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Aussie Wine Exports: The Pain Continues

By Wednesday 4 May 2022No Comments

Australian wine exports decreased by 26 percent in value to $2.05 billion and 13 percent in volume to 628 million litres in the year ended March 2022, according to Wine Australia’s latest Export Report released today.

The year-on-year figures continue to reflect the impact of the imposition of high deposit tariffs on bottled Australian wine imported to mainland China in November 2020 and of the tough market conditions globally.

Exports excluding mainland China declined by three percent in volume but increased by seven percent in value to $2.03 billion – the highest value since 2010.

Key drivers of the value growth were in markets including Singapore, Hong Kong, Thailand, South Korea, Taiwan and Japan indicating that market intensification and diversification is having an impact.

In the 12 months ended March 2022, Australian exporters shipped wine to 112 markets and 71 experienced value growth.

Wine Australia General Manager Corporate Affairs and Regulation Rachel Triggs said while the increase in value excluding mainland China was strong at $129 million, it did not come close to offsetting the decline in value to mainland China (a loss of $844 million).

“Over the past 15 months, Australian wine exporters have had to navigate through an exceptionally challenging operating environment, largely led by the imposition of high deposit tariffs on bottled Australian wine imported to mainland China, the continuing impact of the global freight crisis, and a counter-swing in some markets after Covid-19 related stockpiling in 2020,” she says.

“What the latest Export Report shows is that efforts to diversify and intensify markets is slowly reaping rewards for Australian wine exporters. With the easing of Covid-19 restrictions, we’re seeing the on-premise trade open up in established markets and that has had an impact as demand stabilises.”

The decline in total wine export volume, excluding mainland China, was most significant to Australia’s two biggest markets of the United Kingdom and the United States of America. Exports to these markets surged during 2020 due to Covid-19 stockpiling for the off-premise trade, but demand has since eased as pandemic restrictions relaxed.

“Low inventory after three small consecutive vintages and delays in getting the record 2021 vintage onto ships from the ongoing global freight crisis also contributed to the decline in volume of wine exports. Shipping industry experts to do not expect these issues to resolve until the second half of 2022 at the earliest,” Ms Triggs says.

Australian wine exports declined in all price segments in the year ended March 2022, driven largely by the decline to mainland China and exports valued under $10 FOB per litre to the US and UK.

“However, when excluding mainland China, exports within the premium segment above $10 FOB per litre grew by 47 percent, with 58 out of 89 destinations receiving exports in this price segment reporting growth during the year. These destinations included Singapore, Hong Kong, Thailand, the US, the UK, South Korea and Taiwan,” Ms Triggs says.

In the 12 months to the end of March 2022, the top five markets by value were:

  • UK, down 2 percent to $449 million,
  • US, down 4 percent to $416 million,
  • Hong Kong, up 24 percent to $184 million,
  • Canada, down 13 percent to $171 million, and
  • Singapore, up 96 percent to $168 million.

The top five markets by volume are:

  • UK, down 6 percent to 246 million litres,
  • US, down 5 percent to 127 million litres,
  • Canada, down 7 percent to 51 million litres,
  • Germany, down 8 percent to 34 million litres, and
  • New Zealand, up 6 percent to 33 million litres.

Europe

The UK is the number one destination for Australian wine exports in value and volume.

In the 12 months ended March 2022, exports to the UK decreased by two percent in value to $449 million and six per cent in volume to 246 million litres (27 million nine-litre case equivalents).

A decline of nine percent in export value below $5 per litre FOB, to $357 million, outweighed growth within the above $5 FOB per litre segment of 36 percent to $92 million. The strongest rates of growth came at $10 to $19.99 FOB per litre, up 51 percent to $21 million. It is the highest value in this segment in this 12-month period since 2009 and the number of exporters in this price point increased from 236 in 2021 to 248 in 2022.

Excluding the UK, exports to Europe declined by six percent in value to $233 million and seven percent in volume to 104 million litres. European markets to record value growth included Denmark, up 13 percent to $40 million; Norway, up two percent to $8 million; and Poland, up 71 percent to $7 million.

North America

The US is the second-ranked destination for Australian wine exports by value and volume. In the 12 months ended March 2022, exports to the US declined four percent in value to $416 million and five percent in volume to 127 million litres (14 million nine-litre case equivalents).

About three-quarters of the value shipped to the US was at below $5 FOB per litre, which declined by 10 percent to $325 million. There was growth in the price points at $5 FOB or more per litre with a strong increase recorded at $10 FOB or more per litre, up 37 percent to $53 million – the highest value in this price point in a March Export Report since 2009. There were 27 additional exporters in this price segment compared to the previous year, taking the number to 233, and there are more than 100 additional exporters to the US in this price point compared to a decade ago.

Canada is the third-biggest destination for Australian wine by volume and fourth by value. In the 12 months ended March 2022, Australian wine exports to Canada decreased by 13 percent in value to $171 million and seven percent in volume to 51 million litres (5.6 million nine-litre case equivalents). A decline in exports below $10 FOB per litre more than offset growth at $10 FOB or more per litre. Exports at $10 FOB or more per litre increased by eight percent to $26 million, the highest for this time period since 2011.

Asia

The most significant growth in overall exports in the 12 months ended March 2022 came from Australian wine exports to Southeast Asia, which grew 63 percent to $281 million. Exports to Northeast Asia declined 70 percent to $337 million, driven largely by the decline to mainland China.

Hong Kong is the largest destination in the region by value, and exports increased by 24 percent to $184 million. Australian wine exports to Singapore almost doubled in value to $168 million. The value of exports to Japan rebounded strongly in the 12 months to March 2022, up 15 percent to $51 million with strong growth at $2.50 to $4.99 FOB per litre and at $10 FOB or more per litre.

Exports to South Korea and Taiwan increased by similar rates (almost 30 percent to $45 million and $28 million respectively) with the $10 FOB or more per litre price segment driving growth to each destination. The price segment accounts almost half the value of exports to South Korea and almost 60 percent to Taiwan. Other strong performances were to India, up 134 percent to $15 million, Thailand, up 85 percent to a record $38 million, Philippines, up 74 percent to $12 million, and Vietnam, up 82 percent to $7 million.

 

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