Australia’s total wine exports in the year ended on September 30 contracted 11% in value to AU$2.01 billion but the country’s wine trade association is sanguine about its future as it is seeing “the tail end of the decline” in exports to mainland China, Wine Australia said in its latest export report.
While the decline is reflective of the tough market conditions over the past two years – including over 218% anti-dumping tariffs imposed by China on Australian wine imported to mainland China, the impact of the global freight challenges, and the aftermath of changing consumer habits during the COVID-19 pandemic – the figures also reflect that value is starting to stabilize.
Wine Australia Manager, Market Insights Peter Bailey said that the results were mixed, with the increases recorded in some markets offset by declines in others.
“As a moving annual total result, the Export Report can demonstrate the performance of Australia’s exports and highlight some growing trends. In this report, we’re seeing the tail end of the decline in exports to mainland China having an impact on the total export figures; this is expected to wash out of the figures by the end of 2022,” Bailey said.
“When mainland China is excluded from the data, wine exports to the rest of the world held steady in value, declining by 0.2% to AU$1.99 billion and increasing by 1% in volume to 622 million litres.” he added.
However, exports still saw sharp decline in northeast Asia led by mainland China and Hong Kong. Exports to the region dropped by 46% in value AU$321 million and by 31% in volume to 35 million litres. The main contributor to this decline was exports to mainland China (down 92% to AU$21 million) and exports to Hong Kong (down 21% to AU$163 million). Exports to Hong Kong are returning to a more normal level after an increase in shipments to the market in 2021, it explains.
Offsetting some of the declines were exports to Japan and Taiwan, which rose by 18% and 13% respectively. Exports to South Korea dropped by 5% in value to AU$43 million, mainly caused by lower priced wine exports. Exports valued below AU$7.50 per litre FOB were down 44%, while exports above $7.50 per litre increased by 30%.
Encouragingly, its exports to Southeast Asia increased by 15% in value to AU$291 million and 39% in volume to 24 million litres. Several markets increased in value, including Thailand (up 95% to AU$53 million) and Malaysia (up 55% to AU$59 million). This growth was slightly offset by a decline in exports to Singapore, dropping 16% to AU$132 million; shipments to Singapore are also normalizing after an elevated level of shipments in 2021 and 2022.
“Exports to the North America and Southeast Asia regions are showing growth. In particular, strong growth was recorded in exports to the US, Canada, Malaysia and Thailand,” says Bailey.
“Pleasingly, the growth trend in the US and Canada was driven by both ends of the price spectrum; premium wine exports continued to grow and unpackaged commercial exports increased, as shipments of the record 2021 vintage accelerated following a slower than usual start due to global shipping pressures.”
Exports to the US increased by 5% in value to AU$412 million and 14% in volume to 139 million litres, making it the biggest export market for Australia by value.
Following the US, exports to the UK decreased by 14% in value to AU$395 million and 12% in volume to 222 million litres.
Looking ahead, he warns, “However, while total exports look to be stabilizing, the wine sector can continue to expect market fluctuations, as rising inflation and interest rates may put pressure on margins and curtail consumer spending in key markets. On a positive note, over the past few months, the Australian Dollar has depreciated against the US Dollar, which assists Australian wineries to be more competitive in the US.”
