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“Bump in the road” predicted for imports of Oz wine

Published:  12 December, 2017

Retailers in the UK are being warned to take care when it comes to securing supply of Australian wine as increased competition from China and the US places pressure on exports.

Careful planning is the advice from the wine supply chain for retailers looking to boost sales of Aussie win in the UK – the country’s number one export market for wine.

According to international logistics company Kukla, 225 million litres of Australian wine were exported to the UK in 12 months to September 2017 - more than to any other market.

At the same time however, increasing interest from China saw sales rise by 42%, which has the potential to have a knock on effect for UK wine retailers.

While the Australian National Vintage Report 2017 suggests volumes are slightly up this year compared to 2016 and while exports to the UK remain healthy currently, Steve Wood, managing director of Kukla UK, says China's status as Australia's most valuable wine market could form a potential “bump in the road” for some UK retailers.

“Recent figures from the Australian wine sector show that the value of exports to the UK dropped by 3%, but the UK still remains its biggest volume importer taking around 28% of the country’s total exports,” he said.

“With the 2017 vintage being better than the previous year’s, things still look very comfortable for exports although there is no complacency in the sector. The UK demand for Australian wine remains strong and behind the scenes there are new developments that could grow the market substantially.”

It looks as though China is increasingly looking to Australia to satisfy its newfound thirst for red wine.

Red accounts for 90% of all imports to the country, while Australia’s production is also skewed towards red varieties which account for 75% of Australia’s export value.

In order to balance shifting consumer markets and keep up with demand, producers are developing cooler and higher altitude sites in Queensland, New South Wales and Victoria as well as looking at alternative grape varieties.

Also, increased consolidation could be poised to help collectives of smaller growers to extend their global reach amid a possible tightening of supply.

“Australian wines continue to grow in export volume and UK retailers have the potential to reach out to new producers in these developing regions to secure supplies of established and newer variety wines,” Wood continued.

“As the Chinese and North American markets continue to grow there will be greater interest in the main wine areas but in 2018 it will benefit UK retailers to look more closely at their suppliers and supply chain to ensure they can meet the UK demand for wines from Australia.”