Australian Wine Exports

Wine Exports

Australian wine exports experienced a contraction in value of 19% in the 2021-22 financial year with the export market valued at $2.08 billion, and a reduction in volume of 10% to 625ML (Table 6). The average value also dropped by 10% to $3.33 per litre free on board (FOB).

The decline in export trade was not unexpected as the industry continues to weather the significant impact of the reduction in exports to mainland China, driven by high deposit tariffs imposed in November 2020. The export value to the Chinese market fell by 96% to $25 million with a considerably lower 6ML (down 88%) of beverages shipped into the country (Table 7). The average price for the Chinese market also took a dive, losing 67% of its value to an average value of $4.09 per litre (Table 7).

However, when excluding trade with China from the data, Australian wine exports to the rest of the world shows the trade value is starting to stabilise. Exports rose by 5% to $2.06 billion (without mainland China), which is the highest value since 2009-2010, with 619ML (down 3%) of products shipped. The average value for the export markets rose 9% to $3.32 per litre FOB (Wine Australia).

New Zealand remained an important trade partner with exports to the country increasing significantly in the last 12 months. New Zealand contributed $174 million worth of export trade, purchasing 32ML of Australian wines (Table 7).

The softening of the Australian dollar against the US dollar in the last financial year has allowed Australian products to be competitive. The Americans are now the largest importer of Australian wine by value, contributing $436 million (up 9%) to the Australian economy, with 139ML of Australian wine enjoyed in the country (Table 7). The growth can largely be attributed to the sale of unpackaged bulk wine after the 2021 vintage finally docked at ports following delays from the ongoing global shipping challenges. In addition, the decline in shipments within the $2.50 to $4.99 bulk price segment was offset by the growth in exports above $7.50 per litre FOB (Wine Australia). Wine exports to Canada also fell slightly to $174 million (down 5%), with 53ML (up 4%) of beverages shipped, predominantly as unpackaged wine.

Trade with North America is predicted to strengthen with the number of registered exporters to the USA at its highest level since 2008, with the majority of these exporters focusing on the price segment of $10 or more per litre FOB. Trade with Canada is expected to expand with strong demand for and focus on packaged shipment, especially at the premium end (Wine Australia).

The UK remained our largest partner by volume with 227ML (down 15%) of wines shipped. The value of wine shipped to the UK declined 10% to $421 million in the 2021-22 financial year (Table 7). The fall in trade was expected after the elevated exports ahead of the Brexit deadline of 31 December 2020.

Moreover, with on-trade resuming post the COVID-19 pandemic, the dominance of Australian wine in the off-trade category is experiencing counter-swing, with trade reflecting more normal shipping levels (Wine Australia).

Trade with European countries declined in the last 12 months with the exception of the Danish market. The Danes added another 15% of trade value to $42 million with an additional 3% of products shipped totalling 20ML (Table 7). The average price of wine to Denmark also increased by 11% to $2.07 per litre FOB. Germany remained Australia’s largest export partner in Europe purchasing 32ML (down 11%) valued at $46 million (down 16%). Sweden contributed $23 million of trade consistent with the previous 12 months with 5ML (down 6%) of shipments. The Swedish are paying a high price for our products with an average price of $4.06 per litre FOB (Table 7).

Exports into other parts of Asia (excluding mainland China) showed positive signs, particularly after the Australia–India Economic Cooperation and Trade Agreement was signed in April 2022. India is the world’s third largest alcoholic beverage market; however, wine is a relatively new category, presenting a longterm opportunity for Australian wine exporters. Australian wine exports into India increased 184% to be valued at $19 million, with a significantly larger quantity (4ML, up 182%) shipped into the country (Table 7).

Japan is now Australia’s largest trading partner in Asia by value procuring $51 million (up 12%) of Australian wine from approximately 14ML of shipments (Table 7). Trade with Singapore continues to strengthen with the country doubling its order to $170 million from only 8ML of products shipped. Singapore remained a lucrative market for Australian exporters which paid a premium of $20.26 (up 24%) per litre FOB (Table 7). Exports into Hong Kong fell slightly to $170 million (down 9%) from 8ML (down 11%), returning to more normal trade levels after the mad scramble to bypass the tariffs imposed by mainland China (Table 7). Trade with Hong Kong remained imperative to exporters which pays the highest average price for Australian wine. Consumers in Hong Kong paid an average $22.62 per litre FOB, making up a significant portion of the premium market.

Trade with Malaysia and Thailand also grew to $58 million and $43 million, respectively (Table 7). The potential of the Asian market will provide an opportunity for Australian wine exporters to diversify their markets from the more traditional trade partners in the US and Europe.

The overall decline of 19% in exports saw a reduction across all price segments in the last financial year. The cheaper price segments fared better with the below $10 per litre price segment dropping 13% to $1.415 billion FOB (Table 8). The below $10 per litre segment remained the largest price category, accounting for 68% of total export shipments out of Australia. The $10-$14.99 price segment saw the smallest decline at 4%, recording a total of $150 million FOB (Table 8). A large proportion of the exports were within these categories, weathering what could otherwise be a painful year for exporters.

The premium market suffered the most significant loss with the highest price segment ($200 or more per litre) halved in 2022. The export value for the highest price segment was valued at $47 million compared to $88 million in the previous 12 months (Table 8). The $50- $99.99 price category also experienced a sharp decline, losing 37% of trade to a value of $182 million. Against the backdrop of rising inflation and increasing interest rates across all major economies around the world, Australian exporters can expect market fluctuations which may put pressure on margins as consumers across key markets curtail spending with consumer confidence remaining volatile in the current economy.

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