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Leconfield reaches new markets as national wine boom defies pandemic slump

Business

South Australian company Leconfield Wines is ramping up its sales across Europe and Canada as the nation’s wine exports reach their highest value since 2007.

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Leconfield Wines owner Richard Hamilton said while the business’ Australian wine sales had taken a hit when hospitality venues were forced to close as a result of coronavirus pandemic restrictions, its international presence had continued to expand.

“We have also experienced mixed results overseas with some markets including China reducing spend,” Hamilton said.

“However, in the face of this, we have risen to the challenge. We have restructured to focus on building collaborative partnerships and foster growth in other overseas markets, and these strategies are already starting to yield great results.

“The recent decision by Canada to remove tariffs on the import of Australian wines has also opened up new opportunities for us too.”

Leconfield Wines estimates in the financial year until July 2020 it produced 60,000 dozen bottles of wine, of which about 17,000 dozen were exported.

According to Wine Australia’s latest Export Report released last week, Australia’s top-five export markets experienced growth in value in the 12 months to September 2020 to reach a total value of $2.998 billion.

This was despite the coronavirus pandemic and the looming threat of tariffs from China.

South Australian wine accounts for about 50 per cent of Australia’s annual wine production and more than 75 per cent of premium wine.

The Wine Australia report found a four per cent increase in value was matched by a four per cent increase in price per litre of $3.89 but the overall volume of exports declined slightly by 0.4 per cent to 771 million litres in line with Wine Australia’s premiumisation strategy.

The three months between July 1 and September 30 showed the strongest growth as many parts of the world emerged from pandemic lockdowns and the overall value was at the highest level since exports reached $3 billion in the second half of calendar year 2007.

The value of global Australian wine exports in the September quarter increased by 23 per cent compared to the same period in 2019. This followed declines of 4 per cent in the April to June quarter and 7 per cent in the January to March quarter.

Of the 117 destinations Australian wine was exported to in the 12 months to September, the most significant growth came in Europe, where exports were up 16 per cent to $678 million.

For the 12 months to the end of September 2020, the growth in value was predominantly driven by exports to the United Kingdom and mainland China while New Zealand and Germany were also growth markets.

Sales to the UK were also up 18 per cent to $430 million while sales to Mainland China grew by 4 per cent to $1.2 billion.

The value of Australia’s wine exports into Canada rose by 4 per cent to almost $200 million.

Graphic supplied by Wine Australia.

Leconfield Wines sales and marketing director Damian White said although the company had sold wine in North America previously it had not had a presence in the area for about 15 years and had recently been approved for distribution in Canadian provinces Ontario, New Brunswick and Quebec.

“The Canadian market has been quite a hard market to navigate when you first get there,” White said.

“The key for us in Canada has certainly been developing strong relationships with credible agents in each of the provinces over there. We’re hoping to hit a couple thousand dozen (wine sales) in Canada by the end of next year.”

Leconfield said it had also partnered with Belgian food retailer Delhaize to supply a private label Cabernet Sauvignon under the name of Dalebrook Farm and would also expand in Finland.

White said while the company wanted to maintain its presence in China, with the market representing about 10 per cent of the business’ sales, it would focus on diversifying its sales by increasing its presence in Europe and Canada to reduce risk.

“Whilst we want a presence in China, for me it’s certainly not my plan to make China our biggest export market,” White said.

“I’m not sure that we’d want it to be more than 20 per cent just in terms of that volatility … especially when we’ve got some other markets like Belgium and Canada that are growing quite strong at a greater margin.

“However, there are a lot more opportunities for us in China and I think our focus needs to swing away from volume and more into quality and margin.”

In August the Chinese Government announced it had launched an anti-dumping investigation. Several large Australian wine companies were asked to provide information, including Penfolds parent company Treasury Wine Estates and Casella Family Wines, and have until mid-November to complete questionnaires to assist the Chinese Government with its investigation.

A second investigation was subsequently launched by China into countervailing duties and involves the same companies with the addition of Pernod Ricard, the makers of Jacob’s Creek.

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