Wine Australia reports 10 per cent fall in wine exports in 2022-23

A slump in cheap wine sales to the US and UK has driven a 10 per cent drop in wine exports as local producers eagerly await a trade breakthrough with China.

A slump in cheap wine sales to the US and UK has driven a 10 per cent drop in Australian wine exports as local producers face ongoing uncertainty around a potential reopening of the Chinese market.

The latest figures from Wine Australia show that Australian wine exports fell to $1.87bn in the 12 months to June, or 1 per cent by volume, to 621 million litres.

The UK and the US remained the two largest export destinations, with $364 million and $359 million worth of sales, but those figures were down 14 per cent and 18 per cent on the previous year.

Overall, lower priced wine was hardest hit, with sales in the $2.50 to $4.99 per litre range down 20 per cent to $484 million.

Wine Australia market insights manager Peter Bailey said exports to the UK had continued to decline following two years of elevated shipments during Covid-19, while the fall in sales to the US reflected a broader consumer trend away from the lower priced category.

“Wine consumption in mature markets is in decline, driven by decreases in the commercial price segments,” he said.

“This is impacting Australia’s export performance, especially in the US, as Australia is very exposed to the price segments in decline.

“Globally, consumers are cutting back on alcohol spending as prices rise for food and other necessities but are choosing to drink less often rather than trade down price segments.”

Hong Kong was the only market in Australia’s top 13 export destinations to report an increase in sales in 2022-23, up 29 per cent to $220 million, rising to become the country’s third largest export market.

Exports across Asia were mixed however, with sales to Singapore down 24 per cent to $128 million, while Thailand, Philippines and Vietnam all emerged as growing markets for Australians producers.

Taylors Wines general manager Clinton Taylor said Malaysia and Thailand had emerged as growing markets for the Clare Valley winemaker, which had also looked closer to home following the Chinese tariffs introduced in 2020.

“They’ve been good markets for us - it hasn't recouped what we were sending to China but certainly those two markets have helped us fill a bit of the void,” he said.

“We’re roughly 70 per cent domestic sales and we’ve looked to consolidate domestically as well ... and growing the premium side of the business. But economically it is challenging times.”

Taylors Wines general manager Clinton Taylor and export supervisor Kaye Oliver at their winery in the Clare Valley. Picture: Naomi Jellicoe

Overall, national export volumes were relatively stable in 2022-23, due to an 11 per cent increase in unpackaged wine shipments, particularly to Canada.

“The growth in unpackaged shipments comes as the shipping challenges of the past couple years have eased, allowing Australian exporters to catch up and ease pressure on inventory,” Mr Bailey said.

According to market research firm IWSR, the volume of wine consumption globally declined by 3 per cent in 2022.

The premium category bucked the trend with growth of 2 per cent last year, albeit a slower growth rates than recent years due to economic and inflationary pressures.

While talks about a potential loosening of Chinese tariffs on Australian wine continue, China has slipped to 27th on the list of Australia’s wine export markets, generating just $8.1m in sales in 2022-23.

That’s down from $1.2bn and 135 million litres in 2019.

The tariffs, put in place by Chinese authorities in 2020, have hit Australian winemakers hard and slashed the total demand for grapes in the Australian market.

While the wine industry is hopeful a resolution over the trade dispute is nearing, it’s widely expected to following negotiations over barley tariffs, which Chinese authorities are currently reviewing.

Earlier this month Beijing asked for an extra month to decide whether to scrap its tariffs on Australian barley - a decision that was seen as another setback for wine exporters awaiting the return of what was once the industry’s dominant export market.