Australian wine sales overseas take a hit

Exports of Australian wine are down this year, with the 5 per cent drop blamed on global coronavirus lockdowns and weaker consumer confidence.

Rough patch: Treasury Wine Estates chief executive Michael Clarke says these are “unusual and very challenging times”. Picture: Carla Gottgens/Bloomberg

EXPORT sales of Australian wine have taken a $40 million hit so far this year due to global lockdowns to slow the spread of coronavirus.

And reversing a promising trend, international sales of cheaper Australian wine have increased at the expensive of the nation’s premium wine category. The noticeable shift signals a global consumer trend of trading down to cheaper products following job losses, lower household incomes and weaker consumer confidence.

New Wine Australia figures show exports are down by 5 per cent so far this year to $730 million compared to the four months to April last year.

Australia’s three biggest wine export markets – China, the US and UK, which account for two thirds of all export sales – have all shown signs of slowing down to varying degrees.

Exports to China fell 14 per cent from January to April, compared to the same time last year, largely due to lower consumption over Chinese New Year, traditionally a time of feverish buying.

In the US, the value of Australian wine exports was down 3 per cent for the 12 months to April, at $416 million. But the positive news is that Americans appear to be drinking – or at least buying – Australian wine like never before since their lockdown.

Between March 2 and April 26, wine sales increased by 31 per cent compared to a year ago, and the trend appears to be continuing.

Exports to the UK were down 7 per cent in the year to April. to $356 million. However between January and April alone, the value of exports grew 3 per cent compared to the same period last year.

Most of Australia’s biggest wine exporters have signalled they have taken a coronavirus-induced hit. Treasury Wine Estates said stock depletions and shipments in China have been significantly affected due to a nationwide shutdown.

“In the short term these are unusual and very challenging times with consumers trading down … It is unclear how trading will play out,” TWE chief executive Michael Clarke said.

However Australian Grape and Wine chief executive Tony Battaglene said demand appeared to be picking up again in China and any fallout from diplomatic issues around beef and barley showed no signs of ensnaring the wine sector.

“But we’re always nervous,” Mr Battaglene said. “We hope that relationship can be repaired.”

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