Global wine exports pick up
Global exports of wine are generally picking up at a brisk pace compared to the soft start of 2010. Major exporters such as Spain, France, Italy, Chile and Argentina have all seen significant growth in export volumes. South Africa and Australia appear to be the major exceptions, as the strength of their domestic currency has dampened demand in export markets.
Major import markets are showing mixed signs. In the UK, volumes appear to be growing, but pricing in that market remains a challenge for many exporters. German import volumes are down slightly (-1.1%) but value has risen (+3%) as there are indications of improvements in mid-priced wines. For many exporters, growth is coming not from the major markets such as the UK and the US, but rather from secondary markets such as Canada; emerging markets such as China, Brazil and South Korea; or from regional markets such as Mexico in the case of Argentina, or Kenya and Nigeria for South Africa.
French wine export value growth (20.7%) far outpaced volume growth (8.7%) in the first quarter of 2011. The growth, led by Champagne, Bordeaux, Burgundy and Côtes du Rhône, appears to be gaining momentum. The markets showing the greatest improvement in demand included the US, Germany, Hong Kong, China and Canada.
Italian exports grew 14.7% by volume and 13.7% by value in Q1 2011. The US, Switzerland and Canada were major growth markets by value, and Russia was a major volume growth driver, up 67%.
Spanish exports rose 32.7% by volume and 20.7% by value, with average prices declining 9% through the first three months of 2011. The decline in average pricing was due to a shift in mix, as low priced bulk wine with no certification of origin grew at the fastest rate (+69%) with average pricing in this category down slightly (-3%). However, higher-priced bottled wines with certification of origin (DOP) also saw strong growth in the quarter (+28.7%) without any significant price declines. Spain’s exports grew across a wide range of markets, including Europe, the US, Canada, Asia and Russia.
Total US exports decreased 3% by volume but grew 43% by value, as the soft US dollar supported an increase in exports of higher value bottled wine to key markets such as the EU, Canada and Hong Kong.
South Africa saw total export volumes decline 11% for the 6 months ending April 2011, as the rand continues to strengthen. Bottled wines declined faster than bulk wines, creating further strain. Improvements in volumes to markets such as Denmark, Canada, Russia and several African countries were not enough to offset declining sales to major markets such as the UK, Germany and Sweden.
Argentine wine export values increased 7% by volume and 15% by value in Q1 2011. In contrast to 2010, bulk wine exports (+81%) are now growing much faster than bottled wine exports (+2%), but in both cases average pricing (in US dollars) is showing improvement (+12% and +14%, respectively). The markets with the strongest growth include the US, UK, Sweden, Switzerland and Mexico.
Chilean bottled wine exports grew nearly 17% by volume in the first four months of 2011, and average pricing, in USD, grew 6.4%. Including bulk wines, total wine exports declined -18.5%, as bulk wine volumes declined by 55%. Among bottled wines, the greatest growth has been among the higher value segment of wines with certified origin (DOP). The markets showing the biggest increases in bottled wine imports include the US, Canada, the Netherlands, Japan, Brazil and China.
Australian wine export volumes fell 14.4% to 211.6 million litres in the first four months of 2011, while the FOB value of exports fell 11.5% to AUD 578.9 million. On a 12-month basis through April, the value of Australian wine exports fell to AUD 1,998 million — the first time it has fallen below AUD 2 billion since first breaking through this mark in July 2002. A number of factors have conspired to engineer this result, including a reduced harvest in 2010, dramatic increase in offshore/in-market bottling and bulk wine trade, systemic price discounting, and the strong Australian dollar.
In New Zealand, the annual value of exports fell 6% while volumes declined 10% in Q1 2011. The moving annual total bottled wine export unit value increased for the first time in over two years (since March 2009) to FOB NZD 8.70 per litre in response to higher monthly bottled wine pricing and a lower proportion of bulk wine trade. The average value of bottled wine exports in March 2011, up 7.6% YOY to NZD 9.51 per litre, represents the highest value recorded since June 2009.
US Imports
Imports into the US continue to grow at a healthy pace, with value growth outpacing volume growth. Bottled wine prices have generally stabilised, but bulk wine pricing saw significant improvement over Q1 2010, which helped grow value faster than overall volumes.
Total import volumes through the first three months of 2011 were up 12%, but value increased 16%.
--Bulk wine volumes grew 11%, but value grew 38%.
--Bottled imports grew 11% in both volume and value terms.
--Italy and Spain were the major contributors to growth of bulk wine imports.
--Bottled wine imports from Australia were flat, though values declined by 8%. Australian bulk wine imports experienced a greater decline in volumes than value, and as a result, overall value declined more slowly than volumes.
--Demand for Argentine Malbec in the US remains strong, with imports growing over 30% by both volume and value in the quarter.
--Sparkling wine sales are enjoying strong overall growth (+42% by volume and value) spread among a wide range of suppliers (Italy, Australia, France, Spain, Germany and Argentina).