Is cask wine dead?

Posted by Daniel Palmer on 10th November 2008

The future of cask wine is bleak, according to a new report, which discovers that its share of the wine market has fallen by a third in the past decade.

The product, often referred to as the “goon bag”, was invented in 1965 by winemaker Tom Angove and begun to make its mark in the 70s as a cheap option. With new screw-top bottles, cheaper bottle prices and the threat of volumetric taxes, however, cask wine is set to continue relinquishing market share.

A Citi Investment Research report found that its volume share of the wine market fell from 60 per cent to 40 per cent in the past decade, after losing its lead over bottled wine three years ago (its value share is considerably less due to the low price positioning).

Foster’s Group and Constellation Brands, leaders in the category, are undertaking strategic exits from the category, according to the report.

Citi notes that they have been increasing their prices recently, a sign that they may be trying to milk as much out of the market as they can before their exit. Often the strategy is done to maximize short-term cash flow while also ensuring that minimal funds are invested in the business.