Brits drink to Australia's health
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.
Frequently Asked Questions about this Article…
Australian wine sales to Britain have topped the £1 billion mark, extending Australia's lead over Italy as Britain's favourite imported wine; sales of wines priced above £7 rose about 16% in volume, showing stronger demand for higher-priced bottles.
The article highlights larger winemakers that have focused on premium brands, such as Treasury Wine Estates, as likely to be comforted by the improved performance at the upper price points, since they have moved away from 'cheap and cheerful' labels.
Many winemakers say the high Australian dollar has squeezed margins and in some cases priced their brands out of key markets, with family-owned wineries like Brown Brothers, d'Arenberg and Casella specifically blaming the strong currency for reduced profitability in North America and Britain.
Nielsen data in the article shows Australia was Britain's top source of imported wine in 2012, followed by Italy; France and the US ranked third and fourth with £765 million and £686 million in sales respectively, while Spain was the fastest-growing exporter to Britain.
Taxes and duties on wine in Britain have risen about 50% over the past five years; retailers say many consumers are willing to pay an extra £1–£2 a bottle to move up in perceived quality, with a chunk of that additional price going to government duties.
A Wine Australia report cited in the article shows Britain imported 250 million litres for the year ended March 2013, while total Australian wine export volume rose 2% to 719 million litres, valued at about $1.85 billion.
Europe is the number-one region for Australian exports, accounting for almost half of total export volume; just over one-third goes to North America and around 10% is destined for Asia.
The rise in sales of wines above £7 and Australia's strong performance in Britain suggests growing consumer willingness to buy premium labels, which may favour companies positioned in the premium segment (as noted for firms like Treasury Wine Estates); investors should, however, weigh this trend alongside factors mentioned in the article such as currency impacts and rising duties.
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