Australian exports driven by premium wines to China hit record high
Shipments of premium wine to China have been driving Australian wine exports, with sales reaching a record of $1.2bn in the year to June 2019, according to Wine Australia's latest export report.
This is a 7% increase on the previous year, while volumes to China dropped by 16% to 154 million litres, reflecting the decline in exports of lower value wines. Australia currently sits behind Chile and France in terms of export volume, and second only to France in export value. However, in the first five months of 2019, Australia leapfrogged France to become the number one imported wine category in mainland China by value.
Australia’s imported market share has jumped 13 percentage points since 2015 to 24% based on volume; compounded by the recent contraction of the total import market.
Overall, Australian wine exports grew by 4% in value to hit $2.86bn, with the US also putting in a steady performance and returning to growth, with sales up by 2% to $432m.
However, total volumes exported tumbled by 6% to to 801 million litres, driven by a 7% decrease in shipments of wine below an average value of $2.50 per litre. This resulted in a 10% increase in the overall average value of exported wine to $3.58 per litre, the highest level since 2009.
Wine Australia chief executive officer Andreas Clark said the growth in value and the declines in volume at that lower end of the price spectrum would be welcome news to the sector that has been focusing strongly on growing value rather than volume.
“The strong growth in average value is positive for the wine sector and the broader economy as it lifts returns for wine businesses and flows through to regional economies through higher grape prices,” he said.
“Our National Vintage Report 2019 released last week shows that the average grape price has lifted for the fifth year in a row, reaching $664 per tonne, the highest level since 2008.”
He described the turnaround in exports to the US as “pleasing”, adding that the average value increase of 6% to $2.83 per litre, the first growth in 2 years, rewards the efforts of the many exporters who are working to change perceptions about Australian wines and communicate about the diversity and excellence of Australia’s offering.
“There were increases across most major price segments in the US with the stand out segment for growth being $7.50 to $9.99 per litre FOB,” he continued.
The UK, China’s biggest market accounting for almost a quarter of the total volume of exports (24%), experienced a small decline, with value down by 3% to $373m, and volumes down by 4% to 236 million litres. Average value, however, inched up by 1% to $1.58 per litre.
The volume decline reflects the fact that some of the larger brands have already shipped additional product into market pre-Brexit to offset any disruption to exports.
"It’s important to retain perspective on the UK market," said Clark, pointing out that research by IRI shows Australia was ranked number one in still wine off trade sales in the 12 months ended March 2019, with a market share of 24% in volume and 23% in value.
Off-trade sales in the UK for Australian wine grew 1% in the year ended March 2019 to £1.2 billion. The key areas of growth were wine priced between £5.01–7.00 per bottle (up 1%, £8.01–9.00 (up 10%), and £10.01–20.00 (up 4%) (IRI Worldwide).
Australia commands the highest share (30%) in the £5.01–6.00 per bottle segment. Clark added that Australian wine supplies would remain “tight" in the medium term with last week’s National Vintage Report revealing that the 2019 vintage was 1.73 million tonnes, just one per cent below the 10-year average. This means that supplies, particularly of reds that dominate Australian exports, will continue to remain stable.
Some of the best performing varietals in the UK market included Tempranillo, where shipments rocketed by 101%, Montepulicano, up 73%, Pinot Noir up 34% and Fiano up 39%.