine writer Jeremy Oliver was blunt about what has gone wrong. “Australian winemakers are still making wine they like, regardless of what the market wants — and then they blame poor sales on lack of consumer education,” he said.
This is, perhaps, a little unfair at the commodity end, where it’s hard for growers living off thin margins to transform their vineyards to supply more sought-after grapes. And consumption is declining internationally, not just in Australia. But regardless of who is to blame, there is now an existential crisis facing the industry.
Oliver goes further, arguing that Australia’s tax settings actively warp the market. Unlike most major producing countries, Australia taxes wine on its wholesale value rather than its alcohol content. The Wine Equalisation Tax (WET) applies a 29% ad valorem duty, which means cheap, high-alcohol wines are taxed lightly while premium, lower-alcohol styles can face a higher impost. The result, he says, is a system that shields low-value, high-volume producers from market pressure, prolonging oversupply. A separate WET rebate for small producers has also been repeatedly criticised for propping up uneconomic bulk production.
“The current ad valorem system is stifling growth,” says Oliver, adding that the WET rebate system is frequently gamed by producers.
The retail landscape magnifies every structural problem. Endeavour and Coles, two supermarket-linked groups, now dominate liquor retailing, and that concentration has reshaped what gets shelf space. Endeavour’s Dan Murphy’s and BWS alone account for roughly 40% of national liquor sales. Their private-label arm, Pinnacle Drinks, uses full-category sales data to spin up look-alike brands at speed. As private label grows, independent wineries are left fighting for whatever space remains, often on terms set entirely by the retailer.
With shelf space squeezed, wine tourism is now an even more vital source of revenue. For small producers, the cellar door has become an essential sales channel that helps them pay staff and maintain cashflow. But while Australia’s cellar doors attract around 7m visitors a year, that footfall is thinly distributed.
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