Australian wine, New Zealand fashion, UK health care – three export successes that continue to grow.

Growing exports: Australian wine has cultivated a reputation for quality

Exports are up! It was almost a surprise announcement from the Australian Minister of Trade at the beginning of March 2002. After the global trading downturn, even Australia’s dynamic and diversified exporters found world markets a challenge in the last half of 2001. But January 2002’s figures showed both Australia’s exports and imports up 4% for the month. With a global recovery predicted for the second half of the year, the upward trend in trade is expected to resume.

It’s a trend that has been set over the past decade: the UK, Australia and New Zealand have all enjoyed continually healthy growth in exports. Australia’s exports have risen by two-thirds since 1990, from £27bn (A$74bn) to £45bn (A$124bn). In the same period the UK’s exports went from £156bn to £198bn, and New Zealand’s from £6.7bn to £9.1bn.

Each country has its success stories. The UK’s health care industry exports 50% of its production, and faces a future growth market of increasingly health-conscious developing countries, not to mention ageing populations in the developed world. New Zealand, meanwhile, has designs on the world’s fashion markets, while the Australian wine industry is enjoying extraordinary success, building a reputation for distinct fruity flavours, value for money and premium quality. The growth export forecast is blue skies and sunshine.

Australian wine – a bottle of sunshine

A glass of sunshine: Australian wine has reached 21% UK market share

At a time when most Australian industries are still rebounding from the global downturn, the wine industry has consistently defied the odds to become one of Australia’s greatest champions in the export market.

In 2001, for example, Australia exported 375 million litres of wine, valued at A$1.76bn, up 21% by volume and 19% by value on 2000.

This success not only bucks the global downturn, it comes despite the difficulties of export growth in an industry that is by nature fragile and unpredictable, point out industry players such as the Australian Wine and Brandy Corporation (AWBC), Austrade, BRL Hardy, Southcorp and Australian Business in Europe (ABIE). When approaching the European market, Australia also faced a background of oversupply and EU wine lakes.

“There has been a lot of hard work put in by the Australian wine industry as a collective body, to establish brand Australia overseas,” says Sam Tolley, Chief Executive Officer of AWBC. He believes that strong marketing, clear labelling, reputation for quality and image have played defining roles.

The Australian Wine and Export Council (AWEC) and other government bodies fund regular industry promotions overseas, as well as wine-tasting expos in Australia aimed at highlighting the quality of Australian wine to international investors. Companies such as BRL Hardy have also set up their own sales and marketing divisions in the UK. David Woods, International Marketing Director, says that their recent campaign focuses on Australia’s warm climate and sweeping sun-drenched rural landscape.

“I’ve heard Australian wines in the UK referred to as a bottle of sunshine,” he says. “If you’ve been in the UK in the dark of winter, you’ll understand why a glass of sunshine is so appealing.”

Vision 2025
There’s more to success than image, however. In 1995 the Australian winegrape and wine industry came together and formulated a 30-year plan outlining the export goals, direction, financial funding, infrastructure and possible market strategies for the industry. The document focused the mind of the industry.

Big wine exporters and small businesses now work together with industry bodies on research and development (everything from new technologies to grape strains), marketing, and export strategies. Woods believes that this unity and common vision are essential if Australia is to compete with the ‘Old World’ wine countries of France, Italy and Spain.

The results speak for themselves. In 1995 wine exports were A$300m and Australia held 2% of world market share. The plan aimed at A$1bn by 2000 and 5% of the world market by 2010. Not only has the former been achieved, but the figure in 2001 pushed the expected target by a further A$600m. In terms of market share, Australia currently holds 3.7% and is set to meet, possibly exceed, the 5% challenge by 2010. The goal for 2025 is to achieve exports of A$3bn.

Neck and neck in the UK
Nowhere are the vision and hard work of the industry more evident than in the success of wines in the UK, where Southcorp’s Brian Dale says Australia is “neck and neck” with France. In fact the latest 2001 figures show that Australia is poised to overtake France by controlling 21% of the market share in the UK.

Fiona Buffinton, Austrade’s London Trade Commissioner, highlights the industry’s uncanny ability to strike markets at the right time, with the right product, and the right packaging.
“The launch in the mid-to-late 1980s came at a time when the percentage of higher disposable income was increasing, and the UK market’s tastes were switching from ale to wines,” she says. Australian wines laid down excellent foundations by getting out into the market, showcasing the quality of the wine and establishing the value-for-money proposition that Australia represented. Clear packaging and brand names were also easier to understand than some more complicated European wines. As a result, Australian wines now dominate the middle price range.

“When you see an advertisements on the back of buses for Jacobs Creek... you know we’re well entrenched in the market,” says Buffinton.

Into Europe
Australian wine companies have done particularly well in countries where they are assisted by linguistic, cultural and historical ties. In the UK, USA and New Zealand, exports volumes increased by 22.4%, 31.1% and 13.5% respectively in the year to 2000/1.

While these markets, including the UK, are still considered strong growth opportunities, both BRL Hardy and Southcorp are now focusing on developing the German market. It’s a huge market: Germany consumes 2bn bottles of wine every year and Australia currently only holds 0.8% of the market. Once again, the industry is striking when the iron is hot. The shift towards Germany comes at a time when the media and globalisation have made the German market more open to different cultural perspectives. BRL Hardy’s David Woods says that the industry is collaborating to create Australia as a category in the market, but they have “a lot of shoe leather to wear out”. Australians are carrying out extensive market research in Germany and bringing back popular labels for thorough analysis.

Cloudy conditions?
While the industry has built up momentum in export sales, there are still elements that could slow success. International competition is increasing and the threat of oversupply looms. EU wine lakes and government subsidies inject the ‘Old World’ companies with added security. Finally, there is an ever-present fear of any scandal affecting Australia’s blemish-free reputation for quality, which experts agree would have a massive effect on exports.

BRL Hardy and Southcorp are nevertheless optimistic. They believe Australian wine has built an extremely strong foundation, with a focus on quality and integrity.

Fiona Buffinton does, however, warn of a saturation point, and advises the industry to “keep its running shoes on”.

David Woods agrees. “The only real enemy,” he says, “is complacency.”

The UK: exporting health

Healthy export growth: the UK’s health care industry exports more than half of its entire production

It’s distinctly less sexy than wine or fashion, but the UK’s healthcare industry is a major generator of income for the country, exporting around half of its entire production.

From the UK to Australia, for example, the medicaments sector is the single largest category of imports, greater than cars, IT equipment or aircraft at A$795m (£290m) in 2000/1. Medical equipment adds still more to the total, in an area where Australia imports 80% of its requirements.

The UK’s home market is the sixth largest in the world, driven by the National Health Service (NHS), which is regarded globally as one of the world’s best healthcare brands and a benchmark of excellence, an irony considering the flak it regularly faces on home turf. Trade Partners UK attributes the UK’s increasing global presence in to three main factors: complementary relationships between the industry, the UK Government, the NHS, the private sector and voluntary organisations; a highly developed healthcare infrastructure; and an outstanding and well-supported research base.

That research base in the UK includes a nationwide array of centres of excellence, conducting clinical trials across a huge range of specialisations – for example:

• IBEES, Sheffield’s Institute for Biomedical Equipment Evaluation and Services;
  
• Cardiff’s ‘Wound Management Centre’;
  
• London’s Moorfield Eye Hospital;
  
• the Royal Brompton Hospital, which has the world’s largest cystic fibrosis unit.

Other contract research organisations exist, conducting trials on a commercial basis for manufacturers. Cambridge Science Park has produced cross-fertilising clusters of biotechnology, pharmaceuticals and health care; Imperial College’s School of Medicine is one of the country’s largest medical research and teaching institutions and has united cross-faculty research groups to create new research centres such as the Genetics and Genomics Institute, the Wright Fleming Initiative (infection and immunity) and the Geoffrey Rose Initiative (epidemiology and biostatistics). Private companies such as GlaxoSmithKline and Boots Healthcare International have helped build such a national strength in health care that the UK is the world’s third biggest exporter of pharmaceuticals, with a global reputation from research excellence. It’s also an industry with a healthy future, as the developing world becomes increasingly health-conscious, and an ageing population ensures growth in health requirements.

New Zealand: in a material world

New Zealand designs are regarded as high quality and non-derivative

While still a mere sequin on the dress of the world’s fashion industry, New Zealand designs are shining bright.

In an industry where replication and conformity are the kiss of death, New Zealand’s unique styles are winning the country an international reputation, with fashion lines ranging from rugged outdoor wear to high fashion and children's wear. From Nelson’s ‘Wearable Art’ Awards to Karen Walker, World, and Pumpkin Patch, New Zealand’s fashion is cutting a swathe through the world’s most glamorous industry.

Earning NZ$340m (£100m) in the year to June 2001, New Zealand apparel adds as much to the country’s foreign exchange earnings as its wine sector, and the industry continues to grow. Separating knit and woven apparel from the mix (including sporting apparel and tourist knitwear but excluding carpets, textiles, fur, skin, fibres, sheepskin, wool, footwear and headgear), fashion-related exports from New Zealand have grown to NZ$216m (£63.5m), representing a growth of 37% since 1998.

The main export market for New Zealand’s clothing is Australia, which takes approximately 70% of all exports. But exports are also growing in UK, German, Japanese, South Korean and American markets.

Designers like Kate Sylvester, Karen Walker, Zambesi and World are leading the way. These last three plus designer Nom D made up the ‘New Zealand Four’ who wowed the London Fashion Week set in 1999. The show not so much opened doors for the New Zealand designers as knocked them off their hinges, their work described by fashionUK as “a hot-bed of talent made up of individuals who all add an alternative view to the international fashion scene.”

A name to look out for is up-and-comer Frances Howie. Howie beat out designers from all over the world to scoop the highly-coveted Designer of the Year Award at the 17th annual Smirnoff International Fashion Awards in Toronto. The grand prize, worth more than £50,000, includes automatic acceptance into the renowned Central Saint Martin’s College of Art and Design in London.

The success of New Zealand designers laid the foundations for New Zealand to stage its own fashion week – L’Oreal New Zealand Fashion Week – in October 2001. It was expected to generate an extra £3.5m in exports.

However, New Zealand’s fashion industry covers more than just the big names, with the big export dollars the result of a backbone of manufacturers who have developed a significant market share in Australia during the last 10-15 years. In many cases this is the result of a strong relationship between New Zealand manufacturers and designers, and a dedicated agent or distributor in Australia.

New Zealand designs are regarded as being cut from their own cloth by their affinity for the outdoors, combined with an attitude that clothes can be glamorous, practical and fun. They are further defined by designers and manufacturers’ bold use of materials, from local wools and possum-fur blends to the finest import fabrics. Internationally-recognised brands have built a perception of New Zealand fashion as high quality and non-derivative – a strong foundation on which to build a tailor-made future for New Zealand fashion.

Wine story: Ariadne Zeneca.

Websites:
www.austrade.gov.au
www.tradepartners.gov.uk/healthcare
www.fashionz.co.nz