Feb 05: Australia closed the year 2019 with an export of $2.91 billion, an increase of 3% by value setting a new record for the average price per bottle, even though the volumes were down, especially in the lower value segment, writes Subhash Arora who feels the exports to their biggest market China will suffer a blow in 2020 due to the coronavirus devastating its biggest market, with no idea of impact at the present time
Australian exports grew by 3 per cent to A$2.91 billion in the calendar year 2019 with exports of higher valued wines above $10 per litre clocking a record value of $1.1 billion. The decline was strongest for exports below $2.50 per litre FOB, with value falling by 17 per cent to $463 million. The total value of exports was the second highest for a calendar year and close to the levels reached before the global meltdown in 2007, according to a Report by Wine Australia released today.
Australian wines had started being perceived as cheap and cheerful earlier in the millennium and there was a concerted effort by the country to change the image and shift the focus of export to higher quality wines rather than bulk. Andreas Clark, CEO of Wine Australia since it was formed in 2014, affirms that the sector had focused on growing exports at higher price points and the results reflected the success of the sector’s strategy. The value has been increasing for the last 6 years, by 18 % to A$3.91/liter FOB now.
‘The volume of exports was down, with the decline heavily weighted towards lower price segments. The lower vintages in 2018 and 2019, together with lower inventory levels, meant .that there was less wine available for export in 2019’, says Clark.
Figure 1: Value and volume of Australian wine exports over time
Packaged and un-packaged wine
Bottled wine shipments increased by 7 per cent in value to $2.4 billion and decreased in volume by 5 per cent to 342 million liters (38 million cases of 9-litre). The increase in value was due to a 13 per cent rise in the average value of bottled wine to a calendar year record of $7.04 per litre. This was principally the result of exceptional growth in Australia’s fine wine exports. On the other hand, unpackaged wine exports decreased by 12 per cent in value to $488 million and decreased 18 per cent in volume to 395 million litres. The average price of unpackaged wine also increased by 6 per cent to $1.24 per litre.
China continues as plum market
In the year ended December 2019, Australia exported wine to 120 markets with Asia as the growth center. Australia is the biggest importer for China now and holds a 35 % value share of total wine imports compared with France at 29 %. The top five destinations by value were:
- China $1.28 billion (12%) incldg. Hong Kong, Macau
- USA $419 million (-1%)
- UK $352 million (-9%)
- Canada $183 million (-13%)
- S’pore $105 million (18%)
It is commendable that Wine Australia, a statutory government body that functions with funds received from the industry which is charged a small amount by the government for every bottle sold under an Act passed by Parliament. It is very efficient and dynamic as one can see from the annual report of sales and analysis released within 5 days of the year completion. It allotted a sum of $50 million to promote wines a couple of years ago. It spent A$8 million last year on a special promotion in the USA to change the impression that Australia produced cheap wines and increased the value per bottle of exports successfully.
It is a perfect model for the Government of India to emulate to promote wine exports and perhaps even revive India Grape Processing Board to help increase exports.
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