Australian wine exports declined by four percent in value to $2.77 billion in the 12 months to March 2021, compared with the previous corresponding period.
This was driven principally by the toll taken by high Chinese tariffs, according to Wine Australia’s latest Export Report released today.
Export volume declined by one percent to 724 million litres (80 million nine-litre case equivalents) while the average price per litre for wine exports declined by three percent to $3.82 free on board (FOB).
The value and volume of Australian wine exports will continue to fall, keeping in mind that these latest figures include a lot of wine already exported to China. Now exports to that market have dried up.
The million-dollar question is how far exports will fall – some say we could bottom-out at about $2 billion.
Wine Australia CEO Andreas Clark said the decline in exports was due principally to a steep decline in exports to mainland China as well as the cumulative effects of three consecutive lower vintages in Australia leading to less volume available to export.
“Notwithstanding the impact of China’s tariffs, we were still looking at a potential downturn in exports over this period simply due to the supply situation,” Mr Clark said.
Figure 1: Australian winegrape crush and export volume over time.
Mr Clark said exports to China for the December 2020 to March 2021 period were just $12 million compared to $325 million in the comparable period a year ago.
“As the tariffs apply to product in bottles under two litres, the decline in exports to China was mainly in bottled exports,” he said.
“This, along with increased unpackaged shipments to other markets such as the UK, resulted in a drop in the share of bottled exports in the export mix, from 46 percent of total volume in the 12 months ended March 2020 to 41 percent in the same period in 2021. This led to the decline in the overall average value of exports.”
Figure 2: Value of exports to mainland China in the past 12 months ($million FOB).
Mr Clark said on a more positive note there had been significant growth in exports to Europe (including the UK), which was up 23 percent to $710 million, the highest value in a decade.
“There was also growth to North America, up five percent to $628 million, and Oceania, up seven percent to $112 million.”
Mr Clark said if exports to mainland China were excluded for the past 12 months there had been positive growth in export value with a 10 percent growth to $1.9 billion and eight percent in volume to 646 million litres (71.8 million cases).
Figure 3: Value and volume of Australian exports (excluding mainland China) over time.
The top five markets by value were:
- Mainland China, down 24 percent to $869 million
- United Kingdom (UK), up 33 percent to $461 million
- United States of America (USA), up four percent to $432 million
- Canada, up nine percent to $195 million, and
- Hong Kong, up 55 percent to $148 million.
The top five destinations by volume were:
- UK, up 21 percent to 264 million litres
- USA, down one percent to 135 million litres
- Mainland China, down 40 percent to 78 million litres
- Canada, up four percent to 54 million litres, and
- Germany, up 22 percent to 36 million litres.
The recent strong growth in exports to the UK continued in the 12 months ended March 2021. Value increased by 33 percent to $461 million and volume by 21 percent to 264 million litres (29.3 million 9-litre case equivalents). This extended the UK’s lead as the biggest destination for Australian wine exports by volume and saw it jump over the USA into second place by value. The average value received for Australian wine in the UK increased by 10 percent to $1.75 per litre, the highest level in a decade.
United States of America
Despite a volume decline of one percent, the value of exports to the USA increased by four percent in the 12 months ended March 2021 to $432 million. The average value increased by five percent to $3.21 per litre.
The main driver of growth was between $2.50-$4.99 per litre. Within this segment, the growth was relatively evenly split between red and white still wine, with red up 10 percent to $145 million and white up 11 percent to $136 million.
There was also very strong growth at $20.00-$29.99 per litre. More than 90 percent of shipments in this segment were red wine and have doubled in the past five years.
In the past 12 months, the value of wine exported in glass bottles decreased by eight percent to $2.2 billion while volume decreased by 10 percent to 299 million litres (33 million 9-litre case equivalents). This translated to a two percent increase in the average value of bottled exports to $7.26 per litre FOB.
Unpackaged wine exports increased by 18 percent in value to $577 million and increased eight percent in volume to 418 million litres (46 million 9-litre case equivalents). The average price of unpackaged wine increased by nine percent to $1.38 per litre FOB.
Photograph: The Barossa Cellar (Mike Smith).
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