Australian wineries and breweries face closures as alcohol demand declines

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Australian wineries face closures

Highlights

Australian alcohol consumption fell about 10 percent over three years to 2024, with exports hitting a 22-year low and weekly winery revenues dropping from $20,000 to $2,000.
More than 80 breweries have closed since June 2023 and Coles liquor sales fell 3.3 percent last financial year, while Endeavour Group saw only a modest 0.7 percent retail sales rise.
Non-alcoholic beer sales in Australia are projected by ANZ to double to 300 million litres by 2028, now comprising 10 percent of all beer sales.

Sales slump forces operational cuts

As reported by ABC News, the decline in alcohol sales is accelerating in Australia, with closures and production cutbacks spreading across the sector as cost-of-living pressures reshape consumer demand.

Hunter Valley winery owner Nathan Heuston says his business has fallen sharply since opening about five years ago. He says busy days once brought in as many as 220 visitors, but this year some days have had no customers at all. Weekly revenue has dropped from about $20,000 to about $2,000, forcing the business to reduce staff and scale back output.

Heuston says production this year totals about 20 tonnes, down from 60 to 70 tonnes previously. He adds the business is now limiting production to fruit from its own new vineyard and has not been buying barrels for the last year and the coming one.

Pressure is being felt across the market. Tasmanian brewer Boag closed last week, more than 80 breweries have shut since June 2023 according to the Independent Brewers Association, and seven hotel bars in Hobart entered voluntary administration earlier this year. Trade data in June also shows Australian wine exports falling to their lowest level in 22 years.

Fitch Solutions data shows global wine consumption has been declining for almost a decade. Since 2017, global volumes have fallen in seven of the eight years to 2025, reaching 23.14 billion litres. In Australia, total alcohol consumption fell about 10 per cent in the three years to 2024, and IBISWorld senior analyst Michael Doyle says the drop in the 2024 financial year is the sharpest on record.

Non-alcoholic growth reshapes the market

While traditional alcohol categories are weakening, non-alcoholic products are gaining share. ANZ projects non-alcoholic beer sales will nearly double in the four years to 2028, rising from 150 million litres to around 300 million litres. The category accounted for 45 per cent of total non-alcoholic beverage sales in Australia in 2023 and about 10 per cent of all beer sales.

Heaps Normal co-founder and chief executive Andy Miller says the company's non-alcoholic beer sales are growing by about 20 per cent a year. He says the company is now distributing non-alcoholic beer on tap, and in some venues its draft product is outselling alcoholic alternatives.

Large retailers are also reflecting the shift. Liquor sales at Coles fell 3.3 per cent last financial year, while Endeavour Group, owner of BWS and Dan Murphy's, recorded only a modest 0.7 per cent increase in retail outlet sales.

Australian Grape and Wine describes the current period as the most difficult set of circumstances the industry has faced in generations. Chief executive Lee McLean says the sector is trying to rebuild market share in existing export markets such as the U.S. and the UK, while also opening opportunities in India and Southeast Asia.

Alcohol Beverages Australia executive director Alistair Coe says producers are responding with broader product diversity and growth in low and no-alcohol ranges. McLean, however, warns not every business will survive and says grape growers and winemakers in struggling regions need government help to transition, whether that means changing crops, repurposing land or leaving the industry altogether.

Doyle says high inflation and strained household budgets are likely to keep weighing on alcohol demand. Agriculture Minister Julie Collins says the government has provided more than $105 million in support for the grape and wine sector, including the Wine Equalisation Tax rebate and a mandatory code of conduct for wine-grape purchases.

In our earlier article on Moody’s upgraded global growth outlook, we noted that improving household demand and a steadier labor market were strengthening the recovery as vaccination rates rose and restrictions eased. At the same time, the report highlighted that persistent inflation and ongoing supply-chain disruptions remained key risks that could still weigh on momentum in specific regions and sectors.

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