While exports increased across the price spectrum, the greatest growth was for wines above A$10 ($7.80 USD) per liter, which saw a 91% increase up to A$160m ($124m USD).
The boost in exports was aided by the introduction of the China-Australia Free Trade Agreement (ChAFTA) in December 2015, as well as an increased interest in wine from the growing Chinese middle class.
And the full impact of this free trade agreement is yet to be realized, says Wine Australia.
Premiumization
Australian wine exports continued to show strong growth in the 12 months to the end of March 2016. From April 2015 to March 2016, the value of exports to all destinations grew by 13%, driven by bottled exports, particularly at higher price points.
The US remains the top export market for Australian wines, by value (up 4% to A$442m / $343m USD). However, the latest export figures from Wine Australia show that mainland China overtook the UK to become the second largest market for Australian exports.
“Exports to China grew by 64% to A$397m ($308m USD), despite a slowing economy,” said Wine Australia. “The inclusion of Hong Kong at A$129m ($100m USD) makes China the largest market for Australian wine exports.”
Volumes into China grew by 63% to 72m liters, and average value per liter increased by 1% to A$5.53 ($4.30 USD). However, export growth was particularly strong in the price segments where Australia’s most expensive wines are shipped, showing an appetite for premium wines.
The price range between A$60 and A$69.99 ($47-$54 USD) increased 369% to a total of A$19m ($14.8m USD), while wines above A$100 ($78 USD) increased 310% to A$10m ($7.7m USD).
“China’s preference for Australian red wines continued this year with red wine’s share of value increasing from 91% to 93%,” said Wine Australia. “The total value of red wine exports increased by 66% to A$368m ($285m USD), while white wine increased by 39% to A$20m ($15.5m USD).”
Exports have been boosted by the China-Australia Free Trade Agreement, which was signed in June and entered into force in December last year. The agreement also bodes well for future exports.
“The China-Australia Free Trade Agreement (ChAFTA) was in force for fewer than four months of the reported period so its full impact is yet to be realized,” said Wine Australia.
Free trade agreements
Other Asian markets benefiting from Free Trade Agreements include Japan and South Korea.
“Australian wine exports to Japan increased by 10% in value to A$45m ($35m USD) and 12% in volume to 12m liters. Exports are continuing to experience growth after the Japan-Australia Economic Partnership Agreement (JAEPA), which came into effect in January 2015. The agreement immediately cut tariffs on bulk wine to zero and will reduce tariffs on bottled wine over seven years.”
Meanwhile, exports to South Korea benefited from the 2014 Korea-Australia Free Trade Agreement.
“This removed a 15% tariff on Australian wine in December 2014 and helped bring Australia to an even playing field with its competitors. Value increased by 51% to A$13m ($10.1m USD), the highest annual value since December 2008 and just short of the A$15m ($11.7m USD) peak, which was achieved earlier that year. Volume also increased significantly, growing by 75% to 2.1m liters.”
