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Published:  23 July, 2008

By Jack Hibberd

Turbulent times for the Australian wine industry look set to continue into 2004, after the latest figures from the Australian authorities showed shipments to the UK in 2003 had dropped for the first time in over a decade. According to the Australian Wine and Brandy Corporation, the volume of wine shipped to the UK fell by 5.3%, with the value of wine dropping by an alarming 9.8%. The fall does not necessarily signify that UK consumers are about to end their love affair with Australian wine, however. Our figures show that from the 52 weeks to the end of December 2003, Australian wine sales increased by 8%,' said a spokesperson for AC Nielsen. Helen McGinn, product development manager at Tesco, confirmed that the retailer had not seen any drop in its customers' appetite for Australian wine. Sales are still very healthy and growing, and we have a plan in action to make sure this continues,' she said. According to Paul Henry, director of the Australian Wine Bureau in London, the export fall can be attributed to changes in the stock levels of Australian wine held in the UK, particularly by the major retailers. We have spoken to most of the multiples and they have confirmed to us that they are holding less stock than before,' said Henry. You can't do just-in-time stock management when you are bringing wine from Australia, but you can be more efficient and increase profits. I think you'll find a similar thing happening to all countries that deliver by deep-sea shipments.' Christopher Carson, CEO of Constellation Wines Europe, hinted at previous overstocking among his competitors: We are aware that, overall, the Australian wine industry appears to be slowing up, but [we] would report that our market share and growth in the last six months of 2003 has increased substantially. We can only assume that the slowing up is a result of one or two larger producers not shipping as much in the latter part of 2003 as they did in the previous corresponding period.' A look at the overall export figures, however, suggests that Australia as a whole is finding the market increasingly tough, with slowing growth and the value of the Australian dollar (it strengthened against the US dollar, pound sterling and the euro in 2003) a particular problem. Wine exports grew by 12% in volume to reach 525 million litres in 2003. This can be seen as a subdued performance compared to previous figures - over the preceding seven years exports grew at a compound rate of 22%. On the value side, exports grew by just 4.8% to A$2.4 billion. Currency movements (and, to a certain extent, increased global competition) meant the average price per litre of Australian wine fell in every single major market except Canada, where it was static.