With a vintage almost a third bigger than the fire-ravaged disaster of 2019, Australian winemakers have a lot of quality wine to sell. And with China almost out of the picture for the time being, the UK has once again become the country’s most important export market, as David Williams reports
Wine Australia called it a “unicorn vintage”. Other sources preferred “largest ever”, or simply “massive”. However you choose to describe it, there’s no doubt that Australia’s latest grape crop was a tonic for grape growers after a torrid preceding couple of years.
The 2021 vintage clocked in at a total of 2.03m tonnes, some 31% bigger than 2020 and 19% up on 2019. Better still, according to Wine Australia’s National Vintage Report, it was “characterised by near-perfect growing and ripening conditions across most states and regions”.
In a Wine Australia statement, the body’s general manager for corporate affairs and regulation, Rachel Triggs, said there was “good fruit set, plenty of water at the right time, lack of heatwaves, low disease pressure, and favourable harvest conditions [that] have resulted in a high-yielding, high quality vintage”.
The upbeat tone was perfectly understandable given the apocalyptic scenes of the Australian summer of 2019 to 2020 and the Covid-ridden times that have followed.
In spring 2020, the full cost of Australia’s devastating and prolonged bushfire season was still being counted and analysed. The fires ended up destroying around 1% of the Australian vineyard, but with many producers choosing not to produce wines because of smoke taint, Wine Australia estimated that 4% of production, or 60,000 tonnes, was affected by the fires in some way, and the vintage ended up being the smallest in 10 years.
In that context, the 2021 vintage, which was as ever dominated by a resurgent South Australia with 1.06m tonnes (52% of the total) followed by New South Wales (580,875 tonnes; 29%) and Victoria (334,834 tonnes; 17%), could be seen as the year Australia bounced back, providing, as Triggs put it, “an opportunity for depleted inventory levels to be restored, ensuring we have the supply we need to take up new export opportunities”.
Outsiders could be forgiven for finding a slightly euphemistic edge to Triggs’ reference to “new export opportunities”. This, after all, is an industry trying to come to terms with the collapse of what was, until late 2020, its most important export market by value, China.
The effects of the swingeing tarrifs imposed on Australian wine by the Chinese government at the end of last year were rapid and severe.
According to the latest figures from Wine Australia, exports to mainland China fell by an astonishing 77% in value, to £148m (to put it in sterling terms) in the year to the end of September 2021, while the number of Australian shippers selling wine to China fell from 2,241 to just 750 in the same period.
Naturally, a loss of that scale (Treasury Wine Estates alone lost £41m worth of Chinese sales) is going to have an effect on the overall export figures. And sure enough, the headline figures show a fall in value of 24% to £1.23bn, and a 17% drop in volume to 638m litres. As well as in China, Australian wine struggled in what is now the number two market by value, the United States (losing 11% in volume to £213m) and in its fifth largest market by value, Canada (down 12% to £93.6m).
On the plus side of the ledger, Hong Kong was up 135% to £112m. And, rather more pertinently for readers of this magazine, Australia is in the midst of a UK boom. Indeed, the British seem to have fallen hard once again with Aussie drops – and it’s premium wines that seem to be finding the most favour.
“Over the past 18 months, there has been a significant increase in exports to the UK, which has led to the market solidifying its place as Australia’s number one destination by volume and it has now overtaken mainland China as the number one destination by value,” said Triggs.
According to the Wine Australia Export Report, published in mid-October, exports to the UK grew by 7% in value to £249m in the year to September 2021. Significantly, a slight drop (2%) in volume was offset by average value increases of 9% to 99p per litre, which is the highest average value Australian wines have managed since mid-2011.
“In the past 12 months, exports in almost all price segments to the UK have continued to grow, with exports at an average value over $5 per litre enjoying 35% growth in value,” the Report said. “The growth in premium wine has meant that the UK has moved from the seventh largest destination of exports above $10 per litre to fifth in the past year.”
It’s not all good news for Australia in the UK. As the Wine Australia Export Report says, “worldwide shipping delays, linked to Covid restrictions, have also impacted exports within the 12 months ended September 2021 … shipping lines around the world are lacking capacity and there are major delays at ports, leading to worst-ever schedule reliability when combined with current record levels of ocean freight.”
The country’s geographical position means long delays have become par for the course for importers. As Stuart McCloskey of Kent-based Australian specialist The Vinorium told The Wine Merchant in July, “The problem is that we are now waiting 16 weeks door to door and it’s getting worse.”
Other smaller-scale importers contacted by The Wine Merchant, including Hennings Wine Merchants and Specialist Cellar, made similar observations, with Matthew Hennings saying the “domino effect in deep sea containers will take months to sort out”.
Such problems are not restricted to Australia, however. And in general there is a sense that Australia’s travails in China have led to an increased focus on the UK, a market of historic importance that some exporters may have been guilty of taking for granted in the period when higher-value Chinese sales boomed.
How far that feeling of optimism will be helped by the terms of the free-trade deal agreed in principle by the British and Australian governments in summer 2021 remains to be seen. Although details have not been confirmed, the headline figure of a saving of around 10p per bottle for importers has been greeted with scepticism by many in the UK trade. And the government’s new duty regime, which will penalise many Australian wines for their alcohol levels, may in any case wipe out any such benefits.
More important for the independent sector, however, is the sense that the UK is now getting a more realistic representation of Australia’s full vinous repertoire.
With many producers having lost sales in China and/or the States, and with the country’s strict Covid response having a significant effect on cellar door visits and domestic sales, the UK market, for all its fabled price consciousness – and shipping headaches notwithstanding – no longer looks like such a bad bet for Australia’s varied, dynamic and creative scene of smaller producers.
All of which makes Australian wine a more attractive proposition for UK independents and their customers than it’s been for some time. The reasons behind that might be less than ideal. But the wines themselves – not least those in the selections overleaf – show an industry still very much capable of surprising and delighting in a range of styles to match anywhere in the world.