Australian wine makers buoyed by lower dollar
Updated
The plunging stock market and falling currency in Australia is not all doom and gloom -- there's a bright side for Australia's beleagured wine industry.
The past year has seen declining wine exports, but the weakening Australian dollar and increasing demand from Hong Kong and China is turning the outlook around for wine-makers.
Presenter:Sonia Randhawa
Speaker: Laurie Stanford,Australian Wine and Brandy Corporation spokesman; Simon Napthine, Tarra Warra Estate general manager; Doug Lehman, Peter Lehman Wines managing director
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RANDHAWA : Until plunging in recent months, the strong Aussie dollar had driven down exports of Australian wine... most of Australia's exports are in cheaper wines, and the strong dollar meant they just weren't as cheap as they used to be. But now the wine industry is seeing glimmers of optimism amid the general doom and gloom of the stock market fall. The changing tax regime in Hong Kong - which abolished all taxes on alcohol - has spurred demand there, and demand in China keeps growing. Australian Wine and Brandy Corporation spokesman Laurie Stanford explains.
STANDFORD: HongKong is an emerging opportunity because of taxes in that market being eliminated entirely so the opportunity becomes greater particularly for the high end Australian product and China is definitely a focus market for Australian winemakers to develop and the Australian Wine and Brandy Corporation has people on the ground there, as well as Australia, promoting that market and we're observing very strong growth in higher value bottle products.
RANDHAWA: The benefits are already filtering down to some of the smaller estates. The estate of Tarra Warra in Victoria's Yarra Valley produces 300 tons of wine annually. General manager Simon Napthine is optimistic about both exports and increasing income from tourism.
NAPTHINE: What we are seeing at the moment is favourable comments particularly from the United States, one of our biggest markets and increased levels of inquiries, we haven't seen orders flow through yet but its probably too early at this stage.
RANDHAWA: Is there any concern that wine being more of a luxury product it might have the counter affect as well?
NAPTHINE: With the economy slowing down in the United States, yes it will have some affect but for small wineries like ourselves, and you're talking about a very large market, there will still be people buying wines, still going out and we can still benefit from that particularly when you have a look at what happened in the past we've had a 30 per cent increase over the past year and a half and we also believe its going to have a positive impact with our dollar becoming more attractive we'll start to see a rise in international visitors and tourism is still an important part of our winery business as well
STANDFORD: But the growth in the Asian markets doesn't make up the drop from other regions. And there's concern that the US economy's freefall will affect Australia's biggest export markets - the UK and the US. Doug Lehman from large wine exporter Peter Lehman Wines.
LEHMAN: The actual dollar dropping does help exporters quite considerably so that helps profit flow back but on the negative side people are feeling fairly grim about this with obviously some justification, and that may then and has probably already started people buying less wine and trading down if they are drinking in other words buying cheaper wines.
RANDHAWA: But Wine Australia's Laurie Stanford remains warily optimistic.
STANFORD: The improving exchange rate is very welcome news indeed, the strong australian dollar over the last year has undermined australia's competitiveness in overseas markets and this news with the exchange rate is welcome on the grounds that margins can improve and it also assists us to meet key price points, probably at the more sensitive end, the lower value end than the high value end but its still welcome news given that a large part of australia's exports are down at the more sensitive price point.
