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

Finding the best income-yielding assets

With fixed term deposit rates declining and bank hybrids being phased out, what are the best options for investors seeking income? This goes through the choices, and the opportunities and risks involved.

What history reveals about market corrections and crashes

The S&P 500's recent correction raises concerns about a bear market. History shows corrections are driven by high rates, unemployment, or global shocks, and that there's reason for optimism for nervous investors today. 

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 605 with weekend update

Trump's tariffs and China's retaliatory strike have sent the Nasdaq into a bear market with the S&P 500 not far behind. What are the implications for the economy and markets, and what should investors do now? 

  • 3 April 2025

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Latest Updates

Investment strategies

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Investment strategies

Don't let Trump derail your wealth creation plans

If you want to build wealth over the long-term, trying to guess the stock market's next move is generally a bad idea. In a month where this might be more tempting than ever, here is what you should focus on instead.

Economics

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Investment strategies

Will China's EV boom end in tears?

China's EV dominance is reshaping global auto markets - but with soaring tariffs, overcapacity, and rising scrutiny, the industry’s meteoric rise may face a turbulent road ahead. Can China maintain its lead - or will it stall?

Investment strategies

REITs: a haven in a Trumpian world?

Equity markets have been lashed by Trump's tariff policies, yet REITs have outperformed. Not only are they largely unaffected by tariffs, but they offer a unique combination of growth, sound fundamentals, and value.

Shares

Why Europe is back on the global investor map

European equities are surging ahead of the U.S this year, driven by strong earnings, undervaluation, and fiscal stimulus. With quality founder-led firms and a strengthening Euro, Europe may be the next global investment hotspot.

Chalmers' disingenuous budget claims

The Treasurer often touts a $207 billion improvement in Australia's financial position. A deeper look at the numbers reveals something less impressive, caused far more by commodity price surprises than policy.

Fixed interest

Duration: Friend or foe in a defensive allocation?

Duration is back. After years in the doghouse, shifting markets and higher yields are restoring its role as a reliable diversifier and income source - offering defensive strength in today’s uncertain environment.

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.