Hardys Wines

Australian wine exports on a new high

October 28, 2020
By Melissa Parker

In good news for the Australian wine industry, average value growth in Australian wine exports increased 4 per cent in its top five export markets to $3 billion in the 12 months ended September 2020 according to Wine Australia’s Export Report released today.

The results show the Australian wine industry remains optimistically buoyant as global demand for Australian wine amidst political and economic instability remains strong.

Indeed, it signifies the highest level of overall value in Australian wine exports since the second half of 2007.

The strongest growth has been in the last quarter of the 12-month period where value of exports increased by 23 per cent compared to the same period in 2019.

This came after declines of 4 per cent in the April to June quarter and 7 per cent in the January to March quarter as clear trends emerged amidst the Covid pandemic reflecting consumer sentiment combined with restricted on-premise channels and increased consumption at home.

While premiumisation has continued as a general theme, there has been a surge in commercial/value and premium wines evident in the growth in certain markets.

The UK and the USA saw the majority of growth from the commercial and value end of the market.

The growth in exports to the USA was driven by the $2.50–4.99 per litre segment (up 9 per cent to $291 million) and, to a lesser extent, $5.00–7.49 per litre segment (up 5 per cent to $24 million).

China experienced growth driven by the premium end where higher-priced exports recorded exceptional growth, particularly at $30 or more per litre.

Wine Australia reports that almost two-thirds of Australia’s exports to mainland China are priced at $10 or more per litre.

Wine Australia’s CEO Andreas Clark said although the report points to a roller coaster ride of figures in unprecedented times, the reality is people are still drinking wine, and the outlook for Australian wine export is strong.

“Fundamentally people still want to drink, and that is the key thing,” said Clark.

Clark is confident despite the exception of a Covid dip at the end of the calendar year 2019 bucking the trend, Australian wine exports will continue to experience steady and stable growth it has enjoyed in recent years.

“We have been on a steady growth trajectory. There is no reason why we can’t continue on this growth story. We are well-positioned in a host of markets, not only China,” Clark says.

Red wine

He goes on to explain, however, that some figures are not realistically sustainable. The UK for example experienced a 49 per cent growth in the last quarter sparked by forecasted disruptions to the supply chain with the move to Brexit on January 1, 2021.

“There are factors at play. In the UK, we saw it two years ago with Brexit looming, people wanted to get product into the market, and there is an element of that happening again with the formal Brexit.”

Along with Britain’s Brexit is the uncertainty around the Chinese probe into the anti-dumping investigation and the rumours that Chinese importers are encouraging Australian wine exporters to gather speed and shift volumes into China before the Chinese government imposes tariffs.

Andreas Clark says there is a lot of speculation and no foundation. Still, the investigation is moving along, and Wine Australia and the nominated companies, Treasury Wine Estates, Casella Family Wines and Australian Swan Vintage are fully engaging with the process despite not knowing where it will lead.

As to whether it will have adverse implication to Australian wine exports in China moving forward he says the numbers speak for themselves, interest in Australian wine is strong and driven by the Chinese consumer.

“We have built a really solid platform, and there is a heightened understanding and appreciation for the Australian wine story globally, which is placing us in good stead.

“There is volatility at the moment, and it is a bit hard to understand what is going to play out quarter by quarter, but the interest in Australian wine is strong, and consumer-led.

“We have adequate supply to take to the market so I am optimistic in the long term we can continue to grow and grow well,” Clark concluded.

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