Platters that matter: wine and cheese night transformed

While people often talk about them, when did you last actually have a wine and cheese night?

While they have long been thought of as a way of welcoming the new neighbours - as well as impressing them with your Cab Sauv and Camembert selections -  the humble ritual is changing as the global middle-class grows and transforms.

From Mumbai to Chongqing consumers are embracing - and changing - the way we eat these dinner party staples.

Take global cheese consumption. Last year it was tipped to hit a new record of 21.6 million metric tons. (That’s enough cheese to make a pizza the size of Switzerland - except that the Swiss would probably melt it all and make 108 million fondues).

Part of this growth comes from the rising appetite for Western cuisine, with countries that haven’t traditionally consumed much cheese now embracing everything from artisanal varieties to cheese-laden favourites like burgers, pizzas, and pasta – with extra parmesan, please. 

Meanwhile, global wine consumption is fluctuating as China - the market that once fuelled global growth - sees demand shrink, with middle-class consumers shifting towards craft beer, cocktails and premium spirits. While top-tier wines like Penfolds are expected to perform well, the broader market is tougher than ever, with imports down two-thirds from their peak and wine struggling to regain its lost ‘halo’ of sophistication.

What does this mean for the Australian dairy farmers, processors, wine growers and others in the sector whose fate seems tied to these incredibly tasty export goods?

Cheese: shooting for the moon

Australian cheese is increasingly finding a place on the global food platter.

Australia’s dairy industry is undergoing a quiet but major change - and one with a distinct smell of melting mozzarella.

Cheese production has now overtaken fluid milk as the largest use of Australian milk, a shift that has seen processors pivot away from lower-margin products like skim milk powder and, to a lesser extent, butter.

It is projected that 35 per cent of all milk produced in Australia will be used for cheese production.

When looking only at the milk that goes into making dairy products (rather than being sold as fresh milk), nearly half - 49 per cent - is forecast to be used for cheese. Australia’s dairy export volumes surged by almost per cent in 2023/24, led by strong growth in cheese and butter, yet export value only increased by 2 per cent. This suggests that while demand for Australian dairy remains strong, global dairy prices have softened due to factors such as increased production from major exporters like New Zealand and the European Union, and fluctuating demand from important markets like China. As a result, Australian exporters have had to compete more aggressively on price to maintain market share.

Australian cheese production hit a record 432,000 tonnes in 2021/22, fuelled by a mix of strong industry growth and a pandemic-driven cheese boom. With people spending more time at home, indulging in comfort foods and experimenting with everything from gourmet toasties to homemade pizzas, demand surged.

While production has since dipped slightly, cheese remains a profitable focus for Australian dairy processors, who are seeing stronger returns from both domestic sales and export markets.

Australian cheese exports - where are they heading?

Australia’s cheese industry has seen plenty of twists and turns. One moment the industry is breaking production records, while the next, export values are sliding, milk production is dwindling, and dairy farmers are eyeing the exit door faster than a lactose-intolerant guest at a fondue party.

Japan remains Australia’s top cheese customer, taking over a third of exports for everything from ramen to katsu burgers. And the latest viral food craze, the 10 Yen Cheese Pull having originated in Japan, before spreading across Asia and the world, cheese demand could grow even further.

China is also a major market, thanks to its café culture and ‘cheese tea’ craze.

Malaysia, South Korea, and the Philippines are growing markets, where Aussie cheese melts into pastries, spicy tteokbokki, and Hainanese toast.

But while export volumes remain strong, cheese export values actually fell around 5 per cent last year, largely due to falling global dairy prices and China’s economic slowdown. As with many other food categories, it appears that consumers are still buying cheese - just opting for cheaper varieties.

Within Australia, milk production may have risen just over 3 per cent to 8.38 billion litres in 2023/24, but it’s still 24 per cent below its 2002 peak, as the number of dairy cows and dairy farmers continues to fall. The question now is whether milk supply will keep falling - or if strong cheese demand and steady export revenue may help stabilise it. If cheese continues to be the star performer for Australian dairy products, it may encourage some processors and farmers to look more optimistically to the future.

With Japan, China, and Southeast Asia remaining key growth markets, Australia’s cheese future is closely tied to milk supply. If milk production levels stay reasonable, Aussie cheese could have the volumes to keep growing across the world. If not, then we might have to start rationing the camembert at our next wine and cheese night.

Glass half full? Australia’s wine industry at a crossroads

It has been a turbulent few years for Australian wine.

Global trade disruptions, shifting consumer habits and economic pressures have forced the industry to rethink everything from export markets to grape varieties. While China’s removal of tariffs in March 2024 brought fresh hope, the broader wine market is still navigating a challenging landscape.

China’s comeback - but not for everyone

The good news? Australian wine export value surged 34 per cent in 2024 to $2.55 billion, with export volumes up 7 per cent to 649 million litres.

Much of this rebound was thanks to China, which imported 83 million litres worth $902 million in the nine months following the tariff removal. The average price per litre for Chinese imports was a premium $10.79, reflecting strong demand for high-end Australian reds.

This in turn lifted the overall average value of Australian bottled wine to a record $9.35 per litre - a trend welcomed by premium producers in Barossa Valley, Coonawarra, and Margaret River.

But beyond China, the global picture was less rosy.

Exports to the rest of the world fell 13 per cent in value to $1.64 billion and 7 per cent in volume to 565 million litres, driven by declines in Hong Kong and the US. The drop in Hong Kong was likely due to stockpiling in 2023 in anticipation of the tariff removal, while US imports slowed after a surge in 2023.

The battle of red vs white - Chardonnay takes the crown

For the first time since 2013, Chardonnay overtook Shiraz as Australia’s most-crushed grape variety, hitting 332,000 tonnes.

Meanwhile, Shiraz fell 14 per cent to 298,000 tonnes, its smallest crush since 2007, highlighting challenges in the premium red segment.

Overall, the red wine crush fell 1 per cent to just over 700,000 tonnes, sitting 24 per cent below its ten-year average. White wines, on the other hand, grew 19 per cent to 720,000 tonnes - though still 10 per cent below the ten-year average.

For the first time since 2014, white wine grapes made up the majority of Australia’s crush, reflecting shifting consumer preferences.

Winners and losers - the regional shake-up

Not all wine regions are struggling.

While Barossa Valley, arguably Australia’s most famous wine region, saw a 24 per cent drop in production and a 28 per cent decline in value, Tasmania has gone the opposite way.

Tasmania’s production surged 38 per cent and value soared 51 per cent, as demand for cool-climate wines, particularly Pinot Noir and sparkling varieties, continues to grow.

Coonawarra, long known for its Cabernet Sauvignon, saw a 33 per cent increase in production and a 37 per cent rise in value, showing strong demand for premium reds despite challenges elsewhere.

Meanwhile, Clare Valley’s production fell 28 per cent, yet its value per tonne jumped 20 per cent, suggesting that lower yields have helped drive prices up for its premium Rieslings.

Other notable shifts include King Valley, Wrattonbully, and Padthaway, which all saw per-tonne value increases, reflecting growing demand for specific varietals. In contrast, Barossa and McLaren Vale saw declines of 15 per cent and 5 per cent, reinforcing concerns about pricing pressures in the premium red segment.

A surplus still weighs heavy

Despite a 10 per cent reduction in total wine inventories, Australia still has an oversupply of around 200 million litres, mostly red wine.

This glut has driven down grape prices, particularly for Shiraz, Cabernet Sauvignon and Merlot, making it harder for growers to find buyers at profitable prices.

Changing drinking habits and economic pressures

Domestically, Australians are drinking less wine overall.

Between 2020 and 2022, wine consumption in Australia fell by 9 per cent, or roughly 50 million litres.

Younger consumers are drinking less alcohol, and when they do, they’re increasingly choosing premium products, lower-alcohol beverages, or alternatives like gin, craft beer, and ready-to-drink cocktails.

Economic pressures have also played a role. With inflation and interest rates squeezing household budgets, many consumers have cut back on discretionary spending, affecting premium wine sales and cellar door visits.

The impact has been felt across the industry, with Penfolds closing its Barossa Valley cellar door and Shingleback shutting down its McLaren Vale site - both citing rising costs and reduced consumer spending.

The future

From premium cheese to premium reds, the future of Australia’s food and beverage exports will be shaped by two key factors: global demand and domestic supply.

While Asian middle-class growth continues to create long-term export opportunities, dairy and wine producers alike face structural challenges - from falling milk production to changing drinking habits.

But there’s also opportunity. The success of Australian cheese in Japan, China, and Southeast Asia shows there’s room for value-added, premium, and uniquely Australian products.

For the wine industry, demand for high-quality reds in China and a surge in cool-climate wines could mean the industry’s future lies in premiumisation rather than bulk exports.

And for the Australian consumer? It’s time to enjoy a bold Shiraz with some aged cheddar - while we still can.

Michael Whitehead is Executive Director for Agribusiness Industry Insights at ANZ