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Thursday 6 February 2020

Boom times for the Australian wine industry - but for how long?

The value of Australian wine exports grew by 3% to $2.91 billion in the 12 months to December 2019, figures released by Wine Australia show. 

Exports of higher-valued wines drove the growth in value despite a 12% drop in total volume to 744 million litres.

Wine Australia Chief Executive Officer Andreas Clark said the sector had focused on growing exports at higher price points and the results reflected the success of the sector’s strategy.

The total value of exports in 2019 was the second-highest for a calendar year and value is approaching levels from before the Global Financial Crisis.

The average value of exported wine increased by 18% to $3.91 per litre FOB, the highest level since 2006.

“Australian wine companies have been very active in our export markets and the value of exports has now increased for six consecutive years," Clark said.

Australian wine exports to China (including Hong Kong and Macau) in the 12 months to December 2019 increased by 12% in value to $1.28 billion. 

Australia has consolidated its position as the number one imported country of origin ahead of France, but.... and it is a big but. 

The impact of coronavirus in China and globally since the reporting period and lower than expected exports to the United States and Canada are already putting pressure on the 2020 figures.

Australia’s largest wine company Treasury Wine Estates' share price has dropped by more than 25% in the past 10 days following the coronavirus outbreak. 

“Looking ahead into 2020, we anticipate that coronavirus will have an impact on sales, particularly to China, but at this stage it is difficult to predict the degree of that impact," Clark said. 

“Our first concern is people’s well-being in China and elsewhere and there will be time down the track to consider other impacts.”

Grape picking of early white and sparkling varieties for the 2020 vintage has begun in the South Australian regions of the Riverland and Barossa and the Hunter Valley in New South Wales.

Yields are expected to be down in most regions following a challenging season of extreme heat, drought and bushfires.

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