China Laps Up Australian Wine

Chinese buyers may be losing their taste for Australia’s mineral exports, but they

sure are lapping up its wine.

Bottled-wine shipments to China rose almost by a quarter in value and more than 16% in

volume in the year to September–consolidating the Asian nation’s position as top

buyer of Australian exports priced above 7.50 Australian dollars a liter (US$7.70),

government export agency Wine Australia said Tuesday.

Growth was strongest in the premium end of the market, with shipments costing above A

$10 a liter rising 37% in the period. That helped push the average cost of bottled wine

exports to China higher than those from France for the first time on record, said

Andrew Cheesman, Wine Australia’s chief executive.

“We’re starting to see a few green shoots for the Australian wine industry,” he

said. “It’s pleasing to see growth in bottled-wine exports at the high end, with the

above-A$10-per-liter segment up 4% in volume.”
Australia’s vintners have been cashing in on Asia’s growing taste for wine as demand

has slowed in traditional export markets in Europe and the U.S. But the trend has been

a mixed blessing.

While export volumes have remained fairly steady in recent years, earnings from

shipments have plunged to a 10-year low as winemakers have been forced to sell excess

supplies as cut-price bulk exports to Asia.

The value of Australian wine exports fell to A$1.86 billion in the financial year that

ended June 30, down from a peak of just under A$3 billion in the 2006-07 financial

year, and the lowest figure since 2001-02, Wine Australia data showed.

As with so much of Australia’s manufacturing sector, the strong Australian dollar has

further pressed winemakers’ margins. The currency has doubled in value against the

U.S. dollar since 2001, while the average purchase price for a ton of Australian wine

grapes, priced in Australian dollars, has more than halved.

But now, the fortunes of those growers that have managed to survive the tough times may

be starting to mature.
Data from the Australian Bureau of Statistics, also released Tuesday, showed that the

amount of land devoted to growing wine grapes had fallen by 6% since 2010–a 31% drop

over the past four years–to 145,000 hectares, as more farmers abandoned their

vineyards.

Those left are increasingly growing the lighter, sweeter varieties of red wine favoured

by Asian buyers. Production of Tempranillo rose by 17%, or 3,400 tons, in 2012, boosted

by a 15% surge plantings, according to the ABS data.

“Our focus now must be to ensure that we are keeping the right vineyards in the right

places to meet our emerging demand opportunities and to improve our profitability

performance,” said Tony D’Aloisio, president of the Winemakers’ Federation of

Australia, an industry body.