The average value of Australian wines exported reached its highest level of the past 15 years, but its total value saw a slight dip of 1% for the 12 months ended in June this year, due to social distancing measures enforced globally to contain coronavirus pandemic.
In 2019–2020, the average value of Australian wine exports grew to AU$3.89 per litre free on board (FOB), the highest level since 2004–05. However, the total exports decreased by 1% in value to AU$2.84 billion and 9% in volume to 730 million litres, according to data released by Wine Australia.
“The advent of the Covid-19 pandemic has resulted in unprecedented disruption to wine markets around the world with the closure of restaurants, cafes and bars,” says Andreas Clark, CEO of Wine Australia.
The country enjoyed upward growth in the first two quarters of 2019-2020, but since the start of 2020 as Covid spreads from its biggest market China to elsewhere, on-trade wine sales suffered.
“While the first two quarters of 2019–20 showed increases in exports, in the third quarter ending March 2020, exports declined 7% in value on the comparable quarter in the previous year, while the fourth quarter was slightly stronger with a decline in exports of 4% in value,” he added.
He cautioned that there remained “considerable uncertainty” surrounding the extent, duration and impact of the Covid-19 pandemic in health and economic terms. However, there were some clear trends emerging in key markets in relation to wine sales.
“The biggest impact has been on how consumers have purchased wine, with the shutdown of the on-premise channel [cafés, restaurants and hotels] and a shift to purchasing more wine online. In the off-trade channel [retail liquor sales], there has been growth across all price points, with the trend to premium and fine wine continuing however, the trend for declining commercial/value sales has reversed, with people gravitating to known brands and everyday rather than occasion wines.” he explained.
Although, there’s a 9% volume decline, Clark noted that it’s primarily driven by smaller yields from 2020 vintage instead of softening demand.
In China, the country’s most valuable wine market, exports increased 0.7% in value to AU$1.1 billion and decreased by 17% in volume to 121 million, mainly due to Covid impacts and premiumization of wines.
Australia still remains the country’s biggest wine supplier and takes up 37% of market share according to data released by Global Trade Atlas, ahead of France’s 27% and Chile’s 13%.
Though figures in China seem to be plateauing, in markets like Europe and Southeast Asia, Australian wine reported outstanding performance.
The value shipped to Europe (AU$615 million) was the highest since 2011–12, while shipments to South East Asia (AU$181 million) represent a financial-year record. The United Kingdom, Germany and Scandinavia drove growth to Europe, while Singapore and Indonesia were the key drivers behind the growth to South East Asia. Exports to Singapore were up by 13% to AU$98 million.
While in the US, which has become the country most severely impacted by Covid in terms of infection numbers and deaths, closure of restaurants and bars aided retail sales’ growth, says the trade association.
Covid-19 and restrictions on hospitality venues and the growth in retail sales appear to have assisted Australian wine sales with the value of exports stabilizing in the third quarter before increasing by 14% in the fourth quarter.