Wine has long been one of Australia’s key exports, with the nation ranking as the fourth-largest wine exporter globally, with roughly 60% of our annual production heading to over 100 destinations.

However, the wine industry is facing a challenging period with export volumes recently hitting a 22-year low due to a broader global reduction in alcohol consumption and worldwide market oversupply.

As outlined in Wine Australia’s 2026 Export Report, wine exports dropped in volume to 598 million litres, marking the first time that number has fallen below 600 million litres since 2004. Wine Australia attributed this fall to weak global wine consumption due to a growing focus in the community on health and wellness, cost-of-living pressures and competition from other beverages like RTDs (Ready to Drink).

Peter Bailey, Wine Australia Manager Market Insights, tells Square Holes that consumers are more attuned to ideas around moderation than they once were.

“For many consumers, moderation has become a conscious lifestyle choice rather than a temporary behaviour. Health and wellbeing considerations, changing social norms, and evolving attitudes towards alcohol are influencing drinking habits across many markets,” says Bailey.

“Fewer consumers are drinking wine, drinking occasions are less frequent, and those who do consume wine are increasingly moderating their intake or abstaining altogether. As a result, global wine consumption has fallen to its lowest level since 1961.”

In Square Holes’ own research with Wine Australia on the evolving role of wine in the on-premise channel, we found a cultural shift in the country’s drinking behaviours, with alcohol consumption becoming more intentional, with wine viewed as best consumed with a meal or to mark a special occasion.

Erin Leggat, Chief Executive Officer, McLaren Vale Wine Region says that despite the behaviour change, wine remains integral in providing the drinker with a sense of place and connection.

“It is no secret that wine’s role in society is rapidly changing, but it remains an integral part of how people connect, celebrate and share meaningful occasions. It also has the unique ability – as a consumable product – to offer an experience of place,” says Leggat.

“But consumer tastes are changing, with quality, connection, authenticity and ethical business and environmental practices becoming increasingly important in purchase decisions.”

Price sensitivity, complex wine lists and limited staff support were highlighted as the key deterrents to ordering wine on-premise in our research reporting, with a clear divide in associations and behaviours down age groups.

Our study showed that older consumers (45+) were more likely to consume wine at home, and were more traditional and habitual in their behaviour around wine drinking. In contrast, younger consumers tended towards social consumption, and were led by occasion and venue/social cues when it came to partaking in wine.

These insights are backed up by the recent National Drug Strategy Household Survey 2022–2023, which found that the main drink of choice for young people aged 14–24  was pre-mixed spirits – though the preference skewed higher among females than males.

So how is the beleaguered industry working to survive these shifts?

According to Peter Bailey, many wineries are seeing this behavioural change as impetus to discover new ways to connect with consumers.

“Many are reducing production and adjusting vineyard capacity to better align supply with demand, while others are innovating to ensure wine remains relevant to changing consumer preferences,” says Bailey.

“This includes developing lower-alcohol and no-alcohol products, exploring alternative packaging formats, and creating new ways for consumers to engage with wine through tourism, food, and lifestyle experiences. While moderation presents challenges for traditional consumption patterns, it also creates opportunities for the industry to evolve and connect with consumers in new and meaningful ways.”

For the McLaren Vale region, Erin Leggat says a focus on creating premium experiences and repositioning wine into a wider range of occasions is key to longevity.

“Our industry is responding by leaning into premium experiences – both in the glass and in cellar doors -, investing in regional and brand storytelling, advancing sustainable practices and innovation, and positioning wine within a broader range of occasions,” says Leggat.

“For regions such as McLaren Vale, this creates immense opportunity to deepen consumers’ connection with our incredible wine, food, tourism, culture and community.”

For other members of the wine community, like Phil Reedman, Master of Wine, the role of wine in society remains clear – with or without current challenges.

“It remains as a drink that brings us together, encourages us to talk, share and provokes us to think and remember,” says Reedman.

“Time travel and intellectual stimulation in a glass, or as Bob McLean used to say of a bottle of wine: ‘three quarters of a litre of fun’.”

He points to the recent catastrophic fires that burn across Europe and threaten vineyards across Bordeaux and Madrid and the industry response as an example of how the wine industry will prevail – together.

“Parts of Europe are ablaze; fires threaten Bordeaux and Madrid. Vineyards are in the paths of those fires and their smoke. (And) Right now, Australian wine scientists are on Zoom calls with their colleagues in France, sharing their knowledge of how to deal with these threats,” says Reedman.

Square Holes is a cultural insight studio.

We design mixed method explorations of people and culture beyond the category,  uncovering the patterns, tensions and shifts shaping behaviour to inform strategy, inspire innovation and enable confident decisions. Our studio model brings together the right mix of thinkers, researchers and specialists for each exploration. If you’re navigating change, entering a new market, or seeking deeper understanding of people and culture, let’s start a conversation >