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​Beverage News from India & the World

Tough conditions persist for Australian wine exports

4/27/2023

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Wine Australia Exports
Emerging markets in Southeast Asia showed strong growth for Australian wine exports but were unable to offset declining value to traditional markets, where tough conditions continued in the year to the end of March 2023, according to Wine Australia’s latest Export Report released today.
Australian wine exports overall declined by 7 per cent in value to $1.90 billion and 1 per cent in volume to 620 million litres (69 million 9-litre case equivalents) in the year to 31 March 2023. This is 18 per cent below the 10-year average value of $2.30 billion and 16 per cent below the 10-year average volume of 736 million litres.
Wine Australia Manager, Market Insights Peter Bailey said the year-on-year decline in value was largely driven by a decrease in exports to 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,” Mr Bailey said.
“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.
“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.
“Australian exporters shipped wine to more individual destinations around the world. But it is also pleasing to see that the regional share of export value has remained even; with around a one-third share of Australia’s export value going each to Asia, North America and Europe."
The export results are representative of the incredibly tough conditions for Australian wine globally. The below long-term average performance comes at a time when economic hardship and increased competition from other beverages are impacting traditional markets for Australian wine.
“In traditional markets for Australian wine, the decline in the demand for wine is being felt the most in lower price segments while premium wine is still finding growth, as consumers purchase wine less frequently but are choosing to spend more on each wine product they purchase,” Mr Bailey said.
“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.”
Australian wine exports in all price segments below $10 per litre FOB declined in value in the year ended March 2023. The biggest loss was in exports valued between $2.50 to $4.99 per litre FOB, which were mostly 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.
In the year to the end of March 2023, Australia shipped wine to 118 destinations – up from 112 in the same period in 2022. The strongest region for growth in Australian wine exports was to Southeast Asia, up 9 per cent to $301 million. Offsetting this growth was a decline in exports to North America, down 5 per cent to $557 million, and to Europe, down 17 per cent to $568 million. European markets are experiencing tough operating conditions resulting from economic challenges and conflict in the region. Northeast Asia also declined, down 5 per cent to $318 million.
The top five export destinations by value were:
  • US (down 8 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 1 per cent to $182 million. 10 per cent share of total export value)
  • Canada (up 2 per cent to $174 million. 9 per cent share of total export value), and
  • Singapore (down 20 per cent to $134 million. 7 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. 4 per cent share of total export volume), and
  • Germany (down 17 per cent to 28 million litres. 4 per cent share of total export volume).
​(Excerpt from a release) 
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