Australian wine exports to China just smashed through the $1 billion mark

Getty ImagesOne explanation for increased Australian wine sales to China…

Australian wine exports to China have jumped a massive 51% over the last 12 months to create the country’s first $1 billion market.

New figures released by Wine Australia today reveal that exports increased by 16% in value globally to $2.65 billion, over the year to March 2018, with China’s thirst leading the way.

Wine Australia CEO Andreas Clark said that figure was the highest in a decade, while volumes also grew by 10% to 844 million litres.

Bottled wine exports increased by 15% to $2.15 billion, while the average value of bulk wine rose by 8% to $1.05 per litre. Both are the highest levels since 2009, when the GFC hit exports.

The higher growth in value over volume means the average value per litre of exports increased by 5% to $3.14 per litre.

There was substantial growth in higher value wines, with exports above $10 per litre making up around a third of total exports at $779 million.

Premium wines worth $20 per bottle or more experienced substantial growth of between 42% and 68%, with the $15-$19.99 price bracket the only one to experience a decline, at 18%.

Wines above $200 soared 42%.

Clark said that while the commercial end of the USA market was in decline, contributing to the drop in volume, there had been strong growth in the premium sectors.

The $30–49.99 segment increased in value by 25% to $5 million.

Overall, the US market was down 7% by value to $439 million.

However, Americans were drinking better, with sales at the $US8–11.99 per bottle doubling and $US20–24.99 bottle sales up 22%.

The Wine Australia boss said low Northern Hemisphere harvests helped drive demand for bulk container exports, with volumes up 10% to 462 million litres, and the total value of bulk wine exports rose 19% to $486 million.

“Every country in Australia’s top 10 bulk wine destinations recorded an increase in average value, especially Germany, the largest importer of wine in the world, where average values for bulk wine increased by 20% from $0.87 to $1.05 per litre,” he said.

Falling tariffs as the China–Australia Free Trade Agreement kicks in helped in that market ahead of their total removal in January 2019. As a result, mainland China overtook the USA to become Australia’s second largest export market by volume, but more than double the US by value.

The $1.04 billion in total sales to China included Hong Kong and Macau.

The United Kingdom is Australia’s largest export destination by volume, up 8% to 241 million litres over the last year, and third by value at $373 million, a 9% increase.

Shiraz is the country’s most popular export, jumping 16% over the past year to $609 million by value, well ahead of its nearest rival, cabernet sauvignon, which leapt 25% to $357 million.

Chardonnay is the only white grape among the top 5 varietal exports, coming fourth at $177 million.

Domestically, Australian wine sales in the off-trade retail market rose 3% in value to $3.5 billion in the 12 months to March 2018, with the $15–30 per bottle segment showing the largest growth.

Australia’s wine industry was worth $5.6 billion in FY2017 – a rise of 8%, with 1.37 billion litres of wine produced, up 5%.

Here’s an infographic on Australian wine exports over the last 12 months.

Wine AustraliaAustralian wine exports over the past 12 months.

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