AUSTRALIA’S major export markets look set to drive global wine consumption in the medium term, according to the latest National Australia Bank (NAB) Agribusiness Rural Commodities Wrap.
The US is second behind France in global wine consumption by volume and is the top destination for Australia’s exports in value terms.
Despite data pointing to a recent slowdown in the volume of export sales, China’s current low base of per capita wine consumption, rapidly rising incomes and penchant for premium Australian wines represent favourable conditions for the growth of Australian exports in the medium term.
In 2013, China accounted for only 5 per cent in total Australian export volumes but 13 per cent by value, a relatively small share which leaves ample room for future expansion.
General manager of NAB Agribusiness, Khan Horne, says opportunities to grow existing markets and find new ones, helped by a lower Australian dollar, are bright spots for the Australian industry.
“In the past five to six years there’s essentially been a ‘perfect storm’ for the Australian industry – a glut in wine grape production, stiff import and export competition and a high AUD, but there are green shoots emerging,” Horne said.
“Chinese demand is driving growth in the sales of Australian wines at the premium end of the price spectrum, or above $10 per litre.
“It appears that domestic consumers are also increasingly trading up to higher-quality and higher value Australian wines, although the category only represents a small share of output.
“Overall, Australian production rose moderately in 2013 due to more favourable seasonal conditions, while consumption has stabilised after a couple of decades of steady growth.”
In recognition of the significant opportunity for high quality wine in China, NAB Agribusiness is hosting a study tour next month to give Australian producers an opportunity to experience Chinese tastes and the local industry first-hand, and build valuable networks on the ground.
“China’s per capita consumption of wine is still very low at less than two litres a year, suggesting there are plenty of opportunities for further growth,” Horne said.
“We will visit wineries, experience wine retailing and meet with government, trade and industry leaders, as well as visit the premier trade show for wine in the Asia Pacific, VINEXPO Asia-Pacific in Hong Kong.”
In other commodities, sharp rallies in prices for livestock and wheat, combined with a fall in the AUD pushed up the NAB Rural Commodity Index in March by 4.6 per cent in Australian dollar terms.
It was a more modest rise of 3.6 per cent in US dollar terms.
Dairy and sugar prices both eased by 1 per cent and wool prices were also lower (-3 per cent).