Alcohol consumption is dropping in Australia but there's one market that's booming nationwide

From the Winter issue of Kanebridge Quarterly magazine, on sale now.

It never used to be this complicated to order a drink. Less than 10 years ago, requesting a whisky, a gin and tonic or even a vodka martini was a fairly straightforward affair with a choice of international brands, from Glenfiddich single malt whisky to Absolut vodka and Bombay Sapphire gin.

Now, the drinking landscape is somewhat more complicated — and that’s good news for locals who like a dram of whisky or a cocktail or two.

The Australian distillery industry has gone through rapid growth in recent years, from 30 distilleries nationally less than 10 years ago to more than 600 now. And that’s despite the overall levels of alcohol consumption falling over time across Australia.

CEO of the Australian Distillers Association, Paul McLeay, has a simple explanation.

“Australians are drinking less, but better — and patterns are changing,” he says. “Cask wine sales are down. They’re drinking less boring beer and more interesting products.”

While the distillery industry was already growing, McLeay points to COVID as the impetus for the increasing appetite for flavourful spirits.

“Tastes changed after COVID,” he says. “That home cocktail culture took off as people realised they could make interesting drinks at home — and post photos of them on Instagram.

“That notion of drinking less but better, the idea of fewer drinks on fewer occasions made it feel more special.”

While the Australian wine industry was valued at $5.7b last year, the distillery market is making headway, coming in at $2.5b. However, McLeay says it differs from the wine market, especially in terms of production profiles. For starters, without the need for vineyards, he says the distilleries are equally split between city and regional areas. This is a key advantage for small craft distilleries looking to connect with their local market.

“If you live in Marrickville (in Sydney), you’ll be proud to be drinking a local gin,” he says. “When someone comes to visit, you want to give them something to take home. Spirits allow you to give them a taste of the locality — you can buy it in a bottle.

“For travellers, if people remember the Hellfire Bluff Gin they had on a night out in Hobart, that’s a positive association with the area as well.”

At the moment, he says there are about 500 gin and vodka distilleries around the country, about 100 whisky producers and 50 making rum. With each product having its own flavour profile influenced by local conditions, from the region’s botanicals to its barley, the quality of its rainwater and even the way it is aged, it is good news for consumers seeking variety. McLeay says most distilleries are making multiple spirits to increase commercial opportunity and get product to market quickly.

“The ‘brown’ spirits have had more time,” he says. “Whisky looks clear like gin and vodka initially but over three or four years of maturation, it turns brown. It only takes about a month to make gin, which is why a bottle of gin is generally less expensive than whisky.”

While it might seem as though the homegrown whisky, gin and vodka market has appeared out of nowhere, credit for the modern distillery industry in Australia largely falls to Bill and Lyn Lark from Tasmania who lobbied their local MP in 1990 to change antiquated federal laws that outlawed distilleries that were smaller than 2,700L.

Following the change, LARK Distillery opened in Tasmania in 1992, capitalising on the state’s reputation for growing high quality barley, its clean water, as well as providing the perfect climate for ageing single malt whisky. Support for the Larks’ efforts also followed from government, as well as mentorship from John Grant from Scottish label Glenfarclas, with their first whisky sent to market in 1998.

Bill Lark says while he knew it was a delicious drop, it wasn’t until the early 2000s that the business kicked up a gear.

“The early 2000s was a period where we and the few other distilleries had to prove their credibility to the market,” he says. “When LARK first won a major award in the World Whisky Awards in 2009 I think it gave the confidence in others to get involved. From day one, inspired by such greats as John Grant from Scotland, I encouraged as many new distillers as possible to become a family of distillers where hopefully we would all be producing a world class product in sufficient numbers for eventually Tasmania and Australia to be recognised as a significant whisky producing region.”

In March this year, LARK was recognised by the World Whiskies Awards in London for crafting Australia’s Best Single Malt and Best Blended Malt.

Bill Lark says the local market really started to accelerate when Australian whiskies began winning awards.

In the intervening years, Australian distillers far and wide have heeded the Larks’ call to create their own spirits, from small family operations focusing on a single product to larger businesses with their eyes firmly set on the world stage.

Fellow Tasmanians Suzy and Cam Brett from Spring Bay Distillery share a passion for whisky and were inspired by their travels and the Larks’ example to start their own business.

“We remember very clearly being told by Bill Lark to make sure you make bloody good whisky!” says Cam. “I think there has definitely been a change in consumer habits.

“People are more engaged with what they are drinking, how it is made, where it comes from and that has increased the popularity of all spirits.”

Suzy says she first experienced whisky while working in Edinburgh in the 1980s. She’s been a fan ever since.

“Whisky is the king of drinks because of the complexity, the ageing and the romance,” says Suzy. “The time it takes the whisky to mature is influenced by barrel size, bond store, location and climate. The larger the barrel, the longer the maturation.

“Some of our large barrels may take 10 years or more to mature and it is a case of ‘it’s ready when it’s ready’ and won’t be rushed.”

Suzy Brett from Spring Bay Distillery says she was inspired by Bill and Lyn Lark to produce an exceptional whisky. Image: Joe Chelkowski

Jake and Tess Eagleton started their Wagga Wagga label, Riverina Gin, in February 2023, after years of discussions, as well as travelling around gin distilleries in the Scottish Highlands, where Jake grew up.

“There are lots of gin distilleries popping up in the Scottish Highlands — I was surprised to see so many,” Jake says. “We started visiting them and often they were on people’s farms and you’d get the chance to meet the maker.”

The couple, who now have three children, were inspired by the notion of a family-run business and, with the help of local winery, Borambola Wines, who offered them a shed, focused on a one-shot distillation method. They have a simple philosophy of making one product really well.

“We try to stand out by not standing out too much — we use fresh organic oranges from the local region so the flavour is citrus forward,” says Jake.

They have also called on connections in their local community, partnering with Paper Pear Gallery in Wagga Wagga to host the Riverina Gin Club events. Expansion will be slow but steady.

“We made sure people knew we were a family-forward business,” says Jake. “We have seen a lot of peaks and troughs with the economy and we have been adaptable because we do a lot of the work ourselves. We have one gin that has been well received.”

Brand director and co-founder of Never Never Distilling Co Sean Baxter has bigger ideas for the business he started with friends George and Tim, with plans to further its expansion into Asia and Europe. Unlike other distilleries that sell via bottle shops as well as online, Never Never is focusing on the hospitality industry to reach bars and hotels. It’s not a surprising strategy given Sean’s former life at Diageo, the peak company for brands such as Johnnie Walker, Tanqueray, Guinness and more.

“I worked as a contractor for Sweet&Chilli as a national brand ambassador for Johnny Walker,” Sean says.

“That gave me access to so many amazing venues and bars and I met a lot of people. I was standing in front of so many people telling incredible brand stories and it sunk in — I wanted to do my own.”

The Adelaide-based business now offers more than a dozen gins and sees the relationships with bartenders and hospitality providers as key to their success.

Co-founder of Never Never Gin, Sean Baxter

“We collaborate with international bartenders to promote the brand in Hong Kong and Singapore, and over the past 12 months we have moved into France,” he says. “That’s been a real eye opener, taking our oyster shell gin to the French — it’s an exciting push.”

The ultimate goal is to create a global brand.

“We didn’t build Never Never Distilling to be small.”

Reporting season has once again reminded investors that a strong profit does not guarantee a rising share price, and a large loss does not always trigger a sell-off. What matters most is how each result compares with expectations and, increasingly, what management says about the year ahead. During the August 2026 season, companies offering credible turnarounds or unexpectedly strong guidance were rewarded handsomely, while those flagging weaker margins, slowing demand or greater uncertainty were punished.

The following ranking draws on Morningstar’s review of 164 ASX-listed companies and measures each company’s share-price movement on the day it reported. This captures the market’s immediate response to the earnings announcement, before subsequent economic developments, dividends and company-specific news cloud the picture. Here are the five biggest winners, and the five hardest-hit losers, of the season so far.

The five winners

1. Bapcor (ASX:BAP): +41.0%

Bapcor delivered reporting season’s largest relief rally after presenting early evidence that its troubled automotive-parts business was stabilising. Although underlying revenue fell 1.8% to $1.92 billion and underlying NPAT collapsed 85% to $10.8 million, underlying EBITDA of $152.5 million exceeded guidance.

More importantly, working-capital initiatives released $68.5 million in the second half, lifting cash conversion to 109.4% and reducing net debt by 63% to $135 million. The statutory loss was $431.6 million, largely because of non-cash impairments. Investors focused on improving operational momentum, stronger liquidity and management’s expectation of modest FY27 revenue growth.

2. Zip Co (ASX:ZIP): +18.2%

Zip comfortably surpassed its FY26 targets, sending the buy-now-pay-later provider’s shares sharply higher. Transaction volume rose 23% to $16.7 billion, while cash earnings before tax, depreciation and amortisation jumped 58% to a record $268.9 million. Statutory profit climbed 46% to $116.4 million, and the cash operating margin expanded by 4.2 percentage points to 20%.

The strongest signal was guidance for FY27 cash earnings of $340 million—around 26% growth and above analysts’ forecasts. US transaction volume increased 42.5% and now represents three-quarters of group volume, offsetting weaker customer activity in Australia.

3. CSL (ASX:CSL): +17.3%

CSL’s result was hardly spectacular in isolation, but it cleared a market bar that had fallen dramatically following earlier downgrades and restructuring announcements. Underlying NPATA was US$3.1 billion, down 2% in constant-currency terms, while operating cash flow reached US$3.51 billion.

CSL maintained its full-year dividend at US$2.92 per share and completed a A$1 billion buyback. The real catalyst was FY27 guidance for approximately 5% underlying profit growth, compared with market expectations closer to 2%. After an extended period of earnings disappointments, investors interpreted the outlook as evidence that CSL’s core plasma business was approaching a sustainable recovery.

4. Judo Capital (ASX:JDO): +16.9%

Judo Capital demonstrated strong operating leverage as its specialist business-lending franchise expanded. Full-year profit before tax rose 34% to $168.1 million, while pre-provision profit increased 42%. Gross loans and advances grew 18% to $14.7 billion, reaching the top of the bank’s guidance range and comfortably exceeding broader system growth.

Deposits increased 24% to $12.2 billion, return on equity improved by 1.1 percentage points to 6.4%, and earnings per share rose 29% to 9.9 cents. Reaffirmation of the FY27 outlook gave investors confidence that loan growth could continue without sacrificing margins or credit quality.

5. Super Retail Group (ASX:SUL): +15.8%

The owner of Supercheap Auto, rebel, BCF and Macpac reported record sales of $4.2 billion, up 3.2%, despite cautious discretionary spending. Profitability went backwards: normalised profit before tax fell 7% to $306 million and normalised NPAT declined 2.8% to $226 million as transformation spending weighed on margins. Nevertheless, the result exceeded subdued expectations, online sales grew 5.3% and membership across the group’s loyalty programs reached 13.1 million. Investors were also encouraged by positive early FY27 trading, stable gross margins and continued market-share gains. A fully franked 33-cent final dividend added to the appeal.

The five losers

1. Hansen Technologies (ASX:HSN): –21.2%

Hansen’s historic result met expectations, but investors recoiled from its outlook. The utility and communications software provider achieved an underlying EBITDA margin of 31%, exceeding its 30% target, while generating strong cash flow. However, management designated FY27 an “investment and transition year”, signalling a roughly five-percentage-point margin contraction as spending on products, sales capabilities and organisational changes increased.

Revenue had already been broadly flat, leaving investors concerned that the investment program would depress earnings before new growth appeared. Leadership changes, including the chief executive’s departure, added uncertainty. Management expects revenue growth and margins above 30% to return in FY28, but the market was unwilling to wait.

2. Life360 (ASX:360): –19.4%

Life360’s headline growth was impressive: quarterly revenue rose 38% to US$159 million, subscription revenue increased 31%, and adjusted EBITDA climbed 53% to US$31.1 million. Monthly active users reached 102.4 million and paying circles grew 27% to 3.2 million. The sell-off reflected expectations rather than a collapsing business.

Net income fell 18%, the net margin contracted from 6% to 3%, hardware shipments dropped 18%, and full-year EBITDA guidance was merely maintained. After a strong valuation run, investors wanted a larger upgrade and clearer evidence that heavy investment in advertising, international expansion and artificial intelligence would generate additional earnings.

3. PEXA Group (ASX:PXA): –17.0%

PEXA reported a 7% increase in continuing-operations revenue and 12% EBITDA growth to $152 million, accompanied by a two-percentage-point margin expansion. Free cash flow increased 39%, suggesting the core Australian electronic-conveyancing platform remained highly profitable. Investors instead concentrated on management’s warning that property-transfer volumes could decline, alongside regulatory uncertainty surrounding the fees PEXA can charge.

The company is also continuing to invest heavily in its loss-making international expansion. Morningstar considered the market reaction excessive, arguing that structural transfer-volume assumptions had not materially changed, but the combination of softer near-term activity and regulatory risk overwhelmed the respectable headline numbers.

4. SEEK (ASX:SEK): –14.3%

SEEK produced solid FY26 figures, including 10% revenue growth to $1.20 billion, a 15% rise in EBITDA and 28% growth in adjusted earnings per share. It also lifted its fully franked annual dividend by 13% to a record 52 cents. Those achievements were overshadowed by falling paid job-ad volumes and cautious FY27 assumptions.

The statutory accounts included a $201 million loss from the SEEK Growth Fund and $377 million of significant items, making the headline result considerably less attractive. Investors were particularly concerned that economic weakness could limit volumes while the company continued investing in platform integration and artificial-intelligence products.

5. JB Hi-Fi (ASX:JBH): –12.3%

JB Hi-Fi’s full-year result was broadly respectable, with group sales rising 5% to $11.1 billion and underlying earnings per share increasing 6% to $4.48. The damage came from its current-trading update. Australian sales were almost flat during the June quarter and deteriorated further in July, while earnings in the core Australian electronics business fell 3.6%.

Housing-related categories were particularly weak as higher living costs and interest rates constrained household budgets. With JB Hi-Fi entering the season on a demanding valuation, an in-line historic result was not sufficient: the loss of sales momentum prompted investors to rapidly reduce their expectations for FY27.

Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations. Bapcor was rewarded for being less troubled than feared, while several fundamentally profitable companies were punished because their outlooks failed to justify elevated valuations.

Alcohol consumption is dropping in Australia but there’s one market that’s booming nationwide

As Australians develop a taste for craft distilleries — and their products — the local industry is meeting the growing demand with exceptionally good drops

Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations