2016 ‘a record-breaking year’ for Aussie premium wine

Australia’s top wines achieved their highest export value to date in 2016, climbing 19% to AUS$574m (£344m), Wine Australia’s December 2016 export report has revealed.

Premiumisation helped Australian wine achieve record export value in 2016 (Photo: Matt Turner)

The impressive figure applies to wines priced at AUS$10 or more per litre free-on-board (FOB), and was driven by demand across all major export markets, particularly north-east Asia, the report disclosed.

Exports priced AUS$10 and more per litre FOB were up in all of Australia’s top five markets except Hong Kong ­– mainland China by 47%, the US by 23%, the UK by 25% and Canada by 9%. Hong Kong was down by 12%.

Growth in the premium price segments (Table 1 below) added more than AUS$93 million in value in 2016.

The total export value for Australian wine grew by 7% to AUS$2.22bn last year, while the average value grew by 6% to $2.96 per litre FOB – the highest average value since 2009.

Wine Australia noted that this value growth was driven by bottled exports, particularly those at higher price points. Bottled exports grew by 10% to AUS$1.8bn over the 12-month period, while the average value of bottled exports hit a calendar-year record of $5.48 per litre FOB, up 5% on the previous year.

“Last year, Australia’s most premium wines took centre stage,” Wine Australia CEO Andreas Clark said.

“In another promising sign that we’re starting to see commercial benefits from an improved perception and increasing demand for our finest wines, the majority of Australian wine exporters (70%) saw value growth in 2016.

“We are maintaining the momentum early in the year with some of our biggest annual events where we partner with many Australian wineries and exporters, including the Australia Day Tasting series in the United Kingdom and Ireland, trade tastings in the United States and Canada, masterclasses across China, a significant Australian wine presence at ProWein in March and our major partnership with Tourism Australia for the World’s 50 Best Restaurants, taking place in Melbourne in April.”

While the news was all positive in the premium export category, bulk wine exports declined by 2% in 2016 to AUS$400m, soft-pack exports fell by 5% to $14m and exports in alternative packaging such as PETs (polyethylene terephthalate) decreased by 11% to AUS$4m.

Table 1: Value and growth rate of exports by price segment

Price segment (AUS$/litre FOB)

Value 2016

Added value

Growth rate

<$2.50

$434,592,613

$1,067,627

0.2%

$2.50–4.99

$786,733,137

$25,623,781

3%

$5–7.49

$283,122,297

$29,478,997

12%

$7.50–9.99

$142,266,154

$713,635

-0.5%

$10–14.99

$169,561,573

$19,835,238

13%

$15–19.99

$86,632,600

$12,627,871

17%

$20–29.99

$82,522,745

$18,280,809

28%

$30–49.99

$61,653,333

$26,934,339

78%

$50–99.99

$128,830,339

$11,523,019

10%

$100–199.99

$12,441,492

$2,839,938

30%

$200+

$32,067,872

$1,390,005

5%

Total

$2,220,424,156

$148,887,989

7%

 

The UK market continues to be Australia’s largest in volume terms. However, because 80% of wine is shipped to the UK is in bulk, it ranks third in value and exports were down 5% to AUS$355m.

There were, however, strong rates of export growth for higher priced wines. Exports priced at AUS$5 or more per litre grew by 23% to AUS$68m. The growth was stronger still for exports at AUS$10 or more per litre, which grew by 25% to AUS$28m – double the 20-year low recorded in 2013.

Simon Thorpe MW, managing director of Australia-focused merchant Negociants UK, said that the trend towards premiumisation had led to unprecedented demand for Australia’s top wines in the UK.

“The trend towards premiumisation continues as the more engaged consumer segments look to trade up into GI (Geographical Indication)-specific wines at more than the £10 price point,” he said.

“This trend has been particularly strong in independent retail and premium fine dining venues.

“In addition, we’ve never witnessed such strong demand for super-premium/iconic wines across our Australian portfolio. This demand coming from fine wine exponents whose customers are obviously keen to explore the very top end of what Australia has to offer.”

Australia’s top five export markets by value

  • Mainland China – $520 million ▲40%
  • US – $458 million ▲3%
  • UK – $355 million ▼5%
  • Canada ­– $193 million ▼0.2%
  • Hong Kong ­– $110 million ▼16%.

Table 2: The relationship between FOB and indicative retail price

FOB price per litre

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

UK

US

China

Canada (Quebec)

Canada (Ontario)

Germany

Hong Kong

AUS$2.50

£7

US$4

¥26

C$7.30

C$6.70

€3.10

HK$22

AUS$5.00

£9

US$7

¥49

C$11.35

C$10.20

€5.70

HK$42

AUS$7.50

£11

US$10

¥72

C$13.70

C$13.70

€8.30

HK$62

AUS$10.00

£13

US$13

¥94

C$13.80

C$17.10

€10.90

HK$82

AUS$20.00

£20

US$25

¥186

C$30

C$31

€21

HK$160

AUS$30.00

£28

US$37

¥277

C$44

C$45

€31

HK$238

AUS$50.00

£44

US$60

¥460

C$71

C$73

€52

HK$395

AUS$100.00

£82

US$120

¥917

C$140

C$142

€104

HK$790

AUS$200.00

£159

US$240

¥1,832

C$280

C$281

€207

HK$1,572

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