Asia is a vital region for Australian wine exports. In 2021, Asia accounted for 31 per cent of the value and 9 per cent of the volume of exports.
The significantly higher value share highlights the relatively high average value of Australian exports to the region. In 2021, the average value of bottled wine exports to Asia was $13.86 per litre, more than double the overall average of $6.48 per litre.
Hong Kong has been a top market for Australian wine exports by value for some time. In the 12 months ended December 2021, exports grew by 45 per cent to $192 million and the average value of Australian wine exports was $22.37 per litre.
However, a number of other markets within the region are growing, but they do not always make it into the export result headlines. It is these markets that this Market Bulletin examine.
Excluding mainland China and Hong Kong, Australian exports to Asia grew by 49 per cent in value to $402 million and 18 per cent in volume to 42 million litres in 2021. Red wine exports accounted for 84 per cent of the value. This is critical as the majority of Australia’s wine exports to mainland China prior to the introduction of the significant tariffs in November 2020 was premium red wine.
The top 10 Asian destinations excluding mainland China and Hong Kong in 2021 are shown in figure 1 below.
Figure 1: Exports to key Asian destinations (top 10 excluding mainland China and Hong Kong)
| Destination | Value (A$M) | Volume (million litres) | Average value (A$ per litre) | Value growth in 2021 | Value growth (2016 to 2021) |
| Singapore | $166 | 8.0 | $21 | 108% | 19% |
| Japan | $47 | 13.1 | $4 | 6% | 1% |
| South Korea | $47 | 6.3 | $7 | 74% | 27% |
| Malaysia | $34 | 2.4 | $14 | -21% | -9% |
| Taiwan | $31 | 3.1 | $10 | 65% | 13% |
| Thailand | $28 | 3.1 | $9 | 31% | 9% |
| Indonesia | $14 | 0.8 | $19 | 11% | 27% |
| India | $12 | 2.5 | $5 | 81% | 28% |
| Philippines | $12 | 2.0 | $6 | 34% | 10% |
| Vietnam | $5 | 0.7 | $8 | 60% | -5% |
Singapore was by far the biggest destination from the above for Australian wine exports by value with exports of $166 million in 2021. It is also the fourth largest export destination overall for Australian wine. Japan and South Korea are the next two largest at $47 million each and they are ranked at eight and nine respectively for all destinations by value.
With the exception of Malaysia, all the other Asian destinations listed above recorded value growth in 2021 – almost all with double-digit growth. Singapore was the stand-out; the value of exports to Singapore more than doubled in 2021 while the 5-year compound annual growth rate (CAGR) was 19 per cent per annum. It is important to note that Singapore is a major trading hub within Asia due to its proximity and access to other destinations in the region. With wine tax regulations and accessibility less stringent than in other nearby countries, traders can take advantage of the hundreds of bonded warehouses that can store wine with excise taxes and GST suspended until they’re removed from the warehouse for sale or consumption.
After growing by 74 per cent in 2021, South Korea is on the verge of over-taking Japan in the value of Australian wine exports. The average value of exports to South Korea at $7.47 per litre is more than double of that to Japan. The growth to South Korea has been exceptional over the past five years, with a CAGR of 27 per cent. The Korea–Australia Free Trade Agreement (KAFTA), which entered into force in December 2014, provided a stimulus to growth opportunities in South Korea.
According to the Global Compass 2020 published by Wine Intelligence, South Korea is now the second most attractive wine market in the world, a significant up-shift from the tenth position it held in 2019. One of the main factors for the high ranking of South Korea has been the growth in wine consumption over the past decade. From 2015 to 2020, still wine consumption in South Korea grew at compound annual growth rate of 8 per cent (after growing by 6 per cent per annum between 2010 and 2015). At 0.9 litres per head, there is significant upside in wine consumption in South Korea. According to Wine Intelligence, there were 10.7 million semi-annual drinkers of imported wine in 2021, with 17 per cent of them drinking Australian wine, up from 10 per cent in 2017. Chilean wine leads with 51 per cent. The Wine Intelligence research shows Australian wines are most strongly associated with being sustainable and food-friendly amongst South Korean wine drinkers.
Japan is classified as a more mature wine market than South Korea with still wine per capita consumption at 2.4 litres per head in 2020. At US$3.5 billion, the wine market in Japan is more than three times the size of South Korea’s. One major factor inhibiting the growth of the wine market in Japan is its ageing population. It has one of the longest life expectancies in the world but also one of the lowest birth-rates. According to the Statistics Bureau of Japan, nearly three in 10 people are now more than 65 years old, and over-65s outnumber 20–35-year-olds by a factor of approximately 2 to 1. Wine Intelligence reports that around two thirds of regular wine drinkers in Japan are aged 55 or older, compared with just 10 per cent of regular wine drinkers in the age group from legal drinking age to 34. The over-55s tend to be less experimental with their approach to wine, are more price conscious, and also have the lowest category involvement. Younger Japanese wine consumers are more adventurous and high spending. The younger consumers are also more open to consuming Australian wine in comparison to the older cohort.
Australia’s growth to Japan in the past five years has been subdued at 1 per cent per annum. However, it was stronger in 2021 at 6 per cent. Australia also has a free trade agreement with Japan, which came into effect in April 2015, with bottled, sparkling and bulk wine (in containers of more than 150 litres) tariff-free from April 2021. Australia was the sixth ranked imported wine category in Japan in 2020 with a 4 per cent market share behind France (30 per cent), Chile (17 per cent), Italy (13 per cent), Spain (6 per cent) and the United States of America (6 per cent). Wine Intelligence research shows that among Japanese regular wine drinkers, Australian wine outperforms each of these competitors in being food friendly, value for money, authentic and sustainable. These are areas in which the Australian wine category can differentiate itself from the competitive set in Japan. While red wine is the dominant wine of choice in Japan, sparkling wine is very popular in Japan to the extent the country is the world’s seventh biggest sparkling wine market. This may present as an opportunity for Australian wine as in 2021, only 9 per cent of the value of Australian wine exports to Japan was sparkling wine.
Two other markets in Asia that stand-out are Taiwan and Thailand. Both are similar in terms of the size of Australia’s exports (each import around $30 million of Australian wine), have relatively high average values ($9+ per litre) and have recorded very strong growth rates in 2021 and consistent growth over the past five years.
India attracts a lot of attention due to its enormous population (1.38 billion plus the world’s largest youth population), growing economy and strong trade and cultural links to Australia. However, currently there are only about 2 to 3 million wine consumers in India and the 150 per cent tariff on wine imports and other regulations hinders the extent of the growth opportunity in wine in the country. According to IWSR, Australia held a 37 per cent value share of the imported wine category in India in 2020, well ahead of Italy (14 per cent), France (13 per cent) and Chile (12 per cent). Negotiations for a trade agreement with India are in progress.