penfolds wine shaghai

Credit: Treasury Wine Estates

Australia grows wine exports by 4%

28 October, 2020

Strong demand in the UK and China allowed Australia to increase wine exports by 4% during the 12 months to September 30.

Wine Australia reported steady demand in each of its top five export markets, with the UK and Mainland China highlighted as star performers.

Value growth of 4% represents an impressive performance during the challenging trading conditions that wine producers have faced during 2020.

It is especially impressive when you consider that the UK has been hit by lengthy on-trade closures and that the Australian government has engaged in a war of words with China over the coronavirus outbreak.

Prime Minister Scott Morrison called for an independent inquiry into the origins and management of the Covid-19 pandemic. It resulted in an 80% Chinese tariff on Australian barley and a ban on importing Chinese beef, with the threat of a full trade war.

Cheng Jingye, the Chinese ambassador to Australia, said the diplomatic push could spark Chinese tourists to have “second thoughts” about coming to Australia, cause parents to question whether “this is the best place to send their kids”, and prompt Chinese citizens to ask, “why should we drink Australian wine and at Australian beef?”

Yet that has had no discernible impact on the wine trade. Exports to Mainland China increased 4% to $1.2 billion. Value sales in the USA were up 1% to $439 million, and Australia managed to grow sales by 18% to $430 million in the UK.

These are the ex-cellar values that producers earned by selling to the trade. The retail sales value of Australian wines in those markets is significantly higher. All figures are Australian dollars.

Australia increased sales to Canada by 4% to $196 million, and by 9% to $103 million to New Zealand.

Wine Australia chief executive Andreas Clark said the overall value is at the highest level since exports reached $3 billion in 2007.

“During the July to September 2020 quarter, the value of exports increased by 23% compared to the same period in 2019, and this comes after declines of 4% in the April to June quarter and 7% in the January to March quarter,” he said.

“Throughout the Covid-19 pandemic, there have been clear trends for wine consumption emerging around the world. While premiumisation has continued, there has also been a resurgence in commercial wines, and this is evident in the growth that we’ve seen in different price segments, where it was particularly strong at the low and high ends.

“Different markets have had different trends. In markets such as the UK and USA, growth was primarily at the commercial/value end, while in China growth for premium wines remained strong this year.”

Wine Australia did note that some companies in the UK are shipping products to market ahead of the impending Brexit deadline of January 1 in order to minimise any potential disruption.





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