Australian wine exports have rebounded in the June 2024 quarter, largely given the sell-in of wines to Chinese retailers and distributors. Total exports were up 81% year-on-year. While it is good news, we will need more time to judge the rebound in Chinese consumer demand for Australian wine. Nevertheless, it does suggest concerns about excess supply already in China may be overdone.

Price rises for raw materials have been significant over the past year. In Issue 1 of Price Watch, we analyse these input cost pressures. We look at shipping, sugar, vegetable oils, cotton and semiconductors. While observers see the cost pressures as transitory, the length and extent of the path back to normalisation will significantly impact retailer and manufacturer profits. We expect it will take another 9-18 months for prices to normalise. As a result, retail inflation will rise and there will be profit margin pressure on some, mainly manufacturers, that fail to fully pass through the cost increases.