The Australian wine sector is in its strongest position in more than a decade, with historically high production levels matched by sales growth, and reasonable inventory levels, according to the findings of the Australian wine: production sales and inventory 2016–17* report.
The 2017 vintage was the second year of historically high production, with a grape crush of 1.98 million tonnes, eight per cent higher than in 2016. Wine production increased by five per cent to 1.37 billion litres, driven by an increase in red wine production (up 15 per cent to 793 million litres), while white wine production declined five per cent to 576 million litres.
Wine sales by Australian winemakers also grew strongly in 2016–17. Growth in both the domestic and export markets led to a combined increase in sales value of $393 million (eight per cent) to more than $5.6 billion. Volume increased by 59 million litres (just under 7 million cases) to 1.3 billion litres (142 million cases).
“The additional tariff cuts on Australian bottled wine into China from January 1 2018 will further increase Australia’s competitiveness in the world’s fastest-growing major wine market”
Most (86 per cent) of the growth in sales came from red and Rosé wines, which increased by 51 million litres overall to 666 million litres. This was well aligned with the increase in wine production, indicating that market signals are driving production growth. There was growth in white wines as well; exports of white wine grew four per cent to 296 million litres – the second highest ever recorded annual figure.
Total inventory increased by three per cent to 1.97 billion litres. Red wine inventory increased by seven per cent to 1.09 billion litres in 2016–17, while white wine decreased by one per cent to 739 million litres. The stocks-to-sales ratios decreased slightly for both reds and whites.
Wine Australia Chief Executive Officer, Andreas Clark, said that the large Australian vintage was well-timed, with global production in 2017 estimated to be the lowest since 1961 at 24.6 billion litres, and Australia the only major wine producing country to have an above-average harvest.
“Australia is well-placed to take advantage of the opportunity, with stocks at reasonably high levels and well-established routes to market in the four largest wine markets in the world: the United States, United Kingdom, China and Germany,” Clark said.
“The additional tariff cuts on Australian bottled wine into China from January 1 2018 will further increase Australia’s competitiveness in the world’s fastest-growing major wine market.”
Clarke said on-going tariff cuts through the Japan-Australia Economic Partnership Agreement will also improve Australia’s competitiveness in Japan, which is the second biggest wine market in Asia, after China.