Continuing strong growth for Australian wine exports

Wine Australia’s Export Report shows that Australian wine exports continued to experience strong growth in the 12 months to the end of March 2016.

From April 2015 to March 2016, the value of exports grew by 13 per cent, driven by bottled exports, particularly at higher price points.

Wine Australia CEO Andreas Clark said, ‘It is very pleasing to see the increasing demand for premium Australian wines, particularly in Asia’.

‘Bottled wine exports grew by 16 per cent to $1.7 billion, the highest value in five years. There was growth in bottled exports at all price points, but growth was strongest at the higher end. 

‘Exports above $10 per litre increased 32 per cent to $492 million, which is a record level for exports in this segment. As the table below shows, exports in each of the price segments above $10 per litre experienced growth, ranging from 10 per cent to 56 per cent.

‘Wines with an FOB of $50 per litre or higher now make up a third of all exports over $10 per litre for the first time’, he said.

For an indication of how FOB relates to the in-market retail price in five important markets, please see table 2 below.

Howard Park Wines Commercial Director, Sue Henderson attributes their export success to a deep understanding of market dynamics and most importantly, a high quality product.

‘It’s vital to understand the competitive nature of the market. The consumer demand, trends and understanding where your products compare against the competition are all key elements to success.

‘It sounds simple, but it's not; comprehensive research can reduce the risk and increase the probability of success. Building relationships with key players in the market is critical, as these contacts enable entry to market.

‘The foundation to success however is always the quality of the product; this is the most important ingredient for building export growth. The reality is that we have to compete with world class winemakers, in global markets and that's challenging.’

Table 1: Value and growth rate of exports above $10 per litre

Free trade agreements

We continue to see solid growth in the three markets with recent free trade agreements (FTAs).

Exports to Japan increased by 10 per cent to $45 million, including encouraging growth at higher price points. The value of wine exported above $10 per litre increased by 34 per cent to $8.3 million and exports in the $7.50–9.99 segment increased by 46 per cent to $5.3 million. 

Exports to South Korea have increased by 51 per cent to $13 million, the highest annual value since December 2008 and just short of the $15 million peak, which was achieved earlier in 2008. 

The China-Australia Free Trade Agreement (ChAFTA) was in force for fewer than 4 months of the reported period so its full impact is yet to be realised but Australian exports to mainland China grew by 64 per cent to $397 million over the 12 months. The inclusion of $129 million of exports to Hong Kong makes China the largest market for Australian wine exports. 

Value to mainland China increased across the price segment spectrum, with the greatest growth being the  91 per cent increase in exports valued at over $10 per litre to $160 million. 

Strong varietal growth in bottled wine exports

In the year to 31 March, where the variety appeared on the label, 72 per cent of these were single varietal wines. Single varietal bottled exports grew by 14 per cent to $1.1 billion. 

The top five most exported varieties – Shiraz, Cabernet Sauvignon, Chardonnay, Shiraz/Cabernet Sauvignon blend and Merlot – account for 70 per cent of the value of varietal-labelled exports.
Shiraz exports, which are weighted towards the premium end of the price spectrum, grew 19 per cent to $452 million at an average value of $6.30 per litre. The above $10 per litre is the largest price segment and exports of Shiraz grew 26 per cent to $168 million.

Australia’s top five export markets by value

The United States remained Australia’s number one destination for wine by value, increasing by 4 per cent to $442 million. China overtook the United Kingdom in the second spot, increasing by 64 per cent to $397 million. 

The UK market continues to be our most significant market in volume terms but, because 80 per cent of wine is shipped in bulk, it slipped to third in value even though exports increased by 1 per cent to  $373 million. 

Rounding out the top 5 exports markets are Canada (up 1 per cent to $188 million) and Hong Kong (up 17 per cent to $129 million).

Table 2: The relationship between FOB and indicative retail price

Indicative retail price (domestic currency per bottle, 750 ml)