More Australian wine is exported to Europe than to any other continent. In 2018, almost 40 million cases of Australian wine were shipped to Europe compared with 26 million cases to North America and 24 million cases to Asia.
After peaking in 2007, at close to 50 million cases, Australian wine exports declined to around 40 million cases by 2011 and have hovered around that mark since.
Figure 1: Australian wine exports to Europe (million cases)
Source: Wine Australia
Overall, wine consumption in Europe had been steadily declining over many years through to 2014 but since then it has stabilised, with a marginal increase in the consumption of local wines offsetting a marginal decline in the consumption of imported wines (see Figure 2). Results from the International Wine and Spirits Record (IWSR) indicate that the declines have come from Germany and the United Kingdom (the largest consumers in the region, making up half of imported wine consumption). Interestingly, the world’s second biggest wine producer, France, has been one of the fastest growing markets for imported wines in Europe, with consumption growing at an average of 7.8 per cent per year over the past 5 years. The volume, however, has not been enough to offset the declines felt in the region.
Despite the overall decline in imported wine consumption, which also came from a reduction in commercial/value wines (1.2 per cent on 2016), there was growth in the premium and above segment (above US$10 per bottle).
Rabobank’s Wine Quarterly Q1 2019 reported that even with stagnant consumption overall, online wine sales are enjoying sustained growth in all European countries. According to Rabobank, between 2010 and 2017, the total volume of wine sold through e-commerce in western Europe increased by 66 per cent.
Figure 2: Wine consumption in Europe – local v imported wines (million cases)
Just under 70 per cent of Australian wine exported to Europe lands in the United Kingdom (UK), making it not only Australia’s largest market in Europe by volume but also globally, with an export volume of 27.3 million 9L case equivalents in 2018 (see Figure 3). Some 83 per cent of the wine is unpackaged when it leaves Australia, and some of this wine is then re-exported to other European countries, particularly to the Netherlands, Ireland, Germany and the Nordics. Even with these re-exports, the UK itself remains one of Australia’s most important wine markets; according to Wine Intelligence, out of the estimated 29 million UK wine drinkers, 44 per cent drink Australian wine.
The IWSR reported that, in 2017, the market split between on- and off-trade was 15 and 85 per cent respectively. Australia’s performance in the UK off-trade market continues to be positive, growing by two per cent in value to GBP1.22 billion in the year ended December 2018. This growth in value is driven by growth in premium wine, with Australian wines priced above GBP6 per bottle increasing at a rate of 1.6 per cent, in line with the total market growth of 1.7 per cent (IRI Worldwide).
Laura Jewell MW, Wine Australia’s Regional General Manager EMEA, said ‘there continues to be a lack of certainty around the timing, outcomes, implications and impacts on trade from Brexit. The Wine & Spirit Trade Association has launched a campaign lobbying the government to avoid the ‘no deal’ option and is advising companies to prepare for the worst-case scenario. Consequently, we have seen an increase in Australian exports, particularly in unpackaged wine, as companies and brand owners seek to ensure that stock will be available across Europe.
In the lead up to the excise increase on 1 February 2019, which increased the tax from GBP2.16 to GBP2.23, sales of Australian wine in the off-trade had outperformed the total market. Furthermore, IRI Worldwide reported that the big Australian brand names have generally been enjoying positive growth, with 6 of the top 15 brands in the UK coming from Australia.
Figure 3: Australian wine exports to Europe by top 10 countries in 2018 (million cases)
Source: Wine Australia
In 2018, the volume of Australian wine exports to Germany totalled 3.9 million 9L case equivalents, representing 10 per cent of exports to Europe. Over the past twelve months, Australian wine exports have declined in both volume and value. Impacting this result was the reduction in packaged wine exports under A$5.00 free on board.
Competition is fierce from other European wine exporters like Italy and Spain. As reported in Wine Australia’s Market Bulletin on 3 October 2018, Changing German wine market offers opportunities Germany is the world’s largest imported wine market by volume. Out of total wine consumption in 2017, according to the IWSR, 51 per cent was imported, highlighting the strength of domestically produced wine as well. Australian wine ranked at sixth place in 2017 in terms of volume of imported wine consumed and held 2.2 per cent market share. Market share has remained relatively stable over the past five years.
Figure 4: Extract from Wine Australia’s Market Explorer ‘Which markets consume the most imported wine?’ based on Volume in 2017
Wine Australia reported in Market Bulletin Skål! Nordic markets celebrate the diversity of Australian wine (25 September 2018) that Denmark, Norway, Sweden and Finland make up 11 per cent of Australian wine exports to Europe by value and 8 per cent in volume.
When it comes to wine consumption, all four markets consume only imported wine with Denmark consuming the highest proportion of Australian wine at 12.4 per cent, compared to 9.3 per cent overall. Australian wine sits in fifth place behind Italian, French, Spanish and Chilean wine in 2017 according to the IWSR.
Figure 5: Extract from Wine Australia’s Market Explorer ‘Which markets consume the most imported wine?’ based on Volume in 2017 in Europe.
Wine Australia will once again have a strong presence at ProWein, Europe’s most important wine event, attracting more than 60,000 visitors to Germany from across the world, including major buyers from Europe, USA, Canada and Asia.
From 26 wineries in 2008 to 83 producers in 2019, the Wine Australia stand at ProWein has grown significantly over the last decade. The stand is in the middle of the Australian area, creating a vibrant message for the category and attracting a high calibre of visitors.
The stand features producer booths, an educational and events area, a free-pour tasting zone and expansive meeting space. On the stand, guests can also participate in regional tastings, master classes and networking happy hours.
More information about consumption, wine drinking population and Australian wine exports is available through Wine Australia’s Market Explorer on the Market Insights Tools page.