Wine surplus weighs on Australia

Wine surplus weighs on Australia

Surplus Australian wine sold off for less than AUD1 (US$0.88) per litre has damaged the value of Australian wine exports over the past year.

A 22% rise in the volume of cheap, bulk wine sent to foreign markets has caused the value of Australian wine exports to fall by AUD260m to AUD2.17bn for the year to the start of June.

As "opportunistic" bulk wine buyers drained Australia's surplus, demand for bottled wine fell by 6% in volume terms on the prior year, to 456m litres, said the Australian Wine & Brandy Corporation (AWBC) late last week.

The figures highlight ongoing difficulties for Australia and serve to back-up those industry leaders who claim that the sector must shrink to be viable over the longer term.

Australian wineries have been forced to clear surplus stock by selling off bulk wine for less than AUD1 per litre, AWBC said.

Lower demand for bottled Australian wine was most marked in the UK, which was replaced by the US as the top market for bottled wine during the year.

"Contributory factors to the decline in bottled exports to the UK were the appreciation of the Australian dollar against the British pound, on-going alcohol tax increases in the UK, increased competition and a shift to in-market packaging," said AWBC.

The UK was the top destination for bulk wine, accounting for 44% of bulk exports over the 12 months, ahead of the US, which accounted for 21%. There was also a sharp rise in bulk exports to China.

Leading Australian wine industry bodies warned last year that the country had a surplus of 100m litres and was producing up to 40m cases of wine more than it was selling annually.

For the full AWBC report, click here.