Value of Australian exports climbs

Australia saw the value of its wine exports climb 4% to $2.86 billion last year as the average price of a litre climbed to its highest level since 2009.

The average price of a litre rose 10%, Wines Australia said, to $3.58 per litre, as shipments of wines at the lower of the market fell – the average price below $2.50 per litre – fell 7%. Overall volumes fell 6% to 801 million litres (89 million 9 litre case equivalents), it said.

Wine Australia Chief Executive Officer Andreas Clark said it was 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, pointing out that the average grape price had risen year to year for the last five year to its the highest level since 2008.

The growth was yet again driven by China, which saw record 7% value growth to $1.2 billion, despite as volumes of lower priced shipments dipped 16%, and the USA which returned to growth, with the average value up 6%, the first growth in 2 years.

“The turnaround in exports to the USA, which grew by 2% in value to $432 million, is pleasing, Clark said, adding that it rewarded the efforts of the many exporters who are working actively in the market to change perceptions about Australian wines and communicate its diversity and excellence.

Exports to the UK declined in volume and value terms however, down 3% to $373 million as volume fell 4% to 236 million litres (26 million 9-litre case equivalents), despite a slight increase in the average value of 1% to $1.58 per litre.

These volume decline reflected the strategies of some of the larger brands in terms of ensuing additional product entered the UK market before Brexit to mitigate any disruption to exports, Wine Australia said, but Clark said it was important to retain perspective on the UK market.

“Research by IRI shows Australia was ranked number 1 in still wine off trade [retail] sales in the 12 months ended March 2019, with a market share of 24 per cent in volume and 23 per cent in value,” Clark pointed out.

UK off-trade sales for Australian wine grew 1% in the year ended March 2019 to £1.2 billion, with key areas of growth in the £5.01–7.00 per bottle segment – where Australia has a 30% share of sales – which grew 1%, the £8.01–9.00 bracket, up 10% and the £10.01–20.00 tier, which rose 4% (IRI Worldwide).

Australian wine supplies are likely to remain tight in the medium term, Clark said, following the publication of the National Vintage Report which showed that the 2019 vintage was 1% below the 10-year averages at 1.73 million tonnes, defying the 10-20% many had originally feared.

“This means that supplies, particularly of reds that dominate Australian exports, will continue to remain stable,” he said.