Wine Australia report reveals 7 per cent fall in wine exports

Southeast Asia has emerged as the fastest growing market for Australian wine, but a slump in traditional export markets remains a serious challenge.

Australian wine exports fell 7 per cent in the 12 months to March.

Southeast Asia has emerged as the fastest growing region for Australian wine exports, but a slump in sales to traditional markets continues to pose a serious challenge for local producers.

The total value of Australian wine exports fell 7 per cent in the 12 months to March to $1.9bn according to Wine Australia’s Australian Wine Export Report, released on Thursday.

While exports to Southeast Asia were up 9 per cent to $301m, sales to Europe slid 17 per cent to $568m due to challenging economic conditions across the continent and ongoing conflict in the region.

Sales to the UK have continued to slow after two years of elevated sales during Covid-19, with exports down 20 per cent to $358.9m.

It was overtaken by the US last year as the most lucrative destination for Australian wine exporters.

While talks about a potential loosening of Chinese tariffs on Australian wine fuel hope for an export revival, China has slipped to 24th on the list of Australia’s largest wine export markets, generating just $10.8m in sales.

That’s down from $1.17bn and 135 million litres in 2019, and puts it behind Macao, Philippines and the UAE.

Meanwhile exports to North America fell 5 per cent to $557m in the 12 months to March, and sales to Northeast Asia were also lower, falling 5 per cent to $318m.

Wine Australia market insights manager Peter Bailey said that while many of Australia’s traditional export markets were struggling through challenging economic conditions, the figures showed local producers had found some success in new markets.

“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,” he said.

“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 one third share of Australia’s export value going each to Asia, North America and Europe.”

The slump in packaged wine sales to the UK and Europe drove a 1 per cent fall in overall export volumes to 620 million litres.

However on a brighter note, there’s been a surge in unpackaged bulk wine exports, with the Wine Australia’s report suggesting shipping rates are returning to pre-pandemic levels.

“In comparison to value, total shipment volume was relatively stable – with the large decline to the UK being outweighed by volume growth to the US and Canada, particularly in unpackaged wine, as global shipping conditions continue to improve,” Mr Bailey said.

The US remains the top export destination for Australian wine, followed by the UK, Hong Kong, Canada and Singapore, where exports plunged 20 per cent to $134m.

Mr Bailey said that in addition to the challenging economic environment facing many of Australia’s traditional export markets, competition from other drinks, and wellness trends, were also affecting demand from consumers.

“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,” he 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.”

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

Australian wine producers were plunged into crisis in 2020 after Beijing slapped tariffs of up to 218 per cent on Australian bottled wine.

However in recent weeks Chinese officials have confirmed they are willing to work with the Albanese government to resolve the trade disputes.

Australia has also temporarily suspended World Trade Organisation action over China’s tariffs on barley exports, in a move that could pave the way to the removal of sanctions on other Australian goods including wine.