Australian wine exports flat as grape glut takes toll

SYDNEY (AFP) – The value of Australian wine exports was flat in the 12 months to the end of June as sales volumes increased but a global grape glut forced down prices, government figures show.

The data from the government’s Australian Wine and Brandy Corporation showed the country’s wine export boom had fizzled out, with the value of sales up just two percent to 2.8 billion dollars (2.07 billion US) over the 12-month period.

Sales values increased by an average of 26 percent a year between 1995 and 2003, as Australian winemakers turned a modest industry into an export powerhouse by offering mid-range, quaffable wines at reasonable prices in markets such as Britain and the United States.

Demand for the wine is still there, with export volumes up 12 percent to 738 million litres in 2005-06, but the grape glut means the price paid dropped nine percent to 3.80 dollars per litre — its lowest in almost a decade.

„The rate of volume growth was creditable given the growing volume base for Australian wine shipments, the increased global competition and more difficult trading environment,“ the report said.

Britain and the United States remained by far the biggest consumers of Australian wine, accounting for 34 and 32 percent of export sales respectively, but failed to provide the growth momentum generated in previous years.

The council said red wine sales in China and Sweden were major sources of export growth over the year.

„China is an emerging market,“ it said.

„Contributing to the increase in exports to China are reduced tariffs on wine through China’s accession to the World Trade Organisation, expanding middle class, rising incomes, a growing interest in Western lifestyle and tastes, the promotion of the health benefits of red wine and promotion of wine through tighter regulations on wine standards.“

The value of wine exports to China almost doubled to 22 million dollars but still represents a tiny overall proportion of Australia’s overall industry.

Wines sales to Sweden shot up from 13 to 50 million dollars, almost half of it the low to mid-range soft pack wine that is sold in cardboard containers.

Australia has more than 2,000 wineries and is the world’s fourth largest wine exporter, behind France, Italy and Spain, according to the Department of Foreign Affairs and Trade.

Record vintages in 2004 and 2005, and a near-record crush this year have led to a massive oversupply of wine.

The crisis has left up to a billion litres, more than the entire industry’s annual export output, unsold in storage tanks and prompted winegrowers to ask for a multimillion dollar bailout package.

Source: news.yahoo.com