ASSISTANT Agriculture and Water Resources Minister Anne Ruston has talked-up news of dramatically increased Australian wine export values with China’s performance dominating new reported figures.
Senator Ruston issued a statement today saying Australian wine export values were the highest in a decade, increasing by 16 per cent to $2.65 billion in the year to March, according to Wine Australia's latest Export Report.
Senator Ruston said the export numbers were a win for the wine industry and a win for jobs in regional Australia.
“Regional Australia continues to benefit from higher exports − we’re not going to get rich selling to ourselves,” she said.
“It makes sense that we export our wine when the world’s largest market is right on our doorstep.
“These record wine export numbers also have benefits far beyond the cellar door, with important flow-on effects for the towns and cities around our wine regions.”
Senator Ruston said it was the first time the value of a single wine market had reached over $1b.
She said exports to China, including Hong Kong, were up 51pc over the year to March and now worth $1.04b annually.
“New market opportunities underpinned by free trade deals secured by the Coalition government are providing producers the ability to increase their sales and reinvest in their business.
“The government anticipates the value and volume of wine exports to China will only grow as tariffs for Australian wine into China will be entirely removed from January 1 next year.”
Senator Ruston said the Coalition government’s $50 million Export and Regional Wine Support Package was also providing “unprecedented support” to help wine sellers take advantage of new and emerging markets.
“The package supports a three-year plan to attract 40,000 more international tourists to Australia's wine regions, which will boost regional economies, increase export values and provide more jobs,” she said.
“It is great to see the Coalition’s policies helping the wine industry to reach its potential.”
Unprecedented growth fueled by several factors
Former South Australian Liberal Senator Sean Edwards – a high level wine industry adviser through his business Enterprise Corporation – said the market surge and double digit growth figures for Australian wine exports was “unprecedented”.
Mr Edwards is also the proprietor of Kirrihill Wines in the Clare Valley in SA and said the demand for Australian wines out of greater Asia had been enhanced through free trade agreements, first and foremost with China, Japan and South Korea.
But he said there were also “exciting gains” made in other markets like Vietnam and Indonesia.
Mr Edwards said “modest gains” had been made for Australian wine exports in traditional markets like the US and the UK in terms of volume but China was the big story.
“The numbers we’re seeing certainly in the first quarter of 2018, coming off a very high base of about 43pc in 2017, on 2016 figures, shows there’s been unprecedented growth for the Australian wine industry,” he said.
“When the Australian wine industry transitioned into fine table wines in the 80’s and 90’s, away from fortified wines and sherries, we saw growth in the UK and the US markets, based on currency advantages.
“But the incredible thing about Asia and more particularly China, this unprecedented growth and demand appears to be unrelated to currency and heavily related to zero tariffs.
“We’re currently on a 3pc tariff that goes to zero on January 1, 2019 but there’s also been a significant and important cultural alignment in terms of friendships and valued, symbiotic, business relationship aspirations.
“More and more Australia and China business relationships are forming in an increasingly safer and stable legal framework.
“This cannot go unheralded and a great deal of credit must go to the Australian government and Chinese government who are forging this path together.”
Mr Edwards said China was made up of numerous highly populated provinces that required “a certain finesse”, for distributing wine exports into each one.
He said managing marketing into those individual provinces would be “the key to success” in terms of the future and maintaining benefits, from the recent growth spurt.
“Currently there’s great demand for everyday drinking wine but as the weeks and months roll out, the demand is growing for high end, high quality icon wines to a market which seemingly has an insatiable appetite for what we always used to know back in the 90’s as sunshine in a bottle,” he said.
“The demand is strong for Australian wine but the market is also becoming increasingly brand motivated and great credit must be given to Penfolds and companies like Yellow Tail who have done a great job in addressing the market needs, right across the board, and positioning Australian wine favourably.
“Companies like mine Kirrihill Wines are benefitting greatly from the reputation and quality of those products in that market.
“Australia’s population is 24 million but there’s one billion more people living in China and its growing, so this market has a lot of legs.”
Mr Edwards said every three months 20 million Chinese people entered the aspirational middle class which meant they would be buying more wine in future as their economic prospects increased, including Australian product.
“The next thing is to get Chinese people drinking wine in restaurants,” he said.
“The majority of Australian wine is consumed at home or at private functions at the moment but if we can capture the restaurant market in China, which is largely (beer and tea) at the moment, then we’ll be back to the future and plating vines.
“These aspirations should also be reflected by Wine Australia in their pursuit of increasing the value and volume of Australian wine into those markets.”
Mr Edwards said “everybody’s benefitting” from the enhanced trading environment into Asia, not just wine exporters, with table grapes, beef, lamb, dairy, horticulture and other farm commodities on the up, due to decreased tariffs and improved relations between government and business.
He said the Chinese government had given its local business community “permission to love Australia”.
The developing appreciation of wine in Asia, along with expanding middle class populations, provided a marketing and growth opportunity compared to more traditional and “mature” markets in the US and UK that had long-established imports from other major wine exporting regions, not just Australia, he said.
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