AUSSIE WINES GROW THANKS TO DROPPING PRICES

Australian exports are growing smoothly as prices continue to drop with the ever present wine glut. The Australian Wine and Brand Corp’s recent report indicates that Australian wine exports increased by 10.4% in the trailing 12 months to May 2006. Australia’s top 3 export countries – which make up about 72% of Australian exports – grew by a collective 7.3%, with exports to the UK, US and Canada rising by 4.7%, 8.8% and 16.8%.

Australia’s export value per liter continues to fall, slipping by 8.2% to AUS$3.84. Export prices to the UK, USA, and Canada fell by 3.4%, 10.5% and 12.4% respectively for the trailing 12 months period. An inventory ripping at the seams and an increase in bulk shipments have had a large effect on wine sales, leading one to wonder whether Australian wines will experience such wild success once the glut levels out and prices go up.

Merrill Lynch estimates that Constellation’s Australian brands – Hardy’s, Alice White, Banrock Station and Barossa Valley – account by almost 8% of total Australian wine volumes sold in US grocery stores. Yellow Tail, Foster’s and Pernod Ricard have shares of 39%, 30% and 7%. In the trailing 12 months to May, Australian retail wine prices have gone down about 1.3%, largely hurt by Pernod’s and Foster’s brands.