Europe and North America drive down Aussie wine exports

Chinese tariffs on Australian wine have crippled the country’s wine producers for three years, but in 2023 it was Europe and North America which drove the reduction in value exports.

Australian wine exports declined by 2% in value and 3% in volume in the 12 months to December 2023, Wine Australia has reported.

Value exports are now worth AU$1.90 billion, and 607 million litres of wine were exported from Australia over the 12 month period.

The results are still well below long-term averages, despite being an improvement on those reported in September 2023.

Europe and North America drove the reduction in Australia’s export value over the year, declining by 7% and 12% respectively.

In Europe, exports to the top 15 markets declined in value. Peter Bailey, Wine Australia’s manager for market insights, explained that higher inflation rates compared to North America and Asia have caused the decline, compounded by supply chain issues. This includes the UK, which is Australia’s biggest export market by volume. But “pleasingly,” Bailey said, “Australia’s exports to the UK grew in volume for the first time since mid-2021”.

Inflation may have been a factor in reducing exports to Europe, but value exports were also down in North America, which is less impacted by these pressures.

Both the US and Canada contributed to North America’s decline in value. Bailey said: “In 2023, packaged shipments to these markets continued their decline and unpackaged shipments, which were growing strongly, have started to ease off.”

Europe and North America’s respective shares of the export value have dropped to 29% and 27%.

However, Asia might be a bright spot for Australian wine exports.

China, which was previously Australia’s biggest exporter, is no longer a major market. The country has imposed crippling tariffs on Australian wines since 2020, wiping AU$1 billion off exports in 2021 alone.

Officials from both countries are thought to be negotiating a review of the tariffs, and there are hopes that a solution could be reached in a matter of months.

Outside of China, Hong Kong and Singapore are showing promise. Value exports to Hong Kong were up 74% in 2023 to AU$290 million, accounting for a 15% share of the total.

Singapore, which now accounts for a 7% share of the total export value, saw a 1% rise in value to AU$133 million.

Bailey called the two countries “key trading hubs in the Asian region”. He said: “Hong Kong and Singapore were stand out destinations for Australian wine in Asia, driving the growth of value to the region. Further, the number of exporters to Hong Kong also grew – up 138 export businesses to a total of 531 in 2023.”

Some of the wines are shipped on to other markets. With China’s tariffs acting as a blockade, this may explain the significant jump in value exports to Hong Kong in the last year.

The top five markets by value were:

US (down 7% to $364 million. 19% share of total export value)
UK (down 3% to $361 million. 19% share of total export value)
Hong Kong (up 74% to $290 million. 15% share of total export value)
Canada (down 24% to $143 million. 8% share of total export value), and
Singapore (up 1% to $133 million. 7% share of total export value).

The top five markets by volume were:

UK (up 2% to 220 million litres. 36% share of total export volume)
US (down 5% to 134 million litres. 22% share of total export volume)
Canada (up 7% to 73 million litres. 12% share of total export volume)
New Zealand (down 2% to 29 million litres. 5% share of total export volume), and
Germany (down 7% to 27 million litres. 4% share of total export volume).