Market opportunities from travel and tourism

Travel and tourism generated US$7.6 trillion (10.2 per cent of global GDP) in 2016. Together they accounted for 6.6 per cent of total global exports and almost 30 per cent of total global service exports. This week, we look at the opportunities for Australian wine exporters arising from travel and tourism.

Growth in travel and tourism (3.1 per cent) outpaced that of the global economy (2.5 per cent) for the sixth successive year in 2016. Additionally in 2016, direct travel and tourism GDP growth not only outperformed the economy-wide growth recorded in 116 of 185 countries, but it was also stronger than the growth recorded in the financial and business services, manufacturing, public services, retail and distribution, and transport sectors.

Food and wine are significant components of tourist spend. While inbound tourism to Australia offers opportunities for Australian wineries to increase demand for their wines, another area for wine exporters to consider is key tourist destinations around the world.

The wine lists of restaurants and bars located in resorts and hotels in popular tourist destinations offer an opportunity for Australian exporters to target wine consumers from a broad range of countries, some of whom may never have been exposed to Australian wine before.

One way of evaluating tourist destinations is to consider the relative contribution of travel and tourism to a country’s GDP. Figure 1 below shows the top 10 countries where travel and tourism had the greatest contribution to GDP in 2016. This provides an indication of the intensity of tourism and therefore potential opportunities for wine.

Figure 1: Top 10 countries where travel and tourism has the biggest contribution to GDP

Source: World Travel and Tourism Council, Global Trade Atlas and Wine Australia

[1] Almost half the wine imported by Macao comes from Hong Kong and is therefore sourced from a variety of countries, including Australia. The Australian share of Macao wine imports reported in the table underestimates Australia’s true share.

Figure 1 also shows that in 2016, Australian wine was exported to 7 of the top 10 countries. While the value of exports to each is quite small, it does indicate that Australian wine is available in most of these tourism-intense countries and there is a base from which to grow. There is also upside for Australian wine in each market as the category’s share of wine imports is generally quite low, with the notable exception of Vanuatu. Australia’s relatively low ranking can be viewed as an opportunity to increase share in a growing market.

Cruise travel is another growing category within travel and tourism. Demand for cruising increased by 62 per cent between 2005 and 2015. The Cruise Lines International Association expects 25.3 million passengers to travel on cruise ships in 2017. The US is the biggest market with 11.3 million passengers in 2015 ahead of Germany (1.81 million), the UK (1.61 million) and China (0.986 million). Over the course of a 7-day cruise, the following total amounts of alcohol will typically be consumed:

• 1,200 glasses of Champagne
• 10,100 beers
• 17,000 glasses of wine
• 32,700 mixed drinks.

For wine, that represents 8.7 glasses of wine per passenger per week.

A more detailed analysis of the tourism market for wine exports is available here.