Coronavirus to impact Australian wine sales, says Wine Australia's CEO

  • Feb 05, 2020 AEDT
  • Team Kalkine
Coronavirus to impact Australian wine sales, says Wine Australia's CEO

Wine Australia, an Australian Commonwealth Government statutory authority, has released last year’s export numbers for Australian wine. As per the released report, the Australian wine exports grew by 3% to $2.91 in 2019, however it is expected that the numbers may fall in the upcoming future due to the current coronavirus crisis in China.

From past one month, Coronavirus has been making headlines, as it engulfs more and more people, especially in China, into its infectious spread. This deadly infectious virus has taken several lives, both inside as well as outside the Chinese borders. Although currently there is no clear image with regards to its impact in China and its economy, many believe that it will hamper the economic growth of the country. In addition to this, Coronavirus crisis will also impact the countries which export their products to China.

Click here, to read more about the impact of coronavirus.

The Chinese imported wine drinking population is estimated to be around 52 million, making it the 5th largest importer of wine based on volume and 4th largest consumer in the world.

During the last year, Wine Australia witnessed exceptional growth in demand for Australian fine wine, however, the Chief Executive Officer Andreas Clark has warned that coronavirus will have an impact on sales, particularly to China.

Major Highlights

  • Average value of bottled exports reaches new record
  • Australian wine exports grew by 3 per cent to $2.91 billion in the 12 months to December 2019
  • Bottled wine shipments increased by 7 per cent in value to $2.4 billion and decreased in volume by 5 per cent to 342 million litres
  • Unpackaged wine exports decreased by 12 per cent in value to $488 million and decreased 18 per cent in volume to 395 million litres
  • Australian exports declined at lower price points and increased at the higher end
  • Asia was the growth centre for Australian exports
  • Exports to China (including Hong Kong and Macau) in the 12 months to December 2019 increased by 12 per cent in value to $1.28 billion, while volume declined 17 per cent in volume to 142 million litres.
  • The value of French imports continued the decline that commenced in 2018

In 2019, Australia exported wine to 120 markets including:

  • China (including Hong Kong and Macau) was up 12 per cent to $1.28 billion
  • USA, down 1 per cent to $419 million
  • UK, down 9 per cent to $352 million
  • Canada, down 13 per cent to $183 million
  • Singapore, up 18 per cent to $105 million

Although the Exports to China (including Hong Kong and Macau) in 2019 increased by 12% in value to $1.28 billion, the volume declined 17% in volume to 142 million litres.

Why wine sector is important for Australian economy?

Any impact on Australia wine sales in China could have a negative affect on the overall Australian economy, as Australian wine sector contributes $45.5 billion to the Australian economy each year.

One needs to understand that, the wine sector is not the only agricultural industry contributing significantly to Australia’s economy and rural communities, in fact, it is only a small part of a broader family of agricultural export industries as it makes up around 9% of Australia’s agricultural exports by value, ranking fifth after beef, wheat, wool and sheep meat.

However, there are two key differences between these industries and Australia’s wine sector:

  • wine is a sophisticated manufactured product where the processing value is added in Australia (often in the region where the grapes were grown)
  • domestic and international wine-related tourism makes a significant contribution to regional economies

Australia’s top 10 agricultural exports by value – 2018-19 financial year

(Source: Wine Australia)

The government of Australia also understands the importance of wine sectors for the domestic economy, as it has invested $50 million over four years (2017–2020) to grow Australia’s wine exports and showcase the nation’s wine tourism offering in key markets.

Core components of the $50 million Export and Regional Wine Support Package (the $50m Package) include:

  • targeted marketing campaigns in China and the USA
  • wine export and international wine tourism grants,
  • capability development programs
  • a brand proposition and go-to-market strategy for Australian craft cider

To capitalise on the market opportunities in China, Wine Australia has a program of activities including those that target off-premise trade, trade shows, online promotions trade roadshows, participation in consumer fairs and the Wine Australia China Awards, that recognises those wine professionals who have helped raise the profile of Australian wine in China.

The outbreak of the deadly coronavirus has embarked fears of derailment in the stabilisation of the already bleak Chinese economy. The worry has been intensified as it has wiped out optimism from the nation after it recently signed the phase one US-China trade deal, which had lifted the nervousness around the prolonged trade war between the two largest economies of the world. The stock markets around the world have retreated with the fears prevailing around the fallout on global growth outlook due to China's coronavirus outbreak. Currently it is hard to estimate the overall impact of this deadly virus on China’s economy and associated countries. Hence, investors should keep a close on any update provided by the authorities with regards to the Coronavirus.

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