The average value of bottled exports increased by 9% to $5.35 per liter (USD $4.09) in the year July 2015-June 2016, while bottled exports as a category grew by 15% to $1.7bn (USD $1.3bn).
The demand for Australia’s finest wines was seen in all five top export markets (US, China, UK, Canada and Hong Kong). However, Wine Australia warns that Brexit could mean a ‘challenging’ future for premium Australian wine exports to the UK.
Positive sentiment for Australian wine
Wine exports in the $10+ per liter category (USD $7.6+ per liter) grew by 26%. Most notable was the growth in the $30-$49.99 category (up 40%), the $50 – $99.99 category (up 38%) and $15-$19.99 category (up 33%).
Exports to the US saw an increase in value by 8% to $449m (USD $344m).
“The trend towards Australia’s premium wines in the US continued with exports priced above $10 per liter increasing by 16% to $35m (USD $27m),” reports Wine Australia.
“This reflects the improved perceptions of Australian wine among the US trade with a growing number of importers taking on more premium Australian brands.
“Recent media coverage, along with research commissioned by Wine Australia, also shows more positive sentiment for the Australian wine category among the trade and consumers, but there is still much work to do in increasing the awareness and availability of premium Australian wine in the US.
“To continue sustainable growth in our most valuable market requires a long-term approach and a focus on re-establishing relationships and confidence in the category, supported by significant, consistent investment to drive the Australian fine wine message.”
Exports to Canada increased 7% in value to $195m (USD $149m).
China: demand for premium wine
Exports to mainland China continued to see ‘exceptional growth,’ increasing by 50% to $419m ($320m).
Wine Australia credits the increasing appetite for premium Australian wine at high prices for this growth, as well as the introduction of the China-Australia Free Trade Agreement (ChAFTA) in December 2015.
“Growth was particularly strong in the price segments where Australia’s most expensive wines are shipped with an additional $70m in export revenue generated about $10 per liter,” says Wine Australia.
For Hong Kong, exports increased in value by 11% to $124m (USD $95m). In fact, of the destinations where Australia shipped more than 1m liters, Hong Kong recorded the highest average value at $12.81 per liter (exports above $10 per liter account for 71%).
“This indicates the success and popularity of some of Australia’s finest wines in the market, where there is zero tax on wine. Australian fine wine exports to Hong Kong have steadily grown over the last decade and the country is now the second largest destination for Australian wine exports above $10 per liter, behind mainland China.”
UK: What does Brexit mean for Australian wine exports?
The UK is Australia’s biggest export market by volume. It receives a third of all wine exported from Australia and half of all wine shipped in bulk containers. It is also the third biggest market by value.
'Keep calm and carry on'
“Changes in exchange rates and financial market uncertainty will have an impact but, as with most things British, there is a strong feeling of ‘keep calm and carry on'."
Brexit could create a challenging future for premium Australian wine, says Wine Australia.
“The UK wine trade is currently reeling from the result of the EU referendum decision, with a recent poll of the major players believing that their businesses will take a battering in the short term.
“Add to this the ongoing consolidation across most trade sectors – including the recent takeover of Bilendum-PLB by Conviviality – and the range reduction in several of the retailers, and the long-term forecast looks challenging for premium Australian wine.
“Changes in exchange rates and financial market uncertainty will have an impact but, as with most things British, there is a strong feeling of ‘keep calm and carry on.’
“The 11% shift in the FX rate for the GBP is impacting profitability for key retailers. Australia’s European competitors are suffering a similar drop in exchange rate (with a shift of 10.7% since June 23), which puts their wines equally at a disadvantage.
“However, the outlook is not all gloomy. Waitrose [supermarket] has recently announced its increased Australian portfolio and there are more exporters coming back to this market after some years’ absence or entering it for the first time.”