Brits drink to Australia's health

Australian wine sales to Britain have broken through the £1 billion barrier, extending the country's lead on second-ranked Italy as Britain's favourite imported wine, according to latest figures from market analysis firm Nielsen.

And there was strong growth for more expensive wines, even as Britain splutters along in a protracted economic downturn, with sales of wines priced above £7 ($A11) rising 16 per cent in volume terms.

The improved performance at the upper price should comfort larger winemakers such as Treasury Wine Estates, which has focused on its premium stable of brands and moved away from "cheap and cheerful" labels.

The surge by Australian wine in Britain comes despite winemakers decrying the high dollar that they say hit margins as their brands were priced out of the market by new world producers such as Chile as well as old-world centres like Spain.

Several family-owned wineries, such as Brown Brothers, d'Arenberg and Casella, have blamed the high dollar for crunching profitability, particularly in the crucial markets of North America and Britain.

Figures from Nielsen tell a slightly different story.

Australia remained in the top spot for 2012 as Britain's largest source of wine, and in recent months actually extended its lead over Italy, to break through the £1 billion sales mark.

According to Nielsen, France and the US were in third and fourth place with sales of £765 million and £686 million respectively into Britain.

Spain was the fastest-growing wine exporter to Britain, with value sales up 17 per cent to £538 million for the period.

Britain's tax system is also playing a part with taxes and duties on wine up 50 per cent in the past five years. Local retailers argue consumers are willing to pay an extra £1 or £2 a bottle to jump a few rungs in wine quality, with a chunk of that price government duties.

A recent report from Wine Australia confirmed Britain as the sector's biggest market, importing 250 million litres for the year ended March 2013. The total volume of Australian wine exports increased by 2 per cent to 719 million litres valued at $1.85 billion.

Europe is the No. 1 region for Australian exports, accounting for almost half of the total volume, with just over one-third destined for North America and 10 per cent going to Asia.