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Export value to China reaches a calendar year record

Wine Australia by 06/02/2020  

Australian wine exports to China (including Hong Kong and Macau) in the 12 months to December 2019 increased by 12 per cent in value to $1.28 billion, while volume declined 17 per cent in volume to 142 million litres (15.8 million 9-litre case equivalents). Average value increased by 35 per cent to $8.99 per litre FOB. Both value and average value are calendar year records. While the total value of wine imported by China has declined, Australia has consolidated its position as the number one imported country of origin ahead of France (see Figure 1). Australia’s export value to China continued growing in 2019 while the value of French imports continued the decline that commenced in 2018. Australia now holds a 35 per cent value share of total wine imports compared with France with 29 per cent. Chile is number one by volume but third in value with a 14 per cent share. More than half of Chile’s exports to China are unpackaged, compared to 15 per cent of Australia’s exports.

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Exceptional growth in demand for Australian fine wine saw the total value of Australian wine exports grow by 3 per cent to $2.91 billion in the 12 months to December 2019. Exports of higher valued wines – those above $10 per litre free on board (FOB) – reached a record value of $1.1 billion. Wine Australia Chief Executive Officer Andreas Clark said that the sector had focused on growing exports at higher price points and the results reflected the success of the sector’s strategy. ‘Australian wine companies have been very active in our export markets and the value of exports has now increased for six consecutive years’, he said. The total value of exports in 2019 was the second highest for a calendar year (see Figure 2) and value is approaching levels from before the Global Financial Crisis. The average value of exported wine increased by 18 per cent to $3.91 per litre FOB, the highest level since 2006. ‘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’, Mr Clark said. ‘Looking ahead into 2020, we anticipate that coronavirus will have an impact on sales, particularly to China, but at this stage it is difficult to predict the degree of that impact. Also, our first concern is people’s well-being in China and elsewhere and there will be time down the track to consider other impacts’, he said.

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Price segments Consistent with the trends in many key markets, Australian exports declined at lower price points and increased at the higher end (see Figure 3). The decline was strongest for exports below $2.50 per litre FOB,with value falling by 17 per cent to $463 million. Conversely, the growth was strongest at the high end, with a 22 per cent increase in exports valued at $10 per litre or more FOB to a record $1.1 billion. By value, this is the biggest price segment of Australian wine exports, accounting for more than a third of the total value of exports. Exports in this segment have more than tripled since 2014. The stand-out sub-categories were wines exported at $30 or more per litre FOB, highlighting the growing demand for Australia’s finest wines.

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Destinations

In the year ended December 2019, Australia exported wine to 120 markets. Asia was the growth centre for Australian exports. Exports to Northeast Asia increased by 11 per cent to $1.37 billion and those to Southeast Asia increased by 17 per cent to $200 million. The Middle East also saw growth, up 4 per cent to $34 million.

The top five destinations by value were:

? China (including Hong Kong and Macau) was up 12 per cent to $1.28 billion

? USA, down 1 per cent to $419 million

? UK, down 9 per cent to $352 million

? Canada, down 13 per cent to $183 million

? Singapore, up 18 per cent to $105 million.