Tough conditions for Australian wine exports as key markets fall

The value of Australian wine exports fell by 7% in the last year to $1.90 billion, driven by a 20% year-on-year decline in exports to the UK, according to Wine Australia’s latest Export Report.

Overall wine exports from Australia declined by 7% in value to $1.90 billion, the report said, with volumes falling 1% to 620 million litres (equivalent to 69 million 9-litre case) in the year to 31 March 2023. This marks a drop of 18% below the 10-year average in value terms ($2.30 billion) and 16% below the 10-year average volume of 736 million litres.

Exports to the UK, which is Australia’s top market by volume, representing a third (33%) of its total exports, and second largest market by value at 19%, drove the declines, Wine Australia manager, market insights Peter Bailey said.

“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,” Bailey said.

The total value of UK exports fell by 20% to $359 million, it said, with volumes also down by 16% to 208 million litres.

The picture from the US was different in that there were also declines in value sales, with exports down 8% to $381 million (taking it to a 20% value share of total export value) although volumes rose by 15% to 146 million litres – representing a rise in bulk shipments, “as global shipping conditions continue to improve”.

The volume growth in the US and Canada had helped to offset the large decline to the UK, with the US now representing nearly a quarter (24%) of Australia’s total export volume.

Bailey argued that the declining demand in traditional markets was being most keenly felt in lower price segments while premium wine was still finding growth. “Consumers purchase wine less frequently but are choosing to spend more on each wine product they purchase,” Bailey said. However, because Australia traditionally exports more lower priced products to its key traditional markets, such as the UK and US, this consumer trend was “disproportionally” affecting Australia and impacting its export performance.

“It’s a tough export environment for Australian wine,” he said.

However, there were bright spots – total shipment volume was “relatively stable” he said, while the strategy to diversify into emerging markets “was starting to bear fruit”.

Southeast Asia in particular grew strongly at both the commercial and premium ends (up 9% overall to $301 million) with key emerging markets including Thailand, Malaysia, Indonesia, Vietnam and Philippines.

The picture from Northeast Asia was less favourable, with declines of 5% to $318 million. North America also fell 5% to $557 million, and European markets were also down by a whopping 17 % to $568 million, due to “tough operating conditions resulting from economic challenges and conflict in the region”, it said.

The top five export destinations by value were:

• US (down 8 % to $381 million. 20 % value share of total export value)
• UK (down 20 % to $359 million. 19 % share of total export value)
• Hong Kong (down 1 % to $182 million. 10 % share of total export value)
• Canada (up 2 % to $174 million. 9 % share of total export value), and
• Singapore (down 20 % to $134 million. 7 % share of total export value).

The top five export destinations by volume were:

• UK (down 16 % to 208 million litres. 33 % share of total export volume)
• US (up 15 % to 146 million litres. 24 % share of total export volume)
• Canada (up 44 % to 73 million litres. 12 % share of total export volume)
• New Zealand (down 16 % to 28 million litres. 4 % share of total export volume), and
• Germany (down 17 % to 28 million litres. 4 % share of total export volume).