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Premium exports drive value growth for Australian wine

Published:  14 July, 2016

The value of Australian wine exports grew by 11% to AUD$2.11 billion, while volume grew by 0.5% 728 million litres for the twelve months ending in June 2016.

The growth in value was driven by bottled exports, with almost half the value growth being from wines above $10 per litre.

Bottled exports grew by 15% to $1.7 billion, while bulk wine exports declined by 1%. The average of bottled exports increased by 9% to $5.35 per litre, which is the highest level since October 2003. Exports above $10 per litre increased by 26% to a record $499 million.

Red wine remains the lion share of Australian wine exports, making up 72% of all export values.

Exports to every region increased with exception of Europe, which declined 1% to $574 million. Northeast Asia drove the value growth, increasing by 34% to $618 million. Mainland China saw value exports increase 50% to $419 million and it is now the second largest destination by value for Australian wine exports.

The United Kingdom remains the largest destination by volume for Australian wine with a third of all exports destined for UK shores.  The UK also imports half of all Australian wine shipped in bulk containers.

The total value for UK imports of Australian wines remained flat at $369 million, but volume declined 3% to 243 million litres.

Bottled wine imports to the UK increased by 3% to $163 million.

According to the repor,t the shift to bottling in the UK a decade ago following the Australian dollar appreciation is a trend that will likely not be reversed. "With key bottling facilities now established in the UK though, it is unlikely that the majority of packaging will return to Australia," the report said.

The decline in the lowest priced category (under $2.50 per litre) of 8% offset all the growth that every other category had.

While premium wines have been doing well, the report did caution that the EU referendum could be a challenge going forward.

The report said: "The UK wine trade is currently reeling from the result of the EU referendum decision, with a recent poll of the major players believing that their businesses will take a battering in the short term. Add to this the ongoing consolidation across most trade sectors- including the recent take over of Bibendum-PLB by Conviviality- and the range reduction in several of the retailers, and the long-term forecast looks challenging for premium Australian wine."

The United States was the largest destination for wine by value, which increased by 8% to $449 million.