The latest Wine Australia Export Report, released today, suggests a relatively stable period of trade for Australian wine exporters overall despite continued declines in both volume and value.
In the 12 months up to March, this decline saw Australian wine exports drop 1% in value to $1.88 billion and 2% in volume to 611 million litres, which is about 58% of all wine produced in Australia.
Despite the relative consistency overall, a closer look at the data reveals some significant market movements.
“While we expect volatility to continue at an individual market level, data from recent quarters suggest that overall declines have stabilised, and a more positive sales trajectory is ahead,” said Peter Bailey, Wine Australia Manager - Market Insights.
"The largest drivers of value growth in the past 12 months were Hong Kong, New Zealand, and the UK, while exports to Canada, the US, Singapore, South Korea, Indonesia, and Malaysia declined.”
“Asia was the largest region by value for Australian wine exports, with a 36% value share. Strong growth in Northeast Asia – driven by Hong Kong – was tempered by a decline in the value of exports to Southeast Asia – driven by Singapore, Indonesia, and Malaysia – during the period.”
The value of the North-East Asia market increased by 29% over the past 12 months to be worth $412 million.
“The vast majority of the growth in Northeast Asia’s value was driven by exports to Hong Kong, which increased by 60% to $290 million, mainly in red wine above $10 per litre FOB,” said Bailey.
Overall, exports priced above $10.00 grew by 7% over the year up to March 2024, making it the most important price bracket by value for Australian exports with a value of $663 million. The next most important price point, worth $486 million, is $2.50-$4.99 bracket, which decreased by 4%. $5.00-$7.49 and $7.50-$9.99 showed significant reductions of 12% and 13% respectively.
“Exports to Japan also grew during the period – up 4% in value to $48 million – mainly driven by exports valued between $2.50 and $4.99 per litre, but also above $10 per litre FOB.”
It is likely that the North East Asian market will present differently in the next Export Report following the lifting of tariffs on Australian wine imports into China at the end of March.
Despite overall Europe declines, the value of the UK market grew 2% in value to $367 million and 10% in volume to 228 million litres. This makes it the current top export market for Australian wine, holding 20% of the market share by value and 37% by volume.
“The increasing value and volume of exports to the UK was likely being driven by an increase in customers opting to drink wine at home rather than in bars and restaurants, to save money during the cost-of-living crisis,” said Bailey.
“Australia has a 24% share of all off-premise wine sales in the UK and is the number one country of origin in the category, so it benefits when consumers move towards this channel away from the on-premise.”
The UK overtook the USA as the previous most important export destination by value in the year up until December. The US market receded 7% by value and 21% by volume in the latest Export Report. Peter Bailey indicates that this drop was anticipated.
“During 2022 and the early part of 2023, unpackaged wine exports to the US surged as shipping conditions improved and Australian producers were able to ship large inventories into market. This trend has now eased, and total exports have declined as a result. Meanwhile, in Canada, the decline is driven by a continued decline in packaged exports, while the growth in unpackaged exports has also eased,” he said.
Chardonnay, the top exported variety, decreased in volume by 10% to be worth 146 million litres, or about 23% of all Australian exports. Shiraz, the second most important export variety, decreased by 4% to a volume of 142 million litres.
Pinot Gris/Grigio, now the fourth most important export category, grew by 20% over the year up until March 2024.
The full Wine Australia Export Report can be accessed here.
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