Australian alcohol consumption under further threats from growing cultural trends and weight-loss drugs

China’s wine consumption peaked in 2012 and plunged 65 per cent by 2022 when Australian wines had effectively been banned from the market.

“We don’t expect to see exports return to the peak levels because the market in mainland China, as well as global conditions generally, are now very different,” Wine Australia’s Peter Bailey says.

Locally, things are no better. Last year’s wine sales in Australia were the second lowest since 2007-08.

“After growing consistently between 2006-07 and 2016-17, sales of Australian wine domestically have been gradually declining for most of the past decade,” Wine Australia says.

The US offers an outlook that is just as gloomy.

While Australia readies for its peak summer drinking season between Christmas and New Year’s Eve, the US has already kicked off with Thanksgiving in late November – the traditional start of America’s peak non-summer festive season.

It might offer an uncomfortable taste of things to come. US alcohol consumption has fallen to its lowest in decades.

Sitting alongside the sober curious crowd (those choosing not to drink, or to drink less) at the Thanksgiving table this year were the new “California sober” crowd, which is replacing alcohol with cannabis and mind-altering substances in many forms.

According to a Bloomberg report, the day before Thanksgiving has become the second-biggest day of the year for legal cannabis sales.

“More Americans looking to relax this Thanksgiving may reach for a marijuana vape, gummy or hemp-based THC beverage instead of alcohol,” Bloomberg Intelligence’s Kenneth Shea says.

Australia does not offer the same liberalised drug market yet, but is also experiencing some of these trends as the sober-curious Gen Y and Gen Z reject alcoholic beverages.

A study by Flinders University in October showed that younger generations were turning away from alcohol at unprecedented rates in what researchers referred to as a cultural shift that could reshape Australia’s drinking landscape.

The study analysed more than two decades of data from more than 23,000 Australians, providing robust evidence that the decline in alcohol use among young people is beyond a passing trend.

“For decades, alcohol has been deeply embedded in social life, but that’s changing,” report co-author Dr Kirrilly Thompson, says.

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“Our research shows that over the course of their lives, Gen Z are nearly 20 times more likely to choose not to drink alcohol compared to Baby Boomers, even after adjusting for sociodemographic factors,” lead author Dr Gianluca Di Censo from Flinders’ College of Medicine and Public Health, says.

“This isn’t just a phase; it appears to be a sustained change in behaviour that could have long-term public health benefits.”

It’s not the only health trend having an impact.

Winemakers will also suffer lower consumption due to their core Generation X and Boomer market who are embracing GLP-1 slimming drugs such as Ozempic.

In November, research by UNSW academics reported that GLP-1 demand soared tenfold between 2020 and this year, and half of this demand was from private buyers paying hundreds of dollars a month to use it for weight loss rather than diabetes treatment. The study says these private buyer numbers could exceed 200,000 each month.

The problem for winemakers is that these drugs don’t suppress a user’s appetite for only food; it is also developing a reputation for suppressing appetite for alcohol consumption.

Citi analyst Sam Teeger says it could represent another structural headwind for wine consumption, noting “GLP-1 will become available in pill form in the US next year”.

It promises to slim the sales and profit margins of winemakers such as TWE even further.