Chardonnay Flood Buoys Australian Wine Exports as Prices Decline

By David Fickling January 13, 2013
Rising demand for cheaper chardonnay lifted export volumes of Australian wine even as the value of overseas sales declined for a sixth year running.

Exports of chardonnay in so-called bulk containers climbed 37 percent to 117 million liters in 2012, Louisa Aherne, a spokeswoman for government-backed industry body Wine Australia, said in an e-mail today. Total export volume rose 3 percent.

Australia, the fourth-largest wine exporter, is using cheaper modes of transport and attempting to build higher-value brands in new markets such as China as it struggles with a stronger currency that's made it harder to compete with U.S. and European vintages. Dry weather in the southern spring means the 2013 vintage should be a good one, Bernard Hickin, chief wine- maker for Pernod-Ricard SA (RI)'s Jacob's Creek brand, said in an e- mailed statement.

"We'll see some great wines from this year across a number of varietals and regions," he said. While recent hot weather, which hit 42 Celsius (108 Fahrenheit) in the wine-producing town of Mildura on Jan. 11, presented challenges, a dry winter and spring "will make wines from 2013 show tremendous concentration of flavors and silky textures," Hickin said.

The company will start crushing chardonnay grapes from Mildura in Victoria state and the Riverland region in South Australia today, according to the statement.

Bulk Exports

Bulk wine, in which the beverage is packed in giant bladders inside shipping containers and bottled in its end- market rather than at the vineyard, overtook bottled exports last year, Wine Australia said.

The growth of lower-priced bulk wine meant the value of Australian wine exports fell 2 percent last year to A$1.85 billion ($1.95 billion) even as total volume rose 3 percent to 721 million liters, according to Wine Australia data.

Growing Chinese demand for higher-end Australian wines made it the biggest destination for bottles valued at more than A$7.50 a liter, the body said, putting it ahead of Canada and the U.S. in the segment. The average value of bottled Australian wine exports to China came ahead of those from France.

The Australian dollar has advanced 13 percent against its U.S. counterpart in the past three years, the strongest performer among 16 major currencies tracked by Bloomberg.