Australian Wine Exports show Sturdy Growth

The average value of bottled exports increased by 1 per cent to A$5.53/liter and the average value of bulk exports increased even more by 3 per cent to A$1.00/liter, showing an overall growth of 4 per cent in the average FOB price of all exports to $3.06/liter, the highest since it was achieved first in 2009.

There were a record 2102 active exporters in this period, up from 1744 in the same period in 2016. Of these, 1475 exporters experienced a growth in exports of 28 % ($451 million) to $2 billion.

There was growth across almost all price points). There was stronger growth in the commercial wines priced at under A$2.50 per litre, growing at 22 % to $505 million. Premium wines priced above A $10 per litre FOB, also grew by 23 % to a record $672 million, indicating that the efforts by the Australian industry to correct the negative image that Australia produced only cheap wines. It also indicates that the demand for premium Australian wines has increased in areas where consumers are trading up to higher value products across a range of categories.

Increase in domestic too

Australian premium sales are also growing in the domestic retail market. According to the Report, value of Australian wine sales in the domestic retail market at A$10 or more per bottle increased by 7 % compared to a 0.3 % decline in bottles selling under $10.

Red Wine Exports dominate

Perhaps buoyed by Shiraz being recognised universally as the signature grape of Australia and the most exported grape, red wine continues to dominate Aussie exports, contributing 74 % of export value. The growth was also similar for table wine, growing by 16 % to $1.8 billion. Exports of white wine grew at a much lower rate of 2 % at A$ 546 million. Incidentally, red wine is also outperforming white wine in the domestic market. The value of red bottled wines sales increased by 7 % while white bottled sales increased by only 2 %.

Export Destinations 

Exports to all regions recorded growth, with the strongest growth driven by exports to Northeast Asia (which includes China, Japan and South Korea), which increased by A$248 million (36 %) to a record A $926 million. Exports to Southeast Asia grew by $10 million (6%) to $162 million, Europe grew by $8 million (1%) to $578 million, North America grew by $7 million (1%) to $646 million and the Middle East by $1 million (6 %) to $21 million. Out of the 124 countries it exported to, there was increase in 82 countries.

Australia’s five largest markets account for 76 % of the value of Australian exports. China was the biggest market (30%); the other countries that featured in Top Five were United States (19%), UK (14%), Canada (8%) and Hong Kong (5 %).

Australia’s top five markets by volume were UK (28 %), USA (23 %), China (17%), Canada (8%) and Germany (5 %). About 80 % of wine exported to the United Kingdom and Germany was shipped in bulk containers. Most of the top selling wines –like Hardy’s, Jacobs Creek are shipped in bulk and bottled under their brands in these countries.

China the main driver

Exceptional growth to mainland China continued, with the value of exports up 56 % to a record $739 million. Growing consumer demand and some favourable business practices have contributed to this strong growth. The reduced tariffs due to the China–Australia ‘Free Trade Agreement’ (FTA) have seen exporters now shipping directly to mainland China instead of routing through Hong Kong. Also, as the logistics evolve, shipping time has been reduced. 

As reported by delWine in its 751st issue last month in an Article on World Bulk Wine Exhibition

(WBWE) to be held in Amsterdam on November 20 and 21,  Australia became the preferred choice for Chinese buyers at the Last year’s WBWE, exporting a total of 4.15 million hL of bulk wine in the past year, accounting for 54.5 % of its total foreign sales, amounting to €281 million at an average price of € 0.68 per liter. This year, both these countries will again participate prominently in the world’s largest fair for the wine business. Australia will achieve it through exhibitors, like-Growers Wine Group, Qualia Wines, Winegrapes Australia, Kinston Estate Wines and South Australian Wine Group. China will visit the fair with some of the country's largest buying companies such as Cofco (No. 1) and Ninecoast (No. 8).

Incidentally, Australia's development in the bulk wine trade has been constantly on the increase since 2000, when it barely accounted for 12.5%, compared to 85% for packaged wine. The share went up to 54.5% in 2016 compared to 44% of the packaged wine, according to sources from where delWine collected the data.

Wine Australia

Wine Australia is the trading name of the Australian Grape and Wine Authority, a Commonwealth statutory authority.  It is funded by grape growers and winemakers through levies and user-pay charges and the Australian Government, which provides matching funding. Wine Australia supports the competitive wine sector by investing in research, development and extension (RD&E), growing domestic and international markets and protecting the reputation of Australian wine.

Subhash Arora

1 Aus D= Rs. 51= US $ 0.79=   € 0.67

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