Wine Australia is hosting a roadshow in North America from May 6 to 13 in light of the “challenging environment” including the introduction of a 10 percent tariff on Australian wine.
Trade and consumer events will be held in Chicago, Toronto, Montreal and Washington DC.
Australian wine previously entered the US tariff-free under the Australia-United States Free Trade Agreement.
“While it is disappointing that the US has imposed tariffs on Australian wine, exporters can be assured there is still demand for our wines in the United States and in more than 100 global markets,” Wine Australia says in a Market Bulletin.
“Australia is currently ranked as the fifth-largest exporter of wine in the world and is internationally recognised for the quality of its wines.
“As other major wine producing countries also face import tariffs in the US, Australian wine is not at a disadvantage to competitors such as France, Italy, Spain and New Zealand.”
Imported wines account for around 30 percent of total wine consumed in the US and Australia is ranked third in imported wines behind Italy and France.
“As the import tariffs apply to all major wine producing countries, Australian wine will not be at a disadvantage to competitors from Europe and other parts of the world.
“Because there are a number of factors to account for – how much of the increased cost importers will pass on to consumers, the effect of any global trade war on foreign exchange rates, and whether consumers will start to switch to domestic wines– it is hard to predict how this will affect Australian wine exports to the US in the short to medium term.”
Wine Australia says the tariff will likely ultimately hurt American consumers by increasing the price of wines they know and enjoy, adding further pressure to the cost of living.
The tariffs come at a time when the US wine market is struggling to move past a surplus inventory that resulted from the Covid-19 pandemic and its aftermath.
According to the US Census Bureau, inventory levels remain elevated as consumption levels have not recovered.
“Total off-premise wine sales declined by four percent in volume in the 12 months to December 2024, and while on-premise sales are slightly more robust, price increases of 20 percent on average and shrinking wine lists and number of outlets means this channel has its own challenges,” Wine Australia says.
“The import tariffs will only add to these pressures.”
In 2024, Australia exported 106 million litres of wine valued at $325 million to the US, making it Australia’s second-largest market by volume and third largest market by value.
Australian wine exports declined by 10 percent in value and 21 percent in volume while the average value of exports increased by 13 percent to $3.06 per litre FOB.
The decline in exports was almost entirely driven by unpackaged wine after a surge in this category of exports in early 2023.
Over 90 percent of the volume of Australian wine shipped to the US was at an FOB value of under A$5 per litre, reflecting that Australia is the second-biggest imported wine category in the US commercial wine segment (retail price of below US$10 per bottle) with a 19 percent volume share.
In comparison, Australian wine is the fifth-biggest import wine category in the premium segment (US$10 or more per bottle) with a five percent share.
The tariffs are likely to have a bigger impact at the commercial end of the market as it is more price sensitive, and the margins are tighter.
In 2024 Australian wine exporters shipped wine to 119 destinations, up from 112 in the previous year.
Excluding the US, Australian wine exports to the rest of the world increased by 45 percent in value to $2.2 billion and in volume by 15 percent to 543 million litres.
This growth was driven predominantly by exports to mainland China growing from $10 million to $907 million.
As a result of growth in exports to mainland China, the Northeast Asian region grew by 181 percent in value to $1.18 billion (a 46 percent total value share).
Southeast Asia declined by 23 percent in value to $210 million, with almost all of these small, emerging markets declining year-on-year.
“This reduction doesn’t reflect a material change in demand, rather some exporters choosing to prioritise a re-stocking of their supply chains throughout mainland China,” Wine Australia says.
“The long-term growth rate in value for the Southeast Asia region was still positive in the last five years.
Exports to Europe declining by four percent to $521 million and represents 20 percent of the total export value.
Within North America, exports to Canada grew by nine percent to $156 million.
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