China drives wine export surge

Australian wine exports increased in value by 17 percent to $2.2 billion in 2023-24, the highest level since the 12 months ended September 2021, and volume remained relatively steady at 619 million litres, according to Wine Australia’s Export Report.

The growth in value was due to a surge in exports to mainland China in the last three months of the financial year, as Australian wine restocked supply pipelines following the removal of the duties on Australian bottled wine in late March 2024.

Wine Australia Manager, Market Insights, Peter Bailey said that the rise in exports to mainland China is still a small fraction of the historical peaks achieved to the market.

“The surge in exports to mainland China towards the end of the financial year saw volume rise from one million litres to 33 million litres and value grow by $392 million to $400 million compared to last financial year,” Mr Bailey said.

“While the figures are very positive, they represent the restocking of Australian wine in the pipeline of a major market after a long absence and do not necessarily equate to retail sales.

“It will take some time before there is a clearer picture of how Chinese consumers are responding to the increased availability of Australian wine in-market.

“Consumption of both domestic and imported wines in mainland China is less than a third of what it was six years ago and thus it is very unlikely that Australian wine exports will return to those previous peaks in the short to medium term.”

Exports of Australian wine to mainland China over time.

There were 574 companies exporting to mainland China in 2023-24, up from 115 in 2022-23.

Prior to the imposition of duties, there were more than 2,000 companies exporting to mainland China. In 2023-24, the top 10 exporters by value to the market accounted for three-quarters of the total value and 39 percent of the volume of exports.

Exports of wine priced at $20 or more per litre FOB, which roughly translates to 300 RMB per bottle retail, were the main driver of the value growth to mainland China, accounting for 84 percent of the growth.

“The growth in value has seen mainland China return to the top export market by value,” Mr Bailey said.

“However, the volume of exports at 33 million litres, is relatively small, equating to less than five percent of Australia’s winegrape harvest in 2024 and so is unlikely to make a significant impact on the current oversupply of red winegrapes, particularly in the big volume-producing warm inland regions.”

Exports to the rest of the world (excluding mainland China) declined by four percent ($68 million) to $1.8 billion and volume decreased by five percent (33 million litres) to 587 million litres.

This is the lowest volume exported to the rest of the world in a financial year since 2003-04. The decline in volume was most significant in unpackaged exports priced under $1.50 per litre to the United States (US) and Canada (down a combined 20 million litres).

“Global trading conditions remain very challenging with wine consumption continuing to fall in many markets around the world due to moderation trends and cost of living pressures. There are also enduring problems in shipping, with a shortage of ships globally and freight and charter rates on the rise,” Mr Bailey said.

Australia is not the only country negatively impacted by these factors.

Wine exports have also declined from other major wine producing countries. For example, in the 12 months ended April 2024, the volume of wine exported from Spain fell by two percent, France by seven percent, Chile by seven percent, South Africa by 12 percent, Germany by five percent and New Zealand by 14 percent.

Among varieties exported from Australia, still red wine was the main beneficiary of the growth in exports to mainland China, with total volume of red wine up three percent to 330 million litres and value up 27 percent to $1.5 billion compared to 2022-23.

Cabernet Sauvignon grew in value by 41 percent to $469 million and volume by 12 percent to 70 million litres, with the US also contributing to the increase in exports of this variety.

For white wine, Chardonnay remained the number one variety and while volumes declined by six percent to 158 million litres, value was up marginally to $307 million.

The top performer for still white wine was Pinot Gris/Grigio, up 15 percent in volume to 51 million litres and 16 percent in value to $101 million, a record financial year result for the variety. The US was the main driver of the growth in Pinot Gris/Grigio exports.

The top five destinations by value were: