Tough year for Australian wine exports as value falls
Australian wine exports fell by 4% by value during 2022 to AU$1.94 billion, with UK sales down 18% – although volume rises of bulk wine to the US and Canada helped push volume growth by 1%.
Wine Australia’s latest Export Report called it “another tough year for Australian wine exporters, with rising inflation, business costs and interest rates impacting margins”, and said it was likely that this would continue in 2023.
Four of Australia’s top five markets by value saw exports fall, with the US, which accounts for 20% of the total value share, down 3% to $390 million, and the UK (19% of total export value) down 18% to $373 million on volumes down 11%. The average value of exports in the UK also declined, by 8% to $1.72 per litre FOB.
Wine Australia noted that exports to the UK have been “unpredictable” since Brexit was announced in 2016, and there have been several peaks and troughs since then. It pointed to the uplift during Covid due to Australia’s top position as the UK off-trade, and the subsequent “counter-swing” in demand when the on-trade reopened – but also noted that Australia had seen a smaller reduction of 4%, compared to the total off-trade market decline of 8% (IRI Worldwide).
Both Hong Kong and Singapore also saw value declines, of 13% and 20% respectively (to $167 million and $132 million respectively) however Canada, which accounts for 10% of the total export value, rose 14% to $188 million, with volumes up 46% to 68 million litres, or 11% of total export volumes. The US, which is the second largest volume market with 23% share of the export volumes, saw volumes growth outperform value, rising 13% to 140 million litres. The number of exporters to the US was also at its highest since 2008, up by 5% over the year to 303.
Meanwhile Australian wine exports to Europe declined by 16 per cent to $586 million, led by markets including Germany (down 2% in value to $38 million), the Netherlands (down 19 per cent to $29 million) and Denmark (down 13 per cent to $37 million).
There were increased shipments to Southeast Asia, up 16% value to $305 million, driven by Thailand and Malaysia, although all markets in the region increased except for its biggest market, the trading hub of Singapore, which fell 20% to $132 million.
Meanwhile value sales in Northeast Asia were also down by 10% to $314 million on volumes down 15% to 32 million litres, led by China and Hong Kong, although 8% value growth in Japan helped offset the declines. The market reached $51 million, largely driven by exports of wines above $10 per litre, while the number of exporters also grew by 23% to 260 in 2022.
One bright spot was the improvement to global shipping problems that have dogged the industry since 2021, which Wine Australia manager, market insights Peter Bailey said had led to the increase in unpackaged wine exports.
“Shipments of 2021 and 2022 vintage wines had been largely delayed due to the shipping challenges, particularly unpackaged shipments. As these conditions eased in the latter half of 2022 in some regions, Australian wine producers were finally able to ship their products to customers overseas,” he explained, although he noted that delays are still being reported along certain trade routes.
This increased share of unpackaged wine shipments was a contributing factor in the decline of the total value of exports though, as unpackaged wine is shipped at a lower average free-on-board value because packaging costs are excluded.
This rise in bulk wine drove growth in both the US and Canada, with volume by 67 % to 76 million litres in the US and up by 8% to 44 million litres in Canada. Packaged exports on the premium end of the price spectrum also grew in both markets, with exports to Canada valued at $5 per litre and above growing by 13% to $114 million, while exports to the US above $10 per litre grew by 4% to $50 million.