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Australian wine exports to UK up in value but volume stagnant

Published:  01 May, 2019

Exports of Australian wine to the UK jumped 4% in value to AUD$388 million last year, and 0.1% in volume to 242 million litres.

Wine Australia said Australian wine is number one in the UK off-trade, and third place in the on-trade behind Italy and France. Off-trade sales in the UK for Australian wine grew 2% to £1.2 billion.

Exports of Australian sparkling wine to the UK were up 26%, Australian Tempranillo was up 70% and Australian Pinot Noir was up 21%.

But Laura Jewell MW, Wine Australia’s regional general manager EMEA, said the UK trade is “becoming frustrated without a clear understanding of the impact that Brexit will have for the sector”.

“The WSTA continues to campaign for the trade to say no to no deal, but there is little that it can do except wait for the outcome. Fortunately, the exchange rate is holding up and many importers have increased stocks to cushion the impact, although these will have to be revisited if the UK doesn’t leave the EU until the end of October.”

In January, Wine Australia CEO Andreas Clark said Australia will continue to trade with the UK on its current terms post-Brexit.

Globally, the value of Australian wine exports jumped 5% to AUD$2.78 billion in the 12 months to March 2019. The average value per litre also hit AUD$3.41, the highest point since 2009.

Wine Australia Chief Executive Officer Andreas Clark said that the continued growth was an extremely positive trend for the sector. He added while the volume of exports had declined by 3% to 814 million litres, the increasing value overall and on average was overwhelmingly positive.

“What we are seeing is a drop in volumes in the lower value categories and this places Australia well as the global consumer drinks less but more expensive wines,” said Clark, with “robust growth in most price segments” and exports in “higher priced categories recording the most significant growth, reflecting global premiumisation trends”.

Australia now has a 29% share of the imported wine market in China, up from 26% last year. Exports to China, including Hong Kong and Macau, increased by 7% in value to AUD$1.11 billion and decreased by 14% in volume to 154 million litres.

Wine Australia said this volume decline in the China market is “confined almost exclusively to exports in the below AUD$2.50 per litre value segment, reflecting both a tightening of Australian supply in this segment and also the increased supply availability from competitors such as Chile”.

Supplies would remain tight in the short term, said Clark, with much of the 2018 vintage yet to hit the market and the "expectation that 2019 vintage would be below the long-term average”.

Clark also said there were “positive trends” in the USA off-trade market where sales of Australian wine grew 3% in value to US$521 million last year. Australian wine priced above US$15 per bottle also grew 3%, according to IRI Worldwide.

Nearly all destinations imported more Australian wine last year with the exception of North America. The “excellent growth” in exports to Canada did not outweigh the decline in exports to the US.

The value of wine exported in glass bottles increased 3% to AUD$2.22 billion and decreased in volume 5% to 355 million litres. The combination saw the average value of bottled wine increase 9% to AUD$6.24 per litre.

Soft pack wines increased 12% in value to AUD$15 million and 9% in volume to 7.7 million litres while unpackaged wine increased in value by 11% to AUD$541 million and decreased in volume by 2% to 450 million litres. The average value of unpackaged wine exports increased by 14% to AUD$1.20 per litre.

There were 2603 active exporters in the period, up 16% on last year. During the year, 1786 companies either started exporting or increased the value of their exports, contributing AUD$374 million to the growth in overall value, though 1328 exporters dropped in value by AUD$246 million.

 Photography credit: Tim Jones / Wine Australia