Australia’s highest priced wines drive strong export growth
Australian wine exports’ double-digit growth continued in the 12 months to 30 September 2016 according to Wine Australia’s Export Report, released today.
From October 2015 to September 2016, the value of exports grew by 10 per cent to a total value of $2.17 billion, with growth again being primarily driven by bottled exports, particularly at higher price points.
Bottled exports grew by 14 per cent to $1.8 billion and the average value of bottled exports increased by 9 per cent to $5.47 per litre, a 13-year high.
Wine Australia CEO Andreas Clark said, ‘The latest figures show that Australian wine exports continue to see strong growth and it’s our finest wines that are most in demand.
‘More than half of the total value growth in the last 12 months was in wines priced at $10 or more per litre free-on-board (FOB); value was up 28 per cent to a record $547 million.’
Growth in the premium price segments (detailed in Table 1) added more than $120 million in value in the 12 months to 30 September 2016.
‘Of the 1743 active exporters across the period, 70 per cent contributed to the value growth, an outstanding result. The value of exports grew in 81 of the 122 destinations for Australian wine’, Mr Clark continued.
‘These encouraging export figures are the result of the hard work put in by the entire sector to defend and grow Australian wine’s share in our critical export markets.
‘Wine Australia will continue to support our grape and wine community through our global marketing campaigns and events, research initiatives, market insights and regulatory assistance. These activities all remain guided by our overarching strategic priorities to increase the premium paid for our wines and our global competitiveness.’
Exports priced $10 and more per litre FOB were up in all top five markets ¬– mainland China by 63 per cent, the United States by 21 per cent, the United Kingdom by 20 per cent, Canada by 9 per cent, and Hong Kong by 7 per cent.
Table 1: Value and growth rate of exports $10 and more per litre (FOB)
| Price segment (A$/litre) | Value | Added value | Growth rate |
|---|---|---|---|
| $10–14.99 | $163,029,725 | $25,310,131 | 18% |
| $15–19.99 | $82,646,203 | $16,119,690 | 24% |
| $20–29.99 | $77,963,814 | $21,465,495 | 38% |
| $30–49.99 | $49,670,038 | $17,660,234 | 55% |
| $50–99.99 | $129,853,552 | $34,596,723 | 36% |
| $100–199.99 | $11,415,300 | $1,826,012 | 19% |
| $200 + | $32,729,287 | $4,179,287 | 15% |
| Total above $10 | $547,307,919 | $121,157,572 | 28% |
Exports by region
All export regions recorded growth in the last year, except for Europe, which declined by 3 per cent to $570 million. Northeast Asia is now our number one export region, growing by $177 million (35 per cent) to $678 million. North America was up by $21 million (3 per cent) to $639 million, while Southeast Asia grew by $15 million (11 per cent) to $152 million.
China now Australia’s most valuable export market
Exports to mainland China grew by 51 per cent to $474 million, making it our number one export market by value for the first time. To put this in context, just a decade ago, Australian wine exports to China were valued at $27 million.
Contributing to the exceptional growth are the trade benefits of the China–Australia Free Trade Agreement and the growing Chinese middle class’ increased interest in wine, with average consumption frequency of imported wine and the number of imported wine drinkers both on the rise.
More than a third of Australian wine exports priced $10 and more per litre FOB were destined for China (valued at $190 million and up by 63 per cent).
Negociants International Executive Director, Adam O’Neill said, ‘The demand for our premium wines in China shows no sign of abating and it is particularly pleasing to see high levels of engagement from key trade and media. The rapidly maturing palate of consumers and the ability to reach them through online platforms such as TMall has us confident that this growth will continue, particularly at higher price points.
‘In addition to this, our newly formed partnership with ASC Fine Wines and Yalumba allows us to continue building a sustainable trade footprint with sommeliers and fine wine retailers and focus our efforts on education and brand awareness in conjunction with Wine Australia’s key programs.
‘It’s certainly an exciting time for the Australian category.’
Across the region, Hong Kong exports grew in value by 7 per cent to $126 million and recorded the highest average value for exports at $13.53 per litre. Exports were also up in Singapore by 9 per cent to $62 million, Malaysia by 24 per cent to $55 million, Taiwan by 23 per cent to $19 million and South Korea by 42 per cent to $14 million. Exports to Japan saw a small decline of 0.3 per cent to $45 million, due to a decline in bulk wine exports.
United States average value growth
Australian wine exports to the United States continued to grow, albeit at a slower rate than total exports, with value up by 4 per cent to $448 million.
The average value of wine exports hit their highest levels since October 2009, up by 12 per cent to $2.93 per litre. This growth was driven by the total value of bottled exports, up by 5 per cent to $393 million. The average value of bottled exports grew by 15 per cent to $3.96 per litre.
Recently published articles on Australian wine in North America along with research commissioned by Wine Australia reflect that positive sentiment for the category among trade and consumers is still on the rise. To maintain growth in our higher priced wines, the sector must continue its long-term approach and consistent investment to defend and grow our share in the world’s biggest wine market.
United Kingdom
The United Kingdom market continues to be our most significant market in volume terms but, with 83 per cent of wine exports shipped in bulk, it ranks third in value. Exports were down 3 per cent to $361 million as a result of an 11 per cent decline in exports below $2.50 per litre FOB.
All other price segments grew in the period, with exports priced between $5–$7.49 per litre FOB and $10 and more per litre FOB up 38 per cent and 20 per cent respectively, and both valued at $27 million.
Australia’s top five export markets by value
• Mainland China – $474 million ▲51%
• US – $448 million ▲4%
• UK – $361 million ▼3%
• Canada ¬– $190 million ▲1%
• Hong Kong ¬– $126 million ▲7%.
Table 2: The relationship between FOB and indicative retail price
Indicative retail price (domestic currency per bottle, 750ml)
| FOB price per litre | UK | US | China |
Canada (Quebec) |
Canada (Ontario) | Germany | Hong Kong |
|---|---|---|---|---|---|---|---|
| A$2.50 | £7 | US$4 | ¥26 | C$7.30 | C$6.70 | €3.10 | HK$22 |
| A$5.00 | £9 | US$7 | ¥49 | C$11.35 | C$10.20 | €5.70 | HK$42 |
| A$7.50 | £11 | US$10 | ¥72 | C$13.70 | C$13.70 | €8.30 | HK$62 |
| A$10.00 | £13 | US$13 | ¥94 | C$13.80 | C$17.10 | €10.90 | HK$82 |
| A$20.00 | £20 | US$25 | ¥186 | C$30 | C$31 | €21 | HK$160 |
| A$30.00 | £28 | US$37 | ¥277 | C$44 | C$45 | €31 | HK$238 |
| A$50.00 | £44 | US$60 | ¥460 | C$71 | C$73 | €52 | HK$395 |
| A$100.00 | £82 | US$120 | ¥917 | C$140 | C$142 | €104 | HK$790 |
| A$200.00 | £159 | US$240 | ¥1,832 | C$280 | C$281 | €207 | HK$1572 |
*Free on board (FOB) - ‘Free on board' value of the wine, where the point of valuation is where goods are placed on board the international carrier, at the border of the exporting country. The FOB value includes production and other costs up until placement on the international carrier but excludes international insurance and transport costs.
