Australian wine exports declined by 10 percent in value to $2.56 billion in the 12 months to 30 June 2021 – with the China market in freefall because of the tariffs.
China (including Hong Kong and Macau) dropped 33 percent to $793 million.
This market was worth $1.2 billion less than a year ago. We have now lost more than $400 million from it.
Australian wine exports reached a record $3.1 billion in the 12 months to 31 October 2020. We have dropped $540 million since then.
The release of Wine Australia’s latest Export Report today shows overall export volume declined by five percent to 695 million litres (77 million 9-litre case equivalents),
The average price per litre for wine exports declined by five percent to $3.69 free on board (FOB).
Exports to the United States, where Wine Australia spent a lot of money from the $50 Million Package in recent years, were down seven percent to $400 million.
Wine Australia general manager Corporate Affairs and Regulation Rachel Triggs said that apart from the downturn in China caused by the tariffs, a key factor in the decline in exports was the “cumulative effects of three consecutive lower vintages in 2018, 2019 and 2020”.
“Which meant there was less wine available to export,” she said.
In some positive news, exports to the UK were at their highest level in a decade with value up 23 percent to $472 million and volume up 16 percent to 269 million (30 million 9-litre case equivalents), making the UK the biggest destination for exports by volume and the second by value.
Exports increased to the UK, Singapore, South Korea, Malaysia, Taiwan and Hong Kong by a combined $240 million.
“But they did not offset the decline in exports to mainland China,” Ms Triggs said.
“However, excluding mainland China, exports increased by 12 percent in value to $1.96 billion and increased by six percent in volume to 643 million litres.”
Figure 1: Exports over time (Billion AUD FOB) – mainland China versus Rest of the World.
Ms Triggs said the decline in overall average value was due to a drop in the share of bottled exports; from 45 percent of the share of volume in 2019-20 to 39 percent in 2020-21.
“This again was an impact of the mainland China market as it had predominantly been a bottled wine market, and also the growth in exports to the UK which was dominated by unpackaged exports which were bottled in-market,” she said.
The most significant growth came in exports to Europe (including UK), up 18 percent to $724 million, the highest value since 2010-11.
There was also growth to South East Asia, up 14 percent to $207 million and Oceania, up four percent to $107 million.
The growth to these destinations was offset by the decline to Northeast Asia (which includes mainland China), down 29 percent to $909 million, as well as to North America down five percent to $586 million.
The top five markets by value were:
- Mainland China, down 45 percent to $606 million;
- United Kingdom (UK), up 23 percent to $472 million;
- United States (US), down seven percent to $400 million;
- Hong Kong, up 111 percent to $187 million; and
- Canada, down one percent to $184 million.
The top five destinations by volume were:
- UK, up 16 percent to 269 million litres;
- US, down eight percent to 127 million litres;
- Mainland China, down 57 percent to 52 million litres;
- Canada, down five percent to 51 million litres; and
- Germany, up 14 percent to 36 million litres.
The growth in exports to the UK was much stronger in the first half of the year due to the surge in wine sales in the off-trade sector spurred by the Covid-19 related shutdown of the on-trade as well as some exporters sending wine into the market ahead of Brexit. Exports to the UK increased by 40 percent to $255 million in the first half of the financial year and by eight percent to $218 million in the second half. While growth in the second half was at a much lower rate, the growth in Quarter 4 (up 10 percent) was stronger than Quarter 3 (up six percent).
Since the imposition of import tariffs, exports of Australian wine to mainland China have dropped dramatically. Total exports for Quarters 3 and 4 in 2020-21 were $13 million compared to $419 million in 2019-20, prior to the imposition of tariffs.
United States of America
Exports to the US declined seven percent in value to $400 million and by eight percent in volume to 127 million litres (14 million 9-litre case equivalents). The average value increased by one percent to $3.13 per litre, the highest for a financial year since 2008-09. Most of the decline in export value came in Quarter 4, with value falling by $31 million compared to the same quarter in 2019-20. The decline is the result of several factors. Firstly, there was a substantial increase in exports in Quarter 4 in 2019-20, which was a reflection of the Covid-19-related surge in off-trade sales in the US when the on-trade sector was shut down. This year, with the on-trade re-opening and the off-trade returning to more normal activity, there was counter-swing. As a result, exports declined. Secondly, some exporters had less volume available to export and this was most visible in Quarter 4 as stock levels were unable to support growth.
In 2020-21, the value of wine exported in glass bottles decreased by 15 percent to $1.96 billion and volume decreased by 17 percent to 271 million litres (30 million 9-litre case equivalents). This translated to a three percent increase in the average value of bottled exports to $7.26 per litre.
Unpackaged wine exports increased by 11 percent in value to $577 million and increased five percent in volume to 417 million litres (46 million 9-litre case equivalents). The average price of unpackaged wine increased by six percent to $1.38 per litre.
• See Wine Australia’s Export Dashboard for more details.