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.
The spike in spot sea-freight rates is likely to remain topical over the next few months and add to concerns about retail profit margins in FY25e. Our feedback is that spot sea freight rates for Australian importers are now close to 3x the low point seen only 12 months ago. The good news is many retailers have 12-month contracts. The bad news is that it looks like a step-up in freight rates is coming either way as we move through FY25e and adds risk to earnings. The retailers most exposed to higher sea freight rates are Nick Scali, Wesfarmers and Super Retail Group.