Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 166

Australia’s other boom exports

Australia has some important and resilient industries which have taken up some of the slack in the wind down of the construction-led commodities boom. Record tourist numbers from China, education for international students, strong food exports and a resurgent wine export industry have been sectors which have not only been performing well but have been creating new records. Australia’s economy grew 3.1% year on year to the first quarter of 2016 on the back of a better than expected services sector.

Increasing arrivals to Australia, especially from Asia

Short-term arrivals from Asia into Australia make up the largest share of any source region. In 2015, as shown in Chart 1, 3.4 million visitors from Asia came to these shores. For the first five months of this year, 3.3 million people have arrived on short-term stays, almost one million more than for the same period five years ago.

Chart 1: Short-term arrivals into Australia in millions, 2015

Source: ABS, Owners Advisory, July 2016

Australia is one of the biggest beneficiaries of the rising consumer in Asia where the region is expected to account for more than two-thirds of the global middle class by 2031. The tourism numbers have boomed from China with 1.4 million short-term arrivals from the mainland and Hong Kong in the past 12 months. This number has now surpassed New Zealand as the country where most short-term arrivals originate.

In addition to tourism, Chinese and Indian students are taking education opportunities in Australia. Education sits behind iron ore and coal as the country’s third largest export. In 2014–15 export income from education was estimated at $18.1 billion. Education is also a pathway to settlement for students who opt to remain in the country as skilled participants.

Food glorious food

Demand for a bit of ‘Australia’ in the form of food and wine has seen both export classes touch record highs in the past three years. Grain and meat sales have garnered a lot of the attention as Asian consumers change to a more protein-based diet. Agricultural and fisheries exports for the last financial year reached about $46 billion, as shown in Chart 2, or about 25% of Australia’s overall commodity exports of $205 billion.

Chart 2: Australia exported over $45 billion of rural products in 2015

Source: ABS, Owners Advisory, July 2016

Australian wine rises on strong Chinese demand

The Australian Bureau of Agricultural Sciences reports that annual wine exports grew over 10% in 2015, and is forecast to generate sales of $2.2 billion in the coming year.

Chart 3: Australian wine to China 

Source: Department of Foreign Affairs and Trade, Owners Advisory, July 2016

Austrade points to the Chinese middle class as the primary driver of interest in Australian wine, which is regarded as a stable, consistent and high-quality product. China is now the second largest export destination for Australian sparkling, red and white wines, taking over from the United Kingdom earlier this year.

Achieving exposure to these export sectors

There are many ways for investors to gain exposure to these sectors. Without going into much detail here, Sydney Airport is one of the main gateways into Australia, and while shares are not cheap, the medium- to long-term returns should persist into the future.

Navitas is a global education provider offering a range of educational services including university programmes, resettlement assistance and language training. Navitas scores well on a number of key metrics of profitability, quality of earning and a management team delivering on its mandate.

Treasury Wines is one of the world’s largest wine companies with brands including Penfolds, Wolfblass and Rosemount, and the outlook for growth of underlying sales and earnings looks strong.

 

John O’Connell is Chief Investment Officer of Macquarie's Wealth Management group, and Founder of the bank’s roboadvice division, OwnersAdvisory. This article is general information and does not consider the investment needs of any individual.

 


 

Leave a Comment:

RELATED ARTICLES

Red wine and our green reputation in China

What export boom?

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

The 2025 Australian Federal election – implications for investors

With an election due by 17 May, we are effectively in campaign mode with the Government announcing numerous spending promises since January and the Coalition often matching them. Here's what the election means for investors.

Latest Updates

World's largest asset manager wants to revolutionise your portfolio

Larry Fink is one of the smartest people in the finance industry. In his latest shareholder letter, the Blackrock CEO outlines his quest to become the biggest player in private assets and upend investor portfolios.

Economy

Australia's economic report card heading into the polls

Our economy grew by a nominal rate of 7% per annum from 2017 to 2024, but it benefited from the largesse of fiscal and monetary policies, both of which are now fading. We need a new, credible economic growth agenda.

Preference votes matter

If the recent polls are anything to go by, we are headed for a hung parliament at the upcoming federal election. So more than ever, Australians need to give serious consideration to their preference votes.

SMSF strategies

Meg on SMSFs: Tips for the last member standing

It’s common for people as they age to seek more help in running their SMSF if their capacity declines. An alternate director may be a great solution for someone just planning for short-term help in the meantime.

Wilson Asset Management on markets and its new income fund

In this interview, Matthew Haupt from Wilson Asset Management discusses his outloook for the ASX, sectors such as REITs that he likes, and his firm's launch of a new income-oriented listed investment company.  

Planning

‘Life expectancy’ – and why I don’t like the expression

Life expectancy isn't just a number - it's a concept that changes with survival rates over time. This article breaks down how age, survival, and societal factors shape our understanding of life expectancy, especially post-Covid. 

The shine is back on gold, and gold miners

Gold mining stocks outperformed in 2024 and are expected to do well in 2025. At this point in the rally, it's worth considering what has driven gold prices higher and why miners could still have some catching up to do.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.