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Australian wine exports continue to soar

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Australian wine exports continue to set records, driven largely by an insatiable demand in China.

The average value of bottled wine exports hit a new high of $5.74 per litre and exports to China (including Hong Kong and Macau) increased by 51 per cent for the year to March 2018, according to data released by Wine Australia today.

Bottled wine exports to China are now valued at $1.04 billion – a first for exports to a single country.

And total exports increased by 16 per cent in value to reach $2.65 billion in the same period – the highest value in a decade. Volume also increased by 10 per cent to a near-record level of 844 million litres or 94 million 9 litre case equivalents.

Wine Australia Chief Executive Officer Andreas Clark said value growth has outpaced volume growth. The average value per litre of all Australian wine exported increased by 5 per cent to $3.14 per litre.

Wine exports to China continue to grow following another cut in tariffs in January this year in line with the China-Australia Free Trade Agreement (ChAFTA).

Competitive advantage

Tariffs will be removed completely in January 2019, providing Australian wine exporters with a competitive advantage over key producers such as France, Italy and Spain.

Assistant Minister for Agriculture Anne Ruston said the government is anticipating further growth in the value and volume of wine exports to China when tariffs are removed.

“The Government’s $50 million Export and Regional Wine Support Package is also providing unprecedented support to help wine sellers take advantage of new and emerging markets,” Ms Ruston said.

“The package supports a three-year plan to attract 40,000 more international tourists to Australia's wine regions, which will boost regional economies, increase export values and provide more jobs.”

Second largest export market

Mr Clark said mainland China has now overtaken the US to become Australia’s second largest export market by volume.

“Pleasingly, there was very strong growth at all price points as imported wine becomes more approachable and is increasingly consumed by middle-class drinkers and seen as suitable for consumption at informal gatherings and while relaxing at home,” he said.

The value of bottled wine exports increased by 15 per cent to $2.15 billion, the highest value since 2009.

The average value of bulk wine also increased, by 8 per cent to $1.05 per litre, the highest value since 2009.

Higher value wine exports grew substantially with exports of wine above $10 per litre reaching a new peak of $779 million for the year to March 2018.

Demand for high quality wine

Mr Clark said the high quality of Australian wine plus historically low Northern Hemisphere harvests were driving the demand for Australian wine exported in bulk containers.

This has led to a growth in both volume – which grew by 10 per cent to 462 million litres – and the total value of exported bulk wine, which grew by 19 per cent to $486 million.

“Every country in Australia’s top 10 bulk wine destinations recorded an increase in average value,” said Mr Clark.

This includes Germany, the largest importer of wine in the world, where average values for bulk wine increased by 20 per cent from $0.87 to $1.05 per litre.

Strong growth in premium sectors

Mr Clark said while the commercial end of the US market was in decline, contributing to the drop in volume, there had been strong growth in the premium sectors.

For wines $10 per litre and over, the strongest contribution came from the $30–$49.99 segment, which increased in value by 25 per cent to $5 million.

According to IRI Worldwide, in 2017, Australian sales in the US off-trade market declined by 1 per cent in value, but there was strong growth in two price segments.

At US$8–11.99 per bottle, Australian sales doubled while at US$20–24.99 per bottle grew by 22 per cent.

Number one in the UK

Exports to the United Kingdom (UK), Australia’s largest export destination by volume, increased in value by 9 per cent to $373 million and in volume by 8 per cent to 241 million litres.

Average value increased slightly by 1 per cent to $1.55 per litre.

In the UK off-trade retail market Australian sales increased by 2 per cent in value in 2017, maintaining the nation’s long-held number one position in the UK retail market according to market data analysts, Nielsen.

On the domestic front, Australian wine sales in the off-trade retail market increased by 3 per cent in value to $3.5 billion in the 12 months ended 4 March 2018, with the strongest growth occurring in the $15–30 per bottle segment according to IRI MarketEdge.

Mr Clark said excellent vintage conditions in Australia would sustain the sector’s growth as the relatively cool, dry summer had produced high-quality grapes and winemakers are excited about the exceptional quality of the 2018 vintage wines. 

“Wine Australia is already reaching out to producers to remind them that now is the time to set their vineyards up for an outstanding 2019 vintage.”

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