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Wine Exports Crash To $2.27 Billion

By Tuesday 19 October 2021No Comments

Australian wine exports decreased by 24 percent in value to $2.27 billion and 17 percent in volume to 638 million litres in the year ended September 2021.

This is according to Wine Australia’s latest Export Report released today.

Average value also declined by nine percent to $3.56 per litre free on board (FOB).

The decline was attributed to a significant decrease in exports to mainland China, following the imposition of significant import tariffs on Australian wine, and less wine being available to export due to low inventory levels resulting from small vintages between 2018-2020.

While the 2021 Australian vintage crush was a record size, it is expected to take some time for the impact on export volumes to be realised with the majority of the 2021 vintage wines expected to be shipped over the next two quarters.

Wine Australia general manager Corporate Affairs and Regulation, Rachel Triggs says the overall declines reflect the challenges the Australian wine sector has faced over the past 12 months.

“The decline of exports that we’re seeing now was amplified by the fact that there was a large increase in exports in September and October 2020, driven by exporters shipping wine into mainland China ahead of tariffs being imposed, into the UK ahead of the Brexit transition conclusion, and a surge in demand for Australian wine in the UK and US during the Covid-19 pandemic,” Ms Triggs says.

“This front loading of exports led to the majority of 2020 vintage wines being shipped earlier than usual resulting in the lowest inventory levels in 10 years coming into the 2021 calendar year.”

Figure: 1 Share of vintage exported by quarter/year

Australian wine exports excluding mainland China increased by nine percent in value to $1.99 billion and decreased by five percent in volume to 618 million litres.

Reports suggest that worldwide shipping delays, linked to Covid-19 restrictions, have also impacted exports within the 12 months ended September 2021.

International logistics company Hillebrand recently reported shipping lines around the world are lacking capacity and there are major delays at ports, leading to worst-ever schedule reliability when combined with current record levels of ocean freight.

Australian wine was exported to 113 markets in the year ended September 2021. Several destinations recorded strong value growth in wine exports, including the UK, Hong Kong, Singapore, South Korea, Denmark, Thailand and Taiwan.

“Over the past 18 months, there has been a significant increase in exports to the UK, which has led to the market solidifying its place as Australia’s number one destination by volume and it has now overtaken mainland China as the number one destination by value,” Ms Triggs says.

Figure 2: Value of exports to the UK by month

“Australian wine exporters are continuing to diversify their business models and ship to a broad range of markets.

“For example, in this report there was an increase in the number of exporters to the US; 269 exporters shipped wine to the market, which is the highest number of exporters since the Global Financial Crisis in 2009.”

Exports decreased in all price segments except for the most premium – above $200 per litre.

Although exports above $10 per litre declined by 27 percent overall, owing to decreasing exports to mainland China, of the 88 markets that receive wines in this price segment 54 experienced growth including Hong Kong, Singapore, Thailand, the UK, South Korea, Taiwan, and the United States of America (US).

Furthermore, exports to the US with an average value above $10 per litre increased by 16 percent in value to $43 million, most prominently in the $20 to $29.99 price segment.

“The growth in the above $10 per litre segment is a positive step as this price segment is key to ensuring Australian wine’s continued success in the US market,” Ms Triggs says.

“The premium price segments are driving growth of the broader wine category in the US.”

The top five markets by value were:

  • UK, up seven percent to $460 million.
  • US, down 11 percent to $393 million.
  • Mainland China, down 77 per cent to $274 million.
  • Hong Kong, up 135 percent to $207 million, and
  • Canada, down 12 percent to $173 million.

The top five markets by volume were:

  • UK, down two percent to 251 million litres.
  • US, down 12 percent to 123 million litres.
  • Canada, down 13 percent to 49 million litres.
  • Germany, down four percent to 33 million litres, and
  • New Zealand, down 13 percent to 28 million litres.

The most significant growth in export value came from shipments to Southeast Asia, up 43 percent to $255 million, followed by Europe (including the UK) up four percent to $703 million.

This growth was offset by declining exports to Northeast Asia, down 56 percent to $598 million, and North America, down 11 percent to $567 million.

United Kingdom
Australian wine exports to the UK increased by seven percent in value to $460 million and decreased by two percent in volume to 251 million litres (28 million 9-litre case equivalents). Average value increased by nine per ent to $1.83 per litre, the highest average value since mid-2011. In the past 12 months, exports in almost all price segments to the UK have continued to grow, with exports at an average value over $5 per litre enjoying 35 percent growth in value. The growth in premium wine has meant that the UK has moved from the seventh largest destination of exports above $10 per litre to fifth in the past year.

United States of America
Australian wine exports to the US declined by 11 percent in value to $393 million and 12 percent in volume to 123 million litres (14 million 9-litre case equivalents). Average value increased by two percent to $3.18 per litre. Australian wine exports to the US experienced a boost in the second half of 2020 due to the Covid-19-related surge in off-premise trade sales, where most Australian wine is sold, when the on-premise trade sector was shut down. This year, with the on-trade re-opening and the off-trade subsiding to a more normal level of activity, there was a counter-swing and exports declined overall.

Mainland China
Since the imposition of import tariffs in November 2020, exports of Australian wine to mainland China have dropped dramatically. The value of exports in the 12 months to September 2021 were down 77 percent to $274 million. The number of exporters shipping wine to mainland China has also dropped, from 2,241 in the year ended September 2020 to 750 in the year ended September 2021.

Photo by OSG Containers on Unsplash

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