Jan 31: Australian wine producers are in an enviable position with booming production and sales as the industry enters a period of vastly improved prices with bulk wine prices being the highest in five years and as Wine Australia released a report yesterday showed the Australian wine production rose 5 % to 1.37 billion litres over the 2016 vintage, following a massive harvest
The grape crush was 1.98 million tonnes, up 8 per cent on the 2016 vintage, and is the second year in a row of historically high production.
The Australian wine: production and sales inventory 2016-17, released last Monday, shows sales are keeping pace with the massive grape crush. Wine sales grew 8 % for both the domestic and the export market to $5.6 billion, $393 million higher than the previous 12 months. Australia’s booming harvest comes at a time when global production is dropping to its lowest since 1961 to around 24.6 billion litres, according to a media report.
Wine Australia CEO Andreas Clark said Australia was well placed after a decade of grape oversupply, high Australian dollar and the global financial crisis.“We’re in a good place because of what’s happening globally; we export more than 50 % of our production. We’re selling more wine and getting a better price for it,” says Clark, adding that the higher demand for Australian wine should mean b etter grape prices for growers.
With harvest due to start next month, yields look above average, according to an industry spokesperson who added that an above average year wouldn’t be a problem due to the growth in sales.
Wine exports record high of $2.56 billion
Australian wine exports increased by 15 per cent to $2.56 billion in the 12 months ending December 2017, according to Wine Australia’s Export Report released a week ago.
The 15 per cent increase in the value of exports is the highest annual growth rate since 2004 and also a record-breaking year for volume, with exports growing by 8 per cent to 811 million litres, a calendar year high. Clark said the positives continued with the sector achieving a 7 per cent increase in average value per litre free on board (FOB) to $3.16, the highest since 2009.
‘Growing demand for premium Australian wine, particularly in Northeast Asia, increased the value of bottled wine exports by 17 per cent to $2.1 billion, while the average price per litre for bottled wine grew by 3 per cent to a record $5.63 , Mr Clark said, says a Press Release.
Bulk Wine export also experienced price increases, with total value increasing by 10 per cent to $440 million and average value per litre increasing by 6 per cent to $1.03, the highest average value since 2012. Clark said it was notable that exports of wines priced above $10 per litre grew by 29 % to a record $738 million, indicating that the wine consumers drinking Australian wines were opting for better quality.
Figure 1: Exports of wine by price segment
Price segment (A$/litre) |
MAT December 2017 |
Value change |
Growth rate |
$2.49 and under |
$511,230,356 |
$76,436,923 |
18% |
$2.50 to $4..99 |
$829,999,393 |
$42,768,086 |
5% |
$5.00 to $7..49 |
$332,034,222 |
$48,491,468 |
17% |
$7.50 to $9..99 |
$150,448,428 |
$8,126,188 |
6% |
$10.00 to $14.99 |
$200,552,005 |
$30,711,339 |
18% |
$15.00 to $19.99 |
$76,674,239 |
($10,110,144) |
-12% |
$20.00 to $29.99 |
$131,612,861 |
$49,267,099 |
60% |
$30.00 to $49.99 |
$94,210,830 |
$32,374,491 |
52% |
$50.00 to $99.99 |
$164,096,793 |
$35,281,907 |
27% |
$100.00 to $199.99 |
$17,152,041 |
$4,715,133 |
38% |
$200.00 + |
$53,727,561 |
$21,643,089 |
67% |
Total value |
$2,561,738,728 |
$339,705,582 |
15% |
China Growth Story
Exports to Northeast Asia were the growth driver with exports increasing by 47 per cent to over $1 billion for the first time. Wine exports have experienced outstanding growth to China during the last decade. The implementation of the China–Australia Free Trade Agreement (FTA) in 2015 provided impetus to an already strong market. The export figures for 2017 suggest Australia is well-placed for a continued trend. The value of exports increased by 63 % to $848 million and volume by 54 % to 153 million litres while the average price increased by 6 per cent to $5.55 per litre FOB. There was growth in exports to mainland China across all price points, from entry level to the finest wines.
Exports also grew to:
- Europe by 1 % to $576 million
- Southeast Asia by 2 % to $165 million
- Oceania by 8 % to $94 million
Exports to North America decreased slightly by 2 per cent to $636 million. However, exports of wines to the United States of America (USA) valued at $10 per litre or more (selling for US$14 or more per bottle in retail) increased by 8 per cent to $45 million.
The growth in premium wine exports to the USA is also evident in retail figures.. Off-trade sales figures from sector analyst IRI showed at US$11 or more per bottle, Australian sales grew by 32 per cent while the total sales in this segment increased by 7 per cent in the year ended September 2017.
Australia’s top five markets by value in 2017 were China (33 %), USA (18 %), UK(14 %),Canada (7 per cent), and Hong Kong (5 per cent).. By volume, however, the profile changed with UK at 28%, followed by USA at 21 %. China mainland (19%), Canada (8 %) and Germany trailed at 5 %.
80 % of wine exported to the UK and Germany was shipped in bulk containers where it is bottled for distribution to save costs and duties. Since the value of packaging is not included in the FOB values as in packaged products, the figures could be otherwise higher if comparing apples to apples.
Subhash Arora
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