Australian Wine Exports

Wine Exports

Australian wine exports experienced a contraction of 10% during the 2020-21 financial year, with the export market valued at $2.56 billion and with a reduction in volume by 5% to 693ML (see Table 6). After consecutive price increases over the past five years, values dropped slightly to $3.69 per litre free on board (FOB).

The downturn in Australia’s export market can be attributed to the ongoing trade dispute with China and a smaller 2020 vintage. When focussing on the impact of the tariffs imposed by the Chinese government, the value of exports to that market fell by a staggering 45% to $606 million. A total of 52ML were still shipped to China, but this figure was down by a massive 57% within a year. Australia’s low-mid range value products were essentially forced out of the Chinese market, with many exporters of these products looking to other international destinations. Exporters who remained in the Chinese market were those supplying premium products which have been less sensitive to fluctuations of price. These higher value wines actually experienced an increase of 28% in value to reach an average of $11.60 per litre (see Table 7).

The United Kingdom strengthened its position as Australia’s largest export market by volume, purchasing 266ML (up 15%). The British market is now worth $470 million to the Australian wine industry (up 23%). With some premium producers also looking for alternative avenues for their products, the average price per litre shipped to the UK increased by 7% to $1.76 per litre in 2021 (see Table 7).

The long-term cultural and trade history between Australia and the UK and other European countries helped to significantly increase Australian wine exports to these markets, softening the blow somewhat from Beijing’s punitive trade barriers. The strongest growth came from Germany and France, which are now importing 36ML (up 14%) and 10ML (up 40%) of Australian wine products, respectively. Norway also played an important role with 3ML of Australian wine shipped to the Scandinavian country, representing a 52% increase from the previous year (see Table 7).

Consumers in the United States meanwhile continue to enjoy Australian wines, purchasing 127ML (down 8%) valued at $400 million (down 7%). Americans are now paying $3.16 per litre for Australian wine (see Table 7) with the main driver of growth being the $2.50-$5 per litre price range, according to Wine Australia. There was also strong growth in the $20-$30 per litre category with at least 90% of shipments in this segment being red wine which is now twice as popular in the US market as it was five years ago (Wine Australia). However, pressures on global supply chain networks in 2021 started to have an impact on shipping capacity to the USA.

Many Australian wine exporters demonstrated their resilience in the face of deteriorating relations with China by successfully diverting their stock to other markets. Accordingly, Hong Kong became a recipient of increased exports in 2021, with the value of this market doubling to a record high of $187 million (up 111%). Hong Kong also paid top dollar for Australian wine products at an average $21.99 per litre (see Table 7). Producers also looked at under-explored Asian markets such as South Korea and Taiwan. The export volume to South Korea jumped by 91% to a new volume of 6ML, whilst the export value soared by 111% to $45 million. In Taiwan, the export volume grew by 34% to 3ML, with this valued at $26 million (up 29%) in 2021 (see Table 7). Wine consumption, especially in South Korea, has been increasing over the past decade and there is unrealised potential in these emerging Asian wine markets. Meantime, exports to Singapore grew slightly with the island nation importing $114 million worth of Australian wines at a premium average price of $16.32 per litre (up 11%).

If exports to mainland China were excluded for the last 12 months, there would have been positive growth in export value by 10% to $1.9 billion, and 8% in volume to 646 million litres (71.8 million cases).

Australia’s exports did experience an overall decline of 10% in 2021, with shipments of products across all price segments affected, apart from those over $100 per litre. Australia’s cheaper wines (below $10 per litre) account for 64% of the exported wine total. The below $10 per litre price segment dopped by 10% to $1.630 billion FOB (see Table 8). The $10-$14.99 category saw the largest decline of 31%, recording a total of $157 million FOB. In contrast, the $100-$199.99 segment increased by 11% to reach a total of $65 million FOB. The largest increase of 52% came from the above $200 price tier which reached a total value of $88 million FOB (see Table 8). With growth in value over the last two years concentrated at the higher price points, this slow shift represents global consumers increasingly becoming aware of premium Australian products.

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