According to Wine Australia's Export Report released this week, strong growth to emerging markets is not enough to offset declining exports to established markets for Australian wine exporters.

Unable to resist harsh economic conditions globally, Australian wine exports fell by seven per cent in value to $1.90 billion and one per cent in volume to 620 million litres to March 31, 2023.

The falls represent an 18 per cent drop in value and a 16 per cent drop in volume compared to 10-year averages of $2.30 billion and 736 million litres, respectively.

Peter Bailey, Manager of Market Insights at Wine Australia, said the falling value of wine exports is mainly due to reduced demand from the United Kingdom (UK).

"The UK is still experiencing the decline that we've previously reported, which is the result of elevated shipments over the past two years due to pre-Brexit demand and COVID-19 induced changes in consumer preferences.

"In comparison to value, total shipment volume was relatively stable – with the large decline to the UK being outweighed by volume growth to the United States (US) and Canada, particularly in unpackaged wine, as global shipping conditions continue to improve," he said.

Not all bad news, Bailey pointed out the positive changes outlined in Wine Australia's Export report, particularly relating to emerging markets in Southeast Asia.

"A positive in the report is that Australia's diversification into emerging markets is starting to bear fruit, which is beneficial for longer-term stability and growth. Southeast Asia grew strongly at both the commercial and premium ends of the price spectrum, and to key emerging markets including Thailand, Malaysia, Indonesia, Vietnam and Philippines," he said.

Premium wine continues to be a popular choice globally, with the decline in demand being felt more in the lower priced segments as consumers increasingly choose to buy less, but better quality.

"This change disproportionally affects Australia as a large share of exports to traditional markets such as the UK and US are currently in lower priced products, and this therefore impacts export performance. It's a tough export environment for Australian wine," said Bailey.

Australian wine exports in all price segments below $10 per litre free on board (FOB) declined in value in the year ended March 2023. The most significant loss was in exports valued between $2.50 to $4.99 per litre FOB, mainly glass bottle exports shipped to the US, UK, and New Zealand.

Exports above $10 per litre FOB were stable during the year, staying at $621 million in value and 24 million litres in volume.

The top five export destinations by value were:

  • US (down eight per cent to $381 million. 20 per cent value share of total export value)
  • UK (down 20 per cent to $359 million. 19 per cent share of total export value)
  • Hong Kong (down one per cent to $182 million. 10 per cent share of total export value)
  • Canada (up two per cent to $174 million. Nine per cent share of total export value), and
  • Singapore (down 20 per cent to $134 million. Seven per cent share of total export value).

The top five export destinations by volume were:

  • UK (down 16 per cent to 208 million litres. 33 per cent share of total export volume)
  • US (up 15 per cent to 146 million litres. 24 per cent share of total export volume)
  • Canada (up 44 per cent to 73 million litres. 12 per cent share of total export volume)
  • New Zealand (down 16 per cent to 28 million litres. Four per cent share of total export volume), and
  • Germany (down 17 per cent to 28 million litres. Four per cent share of total export volume).

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