Australian wine continues to grow in the US, highest average value in seven years

Australian wine exports to the United States (US) continue to grow, with value up by 4 per cent to US$344 million (A$448 million) in the 12 months to September 2016, according to Wine Australia’s latest Export Report, released today.

From October 2015 to September 2016, exports priced at A$10 and more per liter free-on-board (FOB) increased by 21 per cent to US$30 million (A$39 million), reflecting the improved perceptions of Australian wine among the US trade and a growing number of importers taking on more premium Australian brands.

Aaron Ridgway, Wine Australia Head of Market, Americas said, ‘These numbers point to a bright and sustainable future for premium Australian wines. We’re also seeing growth across a number of grape varieties, indicating there’s broad interest in the Australian category and our diverse wine styles.’

While total Shiraz exports fell 6 percent, to US$53 million (A$69 million), Shiraz priced $10 and more per liter FOB grew 10 percent to US$14 million (A$18 million).

Other segments that experienced growth were the A$2.49 and below segment, up 5 per cent to US$46 million (A$60 million), A$2.50–4.99, up 3 per cent to US$237 million (A$309 million) and A$5.00–7.49, up 14 per cent to US$18 million (A$23 million).

Many Australian producers have begun reinvesting in the US, citing favorable exchange rates and growing category confidence. Treasury Wine Estates (TWE), which has refocused on Australia with its Penfold’s and 19 Crimes brands, grew in the strong double digits for the period. ‘The US market presents outstanding opportunities not just for TWE but for Australian wine on the whole. We’re confident that the Americas will be a major contributor to ongoing growth for our brands’, said TWE chief marketing officer Simon Marton.

The average value of Australian wine exports to the US grew by 12 per cent to US$2.25 (A$2.93) per litre, the highest average value since October 2009. This growth was driven by bottled exports, which increased by
5 per cent to US$301 million (A$393 million). The average value of bottled exports grew by 15 per cent to US$3.04 (A$3.96) per litre.

Citing double-digit growth for Australian wines retailing between US$10–20 per bottle in Florida, Gary Gaines, senior vice-president of Chains with the Winebow Group said he expects the growth to continue. ‘If you look at how Australia is performing today, there’s Cabernet, red blends, Shiraz blends and alternative whites. There’re different wines for people to look at and that’s really important for the category’, Gary said.

‘I believe this to be a continuing trend.’

Global exports

Exports to mainland China grew by 51 per cent to US$364 million (A$474 million), making it Australia’s 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 US$21 million (A$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 A$10 and more per litre FOB were destined for China, valued at US$146 million (A$190 million) and up by 63 per cent.

Australia’s top five export markets by value

• Mainland China – US$364 million (A$474 million) ▲51%
• US – US$344 million (A$448 million) ▲4%
• UK – US$277 million (A$361 million) ▼3%
• Canada – US$146 million (A$190 million) ▲1%
• Hong Kong – US$97 million (A$126 million) ▲7%.

*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.

A$ – Australian dollar
US$ - US dollar