Australian wine exporters encountered another difficult year in 2022 amid rising inflation, costs and interest rates while its exports to China dropped to a new low, the latest data released by the country’s wine trade body has revealed.
While Australia is still recovering from decoupling with China, the country’s wine exports have yet to bounce back. From January to December, Australian wine exports declined by 4% to AU$1.94 billion and its volume grew just a mere 1% to 623 million liters, according to Wine Australia.
“Notwithstanding, it was another tough year for Australian wine exporters, with rising inflation, business costs and interest rates impacting margins, and it is anticipated this will continue in 2023,” says the wine trade body.
Exports to its top 5 value markets all took a dive except Canada. Its biggest export market the US saw a 3% dip to AU$390 million.
Australian wine exports to the UK declined in value by 18% to AU$373 million. The drop in the UK market, as the Wine Australia Manager, Market Insights Peter Bailey explained is “expected” as Australia experienced two years of elevated shipments as a result of Brexit deadlines and increased demand for wine in the off-trade (supermarkets and bottle shops) during the COVID-19 pandemic when many on-trade businesses were closed.
RECORD LOW EXPORT TO CHINA
Exports to Northeast Asia declined by 10% in value to AU$314 million and 15% in volume to 32 million litres, mainly affected by sluggish performances in its fourth biggest export market by value Hong Kong and neighboring mainland China.
Exports to Hong Kong dived 13% to AU$167 million. This caused its overall exports to China including Hong Kong and Macau to contract 14% to just AU$192 million, below the AU$200 million mark, a new low since China imposed up to 218% anti-dumping tariffs on Australian wines.
Relations between China and Australia are thawing and there are talks of lifting restrictions on wine but no official announcement has been made.
Growth in exports to Japan offset some of this loss, up by 8% to AU$51 million and driven by exports above AU$10 per litre, which reached a calendar year record of AU$13 million. The number of exporters to Japan grew by 23% to 260 in 2022, up from 211 in 2021. While exports to South Korea declined overall, the above AU$10 segment showed strong growth, up 28% to AU$26 million.
GROWTH IN SOUTHEAST ASIA
What’s most encouraging is that growth in the value of exports to Southeast Asia continued through the period with a 16% rise in value to AU$305 million.
Exports to all key Southeast Asian destinations increased, with the exception of Singapore. The main drivers behind this growth were Thailand (up 118% to AU$62 million) and Malaysia (up 78% to AU$61 million).
A decline in the value of exports to its fifth biggest export market by value Singapore, down 20% to AU$132 million, offset some of these gains. Singapore remains the number one destination in Southeast Asia for Australian wine exports but is a trading hub and some of the wine is on-shipped to other Asian markets.