Top news from Wine Australia regarding exports

You’re a star, my old China

It’s hard to top the news from Wine Australia on the exports for the three months ending 31 March 2017:

“In the 12 months ended March 2017, the value of Australian wine exports grew by 10 per cent to $2.3 billion and volume increased by 5 per cent to 769 million litres. The average value of exports grew by 4 per cent to $2.98 per litre, the fourth successive year of growth.”

China is the star: the cartwheeling, fire-eating, sword-swallowing acrobat the audience loves. It accounted for $568 million of the $2.3 billion worth of wine exported, a 43 per cent increase in value and 51 per cent in volume.

In bottled exports, all price sectors reported increases (price per litre):

$2.49 and under: +3 per cent
$2.50-$4.99: +36 per cent
$5-$7.49: +43 per cent
$7.50-$9.99: +28 per cent
$10-$19.99: +25 per cent
$20-$49.99: +89 per cent
Over $50: +36 per cent

Volume in the under $2.49 ($22.40 for a nine-litre case) sector came to 9.82 million litres, the third largest amount exported in that price sector. It’s a lot of wine and it would be good to see it eliminated.

The largest sector was $2.50-$4.99 a litre, at 159 million litres. Within this sector ($22.50 to $59.88 a case) there is a profit. The profit is obviously greater towards the $60 end than the $22.50 end. It would be interesting to see the breakdown. Any wine at $5 a litre or more should be making good returns.

At the top end, $10 a litre and above, Asia is far in advance of the rest of the world. Asia, in this case, being China, Hong Kong, Singapore and Malaysia, the four of which accounted for $138.45 million of the $177.08 million of wine exported at $50 a litre and above.

Interestingly, the bottle price increase in mainland China was 3.1 per cent, but in Hong Kong was 9.6 per cent. The next largest increase was the US, at 4.7 per cent.

China took 34 million litres of wine in bulk container, an increase of 139 per cent. The good news was that 5.6 million litres were above $2.50 a litre, and 4.3 million litres were in the $2-$2.49 bracket. There was no wine imported at less than 50 cents a litre, though the 50c-$1 sector was up 170 per cent to 16.34 million litres. Not a good sign.

It wasn’t deliberate timing, but around the time of the export figures release it was announced that the Margaret River region had opened a retail wine store in Beijing. Is this really a good move for the region? TKR is not convinced, but will observe over time.

What is not yet clear is who exactly owns the store. If it’s the region then any wine carrying the Margaret River GI has a right to be there. We are fully aware Margaret River has a high opinion of itself, but not all the Margaret River wine we have tasted is outstanding, and no matter what the Chinese pay now, value for money will eventually balance out all Australian wine, and a lot of Margaret River wine is on the high side.

If it’s not a regional co-operative style of ownership, do the few that own it have the moral right to say they represent of Margaret River wine?

For better or not, the region or its independents are being proactive, as is Seppeltsfield’s majority owner Warren Randall, who has taken a stake, reported as 37 per cent, in a new wine tourism venture in Henan Province. The new venture will sell wines from Seppeltsfield and other Randall brands.

Other export markets will be dealt with in coming TKRs.

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