Australian wines go to world in big bladders Australian wines are increasingly being exported in bags, not bottles. Hardys became Britain's best-selling Australian wine by selling bottles for as little as £3.40 ($5) in the face of a rising domestic currency. To do that and still earn a profit, the winemaker turned to plastic bags - 24,000-litre plastic bags. Accolade Wines, the maker of Hardys, pared shipping costs that can amount to as much as $US3 a case by eliminating glass bottles and shipping the alcohol in bladders. After the 16,000 kilometre journey, the wine is bottled at a plant next to a scrap merchant a two-hour drive from London. Australia's $A5.5 billion wine industry is now moving more than half its overseas shipments in bulk, making the 40-day journey to Europe in bladders big enough to fill 32,000 bottles. It's reshaping logistics and the flow of wine between the country, the largest exporter outside of Europe, and Britain, the biggest net importer. "We don't ship glass around the world, we ship wine," Richard Lloyd, global manufacturing director for Accolade, said by email. The Australian dollar has been the strongest performing major currency against both the British pound and US dollar over the past four years. Options traders expect just a one-in-10 chance that the Aussie will return to its 2009 levels against either currency this year, according to data compiled by Bloomberg. Higher capacity About 30 shipping containers are trucked every day to Accolade's plant in Avonmouth near the English city of Bristol. Treasury Wine Estates' brands and Pernod Ricard SA's Jacob's Creek are also being shipped in bulk, while Casella Wines, maker of the third-best selling US wine label Yellow Tail, may move to bulk exports to cut costs. Sea transport costs are typically based on volume, so filling a shipping container with cases of low-end wine wastes space on packaging, said Tony Woodborne, manager of Flexibulk Logistics, a Sydney-based wine freight company. "You lose a third of your volume to bottle and carton," he said. While a 20-foot container accommodates about 9900 litres of bottled wine, a bladder holds 24,000 litres and costs little more to transport, he said. Sending an ordinary six-metre container of bottled wine from South Australia, the nation's biggest wine producing state, costs about $3300 to $3400, said Ben Mislov, sales manager for Adelaide-based transport company JF Hillebrand Group AG. While adding the cost of using a large bladder lifts the price to about $4000, the capacity is doubled. The greater mass of wine also stays cooler during a typical 40-day journey, reducing the need for refrigeration that can increase the container rate to $5000, he said. Wolf Blass Accolade, owned by Champ Private Equity, bottles its own Banrock Station and Hardys ranges at the 1.6-million bottle-a- day Avonmouth plant, along with the Rosemount, Lindeman's and Wolf Blass labels owned by Treasury, Australia's biggest publicly traded winemaker. Filling 12.5 million cases with Australian wine each year, the plant is bigger than any facility in its home country. Australia's shipments of so-called bulk wine have grown more than six-fold over the past decade, and overtook bottled exports for the first time last year with 54 per cent of the total, according to data from Wine Australia, a government-backed industry body. Four out of five bottles the country sells in British stores are now shipped as bulk, and two out of five in the US. Chile, the second-largest New World exporter according to the International Organisation of Vine and Wine, shipped about 36 per cent of its overseas sales in bulk in the first six months of last year, according to wine brokers Ciatti Company. Chile, New Zealand The US and South Africa, the third- and fourth-largest exporters outside of Europe, also shipped about half their wine as bulk in 2010 and 2011, according to reports by the US Department of Agriculture and Wines of South Africa, an industry body. About 35 per cent of New Zealand's wine exports were made in bulk during 2012, according to New Zealand Winegrowers, a government-backed industry body. The container bladders are oversized versions of the bag-in-a-box packaging pioneered in 1965 by Australian producer Angove's, a family winery three hours east of Accolade's Adelaide head office. Paint, Herbicide As well as wine, the giant bags can be used to transport fruit juice concentrates, paint, herbicides and drinking water, according to the website of Flexitank, a Melbourne-based supplier. While the tanks have been around since the 1980s, improvements to their construction and the plastic membranes used have reduced the risk of spoilage, according to the Waste and Resources Action Program, a British government-backed packaging body. That makes long-distance bulk shipments as viable as the short-range tanker exports common between European countries. Australian wine producers have been forced to innovate to win back profit margins on exports hit by the surging value of the currency and a global glut of wine. Shipping in bottles can add $US3 a case, or US25¢ per bottle, to costs, according to Rabobank International. Closed Furnaces Owens-Illinois, the world's largest bottle-maker, closed down three of its 12 Australian glass furnaces, citing the move to bulk wine, the company said last year. Melbourne-based Amcor, the world's biggest packaging company, said revenue from its glass-packaging business fell 34 per cent last year and has dropped a forecast that a new bottle furnace would be needed every three years. Penrice Soda Holdings blamed the growth of bulk wine for its decision January 18 to stop producing the soda ash used in glassmaking. While bulk shipping is popular for lower-priced wines, it probably won't be adopted for prestige labels, said Peter Booth, South Australia manager of Adelaide-based freight company Booth Transport. "Penfolds Grange in a bladder?" he said, referring to Treasury's most prestigious label, which has sold for as much as $A60,000 a bottle at auction. I can't imagine that ever happening.