Wine Australia’s CEO Andreas Clark warns of the impacts of the deadly coronavirus on sales particularly to its most profitable market China in the trade body’s latest export report, as China struggles to contain the virus that has infected close to 37,000 and killed over 800.
Clark made the comment when the whole wine industry in China is expected to drastically downgrade sales expectations, as millions of residents from the epicenter of Hubei province to cities in Wenzhou are under lockdown.
Given the current situation, Clark was cautious about Australian wine’s growth prospects in 2020.
“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. Also, our first concern is people’s well-being in China and elsewhere and there will be time down the track to consider other impacts”, says Clark.
China in 2019 continued to rank as Australia’s top export market.
Exports to China (including Hong Kong and Macau) in the 12 months to December 2019 increased by 12% in value to AU$1.28 billion, while volume declined 17% in volume to 142 million litres (15.8 million 9-litre case equivalents). Average value increased by 35% to AU$8.99 per litre FOB. Both value and average value are calendar year records.
While the total value of wine imported by China has declined, Australia in the year of 2019 has surpassed France as the country’s biggest wine supplier by value, while the value of French imports continued the decline that commenced in 2018.
Australia now holds a 35% value share of total wine imports compared with France with 29%, says the wine trade body. Chile is number one by volume but third in value with a 14% share. More than half of Chile’s exports to China are unpackaged, compared to 15% of Australia’s exports, it adds.
Other top export markets by value for Australian wines are:
- China (including Hong Kong and Macau) was up 12 per cent to $1.28 billion
- USA, down 1 per cent to $419 million
- UK, down 9 per cent to $352 million
- Canada, down 13 per cent to $183 million
- Singapore, up 18 per cent to $105 million.
Together Australia’s wine exports grow by 3% during the year to AU$2.91 billion in the 12 months to December 2019, driven by higher valued wines, those above AU$10 per litre free on board (FOB). This category reached a record value of AU$1.1 billion.
“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.
Its total export volume dropped 12% to 744 million liters.
“The volume of exports was down, with the decline heavily weighted towards lower price segments. The lower vintages in 2018 and 2019, together with lower inventory levels, meant that there was less wine available for export in 2019”, Clark said.