“Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it.” - Samuel Johnson
Issued by Wine Australia on Monday 14th January 2013 “Australian wine exports grow in average value and volume” the media release states, referencing the latest Wine Export Approvals Report (WEAR) for the 12 months to end December 2012.
The overall figures are as per the report with total exports up 3 per cent to 721 million litres (valued at A$1.85 billion) and the average value per litre also increasing slightly for both bottled and bulk wine.
However, three comments in particular stood out:
- “Australian wine exports delivered a solid performance in some of our key markets last year”
If we take Australia’s key export markets to be the UK, USA, Canada and China (the top 4), it would seem solid performance equates to a decline in the volume of bottled red wine sales in all markets excluding China.
Perhaps a surge in bulk exports to the US valued at an average of $0.94/litre (down from $1.03 in the previous 12 months) is ‘solid’, it did at least mean the overall volume of wine going to the States was up…
Was the total value of exports solid in these key markets? No, overall value declined in each market except for China.
- “It is encouraging that we are seeing some traction, with some of our mature markets delivering growth at the premium end”
What do you consider ‘premium end’?
In the US every single price point for bottled wine saw a decline in volume. The UK was the same with the exception of the $5.00-$7.49 segment which grew 6% – possibly on the basis of the average RRP rising in this market, and Canada saw growth in the 2 price segments for bottled wine below $5.00.
The report does indicate that China, Hong Kong and Japan all grew at the ‘premium end’ if we make the assumption this refers to bottled wine valued at A$5.00/litre and above.
- “the above A$10 per litre segment grew across all markets”
Looking at the information provided for the A$10 and over segment across the top 4 export markets it shows the following in reference to bottled exports by price point and destination (Volume for MAT December 2012):
- USA: -30%
- UK: -12%
- Canada: -1%
- China: +40%
For a more accurate take on Australian wine exports, it would be wise to go with what you know yourselves, or refer to the WEAR that provides you with the actual information.
Alternatively, please find a quick summary on the top 5 markets below:
- UK: 80% of wine exports from Australia are sent in bulk; recent reports out of the UK said the average price per bottle has broken the £5.00 mark for the first time…it would be interesting to know where Australian wine sits. Since the overall price of wine (and taxes) are increasing, one would hope Australian wine was part of the upward trend, but the last 12 months do not indicate a very ‘solid performance’.
- USA: a massive increase in bulk wine exports offset a decline in bottled exports meaning overall volume was up. Unfortunately, however, the shift meant a decline in average $/litre as well as overall value and the price of bulk exports is a meager $0.94/litre and down from the previous year. Not sustainable, and not a ‘solid performance’.
- Canada: for what promises to be a market with ‘solid performance’ for Australian wine, Canada went backwards by volume, value and average $/l in 2012. This could just be timing of the report… Canada is still the 3rd biggest market for bottled red and white exports and maintains a healthy $/l value for these.
- China: following successive declines in volume exports over the past year or so (shift from bulk to bottled), China is the shining light (along with Hong Kong) of Australia’s export markets. Up by volume, value and average $/l in the 12 months to the end of December 2012. Even though China receives less than half the volume of bottled red wine exports sent to the US, if recent trends continue, China will be the biggest market by value for bottled red wine within the next 6 months, and almost double the value/litre. Be careful though. Read my last post about selling wine in China and don’t expect the current trend to continue forever.
- Germany: an interesting shift in export profile over the past 12 months. Usually considered a ‘bulk’ market for Australian wine, there has been a shift to bottled wine with reds up 18% and whites up 156% (albeit off a small base). These increases were matched by decreases in bulk exports to Germany which saw overall volume down by 8%. However, value increased overall which has to be good for the Aussie producer. Watch this space…