Exports to the largest market, China, continued to grow – up 51% over the last year to reach $1bn (including Hong Kong and Macau) – thanks to the reduction of wine tariffs as part of the China-Australia Free Trade Agreement. Tariffs will be removed completely in January 2019, providing Australian wine exporters with a competitive advantage over key producers such as France, Italy and Spain.
In 2016 mainland China overtook the US to become Australia’s largest export destination for wine, with growth continuing in 2017.
“Pleasingly there was very strong growth at all price points as imported wine becomes more approachable and is increasingly consumed by middle-class drinkers and seen as suitable for consumption at informal gatherings and while relaxing at home,” says Wine Australia.
Top five export destinations
The quality of Australian wines – along with historically low harvests in the Northern Hemisphere – are helping boost Australian wine exports, according to Wine Australia.
As value growth outpaces volume growth, the average value per litre of all Australian wine exported increased by 5% to $3.14 per litre (year ending March 2018).
Following China (where exports are worth ($1.04bn), the second largest destination for Australian wine is the US ($439m). Although this market saw a 7% decline in value, the premium sectors have been growing, particularly in the $30-49.99 category which increased in value by 25% to $5m.
Exports to the UK – which is the largest destination by volume and third largest by value – increased over the last year by 9% in value to $373m and 8% in volume to 241 million litres.
Canada and New Zealand are the fourth and fifth largest markets for Australian wine exports respectively.
Australia gears up for promising vintage
Andreas Clark, chief executive officer, Wine Australia, says the high quality of Australian wine plus historically low harvests in the Northern Hemisphere are driving demand for Australian wine exported in bulk containers. This has led to growth in both volume (up 10% to 462 million litres) and value (up 19% to $486m) of exported bulk wine.
“Every country in Australia’s top 10 bulk wine destinations recorded an increase in average value, especially Germany, the largest importer of wine in the world, where average values for bulk wine increased by 20% from $0.87 to $1.05 per litre,” he said.
Clark adds that excellent vintage conditions in Australia will sustain the sector’s growth as the relatively cool, dry summer has produced high-quality grapes and winemakers are predicting exceptional quality for the 2018 vintage wines.
“Wine Australia is already reaching out to producers to remind them that now is the time to set their vineyards up for an outstanding 2019 vintage,” he said.
Historical lows in European wine production
Global wine production was estimated to fall 8% in 2017, according to figures from the International Organization of Vine and Wine (OIV).
Production levels were at a historic low in Europe’s top wine producing countries of Italy (-23%), France (-19%), and Spain (-15%), caused by extreme weather events resulting in a premature harvest and reduced harvest yields across Europe. Germany and Greece also saw wine production fall 10% compared to 2016.
Production figures in the US were steady but data had not taken into account the effect of wildfires in California.
Production grew in South America, including Brazil and Argentina, while Australian production grew for the third year in a row.