The US has overtaken the UK as our top wine export destination

Australian wine exports to the UK have fallen as the fallout from Brexit and the pandemic continue, while China is now a minnow in terms of our overseas wine trade.

Wine exports have slipped by 4 per cent, as sales into China fade away.

The US has edged ahead as the most lucrative destination for Australian wine exports, moving into first place as exports to the UK plunge, while the once hugely dominant Chinese market now imports less wine than the Philippines.

The total value of Australian wine exports for the 2022 calendar year slipped 4 per cent to $1.94bn according to Wine Australia’s Australian Wine Export Report, released on Tuesday.

This was well off the high of $2.82bn posted in 2018, while volumes increased by 1 per cent last year to 623 million litres.

The crushing tariffs imposed on Australian wine exports to China from late 2020 have relegated that market to our 23rd largest, with exports falling another 58 per cent by value to $12m, down from $1.17bn and 135 million litres in 2019.

Exports to the traditionally strong UK market fell 18 per cent to $373m as momentum from Brexit deadlines, which pulled forward some wine sales, rolled off and wine buyers’ behaviour changed in the post-lockdown period.

Wine Australia said exports to the UK had been volatile for the past six years.

“There have been several peaks and troughs during this time before the Covid-19 pandemic also influenced shipment levels in 2020,’’ the report says.

With Australian wine performing better in bottle shops in the UK as opposed to restaurants, the reopening after Covid lockdowns eased put a dent in sales.

“Australian wine holds the number one position in the UK off-trade – a category that benefited greatly from the closure of the on-trade during the Covid-19 pandemic, and as the on-trade reopened in 2021 and 2022, there was a counter-swing in the demand for Australian wine as Australia’s share in the on-trade is substantially lower,’’ the report says.

Sales were also skewed by increased demand to get product in-country before the end of the Brexit transition period at the end of 2020, and “sales growth slowed in 2021 and finally reversed in 2022’’.

The Australian Government and wine industry organisations have been trying to bolster exports to the US in a bid to fill the hole left by the exit of the China market.

Wine Australia’s regional general manager overseeing the UK market Laura Jewell said hospitality had been struggling in general.

“The hospitality sector in the UK was particularly hard hit during 2022, with more businesses closing due to rising costs, staff shortages, low consumer confidence and strikes affecting travel and delivery services,’’ she said.

“These also impacted the Christmas trade as the rail strikes meant that many corporate events were cancelled, and those that did go ahead were with reduced numbers.’’

Exports to Europe excluding the UK also fell, down 12 per cent to $213m.

“European markets are experiencing tough operating conditions resulting from economic challenges, shipping delays and conflict in the region,’’ Wine Australia said.

In North America exports to the US fell 3 per cent to $390m, while volume increased 13 per cent to 140 million litres, forcing the average price per litre 14 per cent lower to $2.78.

Canada imported $188m worth of wine, up 14 per cent.

The average value per litre for exports to the US dropped as shipping challenges eased and Australian wine companies were able to export more bulk wine, driving unpackaged exports up 67 per cent to 76 million litres.

The number of exporters sending product to the US hit a 15 year high of 241, up from 222 the previous year.

The Australian Government and wine industry organisations have been trying to bolster exports to the US in a bid to fill the hole left by the exit of the China market.

Exports to Southeast Asia were up 16 per cent to $305m, with all countries in the region buying more Australian wine apart from Singapore, where sales dropped 20 per cent to $132m.

“Singapore remains the number one destination in Southeast Asia for Australian wine exports but is a trading hub and some of the wine is on-shipped to other Asian markets,’’ Wine Australia said.

“As with all trading hubs globally, export levels can vary to these types of markets depending on changes in business practices of shipping directly to the selling destination or vice versa.’’

Originally published as The US has overtaken the UK as our top wine export destination