With current tight global inventories, higher prices are now assumed and accepted by buyers, while innovation in wine is increasing, according to a new report.
Rabobank’s latest Global Wine Quarterly report also found that bBeverage categories are blending and demand for organic wine is growing, even if this has taken longer than initially anticipated. These are just some of the trends observed at the world’s leading wine and spirits trade fair, Dusseldorf’s ProWein 2018, and outlined in the report.
Australian wine exports in 2017 reflected the sharp increase in sales to China, with China now outpacing the US to be the largest buyer of Australian wine in value terms. Exports of bulk wine contracted, with the exception of sales to China, while exports of bottled wine to Europe – UK, Germany, The Netherlands, and Sweden – saw a positive trend that more than offset the slightly weaker bottled sales to North America.
Australian exports to the US were up by 24 per cent in volume in 2017, driven by an 89 per cent increase in shipments of bulk wine, with bottled wine down by six per cent. Bulk wine export volumes to the US are quickly approaching those of bottled wines and the change in the mix is having a clear impact on the average price per litre.
Across the board, Australian wine exports increased by 9.4 per cent in volume terms and 16.7 per cent in value in 2017.
Entering the harvesting period for the southern hemisphere, bulk wine prices remain high after having steadily increased in the last months of last year. The report says tight availability is likely to prevent any correction in the near future, and although larger volumes are expected in various markets (South Africa being the key exception), this is not enough to move the market back to balance.
From a M&A perspective, the recent acquisition of Accolade Wines by US private equity group P.E Carlyle for AUD1billion reflects investor interest in the wine industry and the growth potential of the Chinese market, with rising exports of Australian wine to China.