Australian wine exports dip, TWE shares drop

By Nicki Bourlioufas

Australian wine exports fell just 1% to $2.84 billion in 2019–20, despite short supply and COVID-19 restrictions hitting shipments to global markets, according to Wine Australia’s Export Report. The average value of exports jumped 9% to $3.89 per litre free on board (FOB), the highest level since 2004–05, and reflecting resilient demand from Europe and Asia.

However, total export volumes fell by 9% in volume to 730 million litres, in line with a smaller grape crush, which was at its lowest level in more than a decade. Looking ahead, Wine Australia Chief Executive Officer Andreas Clark said Wine Australia and the Australian Grape & Wine will be providing regular updates on an investigation by China of wine dumping allegations, which could hit exports in 2020-21.

Shares in Australia’s largest wine producer, Treasury Wine Estates, this week fell to $8.40, their lowest levels since January 2016, according to Bloomberg data, with TWE trading at $8.98 on 25 September, continuing their fall since China’s August announcement. Australia is the biggest importer of wine into China, and TWE the biggest seller. Reflecting how lucrative Chinese consumers are, the average value of wine exported to China jumped 22% to $9.07 per litre FOB in 2019-20, with more premium wines being sold to the world’s most populous nation.

The Chinese Ministry of Commerce (MOFCOM) initiated anti-dumping and investigations into Australian wine exports following a request by the China Alcoholic Drinks Association (CADA). The allegations have hit local wine exporters as political and trade tensions flare between the nations. “We are working in close collaboration with the Australian Government to monitor and support the sector’s interests,” Clark said in a September newsletter.

COVID-19 hit to exports

The advent of the COVID-19 pandemic has resulted in unprecedented disruption to wine markets around the world with the value of Australian wine exports declining since the March pandemic was declared. The chart below shows that in the fourth quarter of 2019–20 (April to June), exports dropped 4% to $716 million compared to the same quarter in 2018–19. This comes after a 7% decrease in the third quarter.

Value of exports by quarter (million AUD) – FY2019 v FY2020

Source: Wine Australia

However, there was some good news. The value of Australian wine shipped to Europe was the highest since 2011–12, rising in value by 3% to $615 million, as the chart below shows. South East Asian exports rose 0.3% to $181 million, while shipments struck a financial-year record. The United Kingdom (UK), Germany and Scandinavia drove growth to Europe, while Singapore and Indonesia were the key drivers behind the growth to South East Asia, according to an export report from Wine Australia.

Change in value of exports by region

Source: Wine Australia

In the past year, Australian exporters shipped wine to 116 destinations. A rise in European exports partially offset declines to other regions: North East Asia, exports fell by 1 % to $1.3 billion, in North America, by 2 % to $617 million, in Oceania, by 5 % to $103 million, and to the Middle East, by 33 % to $24 million.


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