Demand continues to grow for Australia’s premium wine

Market Bulletin | Issue 187
06 Feb 2020
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Exceptional growth in premium and fine wine categories saw the value of Australian wine exports reach $2.91 billion in the 12 months to December 2019, an increase of 3 per cent in value despite a decline in volume. The average value of exported wine also increased, by 18 per cent to $3.91 per litre FOB, the highest level since 2006.

Value increased for the sixth consecutive year and was the second highest on record for a calendar year.

The growth reflected the sector’s drive to premiumise, with exports of wines above $10 per litre FOB reaching a record value of $1.1 billion.

Figure 1: Exports by price segment (millions AUD FOB)

While the volume decline was significant, the decline was heavily weighted towards lower price segments. Further, it came after record volumes exported in 2018, which followed a record Australian wine grape harvest in 2017. However, there was less wine available for export in 2019 as there were 2 consecutive lower vintages in 2018 and 2019 and inventory had already been drawn down.

Figure 2: Value and volume of Australian wine exports over time

In 2019, Australia exported wine to 120 markets. Asia was the growth centre for Australian exports with solid growth in value to Northeast Asia and Southeast Asia.

China is the biggest destination by value. While volume declined, mainly in low-priced unpackaged shipments, value increased to a calendar year record of $1.28 billion. While the value of total wine imported by China has declined, Australia has consolidated its position as the number one imported country of origin ahead of France. While Australia’s export value to China continued growing in 2019, the value of French imports continued the decline that commenced in 2018.

Figure 3: China imports of total wine by value from top seven countries of origin

Exports to the United States of America (USA) declined in both volume and value but the average value increased by 15 per cent to $3.05 per litre. This is the first year since 2008 that the average value has exceeded $3 per litre. This increase in average value is the result of the growth in exports of premium Australian wine to the USA. Exports with an average value of $10 per litre and above FOB increased by 4 per cent to $43 million.

The United Kingdom (UK) remained the number one destination for Australian wine exports but both volume and value declined. Australia is still the number one category in the UK off-trade market, a position it has held for more than 15 years. With regards to Brexit, while the UK left the European Union (EU) on January 31, uncertainty will remain until trade deals are negotiated with the EU, USA, Australia and New Zealand.

The Export Report MAT December 2019 is available here (access restricted to Australian wine levy-payers and exporters).


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