Australian wine exports decreased by 26 per cent in value to $2.05 billion and 13 per cent in volume to 628 million litres in the year ended March 2022, according to Wine Australia’s latest Export Report released today.
The year-on-year figures continue to reflect the impact of the imposition of high deposit tariffs on bottled Australian wine imported to mainland China in November 2020 and of the exceptionally tough market conditions globally.
In the 12 months ended March 2022, exports to mainland China fell by 97 per cent in value to $24 million and by 93 per cent in volume to 5.6 million litres.
Exports excluding mainland China reported a 3 per cent decline in volume, but a 7 per cent increase in value to $2.03 billion – the highest value since 2010 (see Figure 1).
Figure 1: Exports to all destinations, excluding mainland China (A$ billion FOB)
Key drivers of the value growth were premium price points in markets including Singapore, Hong Kong, Thailand, United States of America (US), United Kingdom (UK), South Korea, Taiwan, and Japan indicating that demand for premium Australian wines is on the rise and that market intensification and diversification is having an impact (see Figure 2). The value of exports above $10 per litre FOB grew by 47 per cent, when excluding mainland China; value grew to 58 destinations (out of 89 receiving exports in this price segment) during the year.
Figure 2: Value growth above $10 per litre by market, excluding mainland China (A$ million FOB)
The decline in volume, excluding mainland China, was most significant to Australia’s two biggest markets of the UK and the US. To a lesser extent, volumes also declined to the Netherlands, Canada, Germany, Finland and Sweden. Exports to most of these markets surged during 2020 due to COVID-19 stockpiling for the off-premise, but volumes eased as pandemic restrictions relaxed.
Aside from the drop in shipments to mainland China, the drop in volume can also be attributed to low inventory at the start of the financial year after three small vintages in 2018, 2019 and 2020 and delays in getting the record 2021 vintage onto ships due to the ongoing global freight crisis. Reports are that the shipping issues are a large bottleneck to getting wine into international markets, with a common amendment to shipment permits being a change of departure date to a later date. Shipments are often being delayed to the next month. Hillebrand reports that this is a common occurrence due to the ongoing vessel schedule disruptions. Shipping industry experts to do not expect these issues to resolve until the second half of 2022 at the earliest.
Price segments
Exports declined in all price segments. The loss was largest between $50.00 and $99.99 per litre, driven by mainland China. This was closely followed by $2.50 and $7.49 per litre, largely driven by declines in exports to the US, the UK and Canada. Exports with an average value of $10 per litre and above declined by 39 per cent to $626 million. This was driven by mainland China, with exports at $10 or more per litre falling by $591 million compared with the previous year.
Figure 3: Exports by price segment (million AUD FOB)
Destinations
In the 12 months ended March 2022, Australian exporters shipped wine to 112 markets, compared with 111 the year before, and 71 experienced value growth. The most significant growth came from exports to Southeast Asia, up 63 per cent to $281 million, but also from other Asian markets such as India (up 134 per cent to $15 million), and the Middle East (up 48 per cent to $18 million). This growth was offset by a decline in exports to Northeast Asia, down 70 per cent to $337 million, North America, down 6 per cent to $588 million, and Europe, down 4 per cent to $683 million.
Figure 4: Value of exports by destination region
Europe
The UK is the number one destination for Australian wine exports in value and volume. In the 12 months ended March 2022, exports to the UK decreased by 2 per cent in value to $449 million and 6 per cent in volume to 246 million litres (27 million 9-litre case equivalents).
A decline of 9 per cent in export value below $5 per litre FOB, to $357 million, outweighed growth within the above $5 FOB per litre segment of 36 per cent to $92 million. The strongest rates of growth came at $10 to $19.99 FOB per litre, up 51 per cent to $21 million. It is the highest value in this segment in this 12-month period since 2009 and the number of exporters in this price point increased from 236 in 2021 to 248 in 2022.
Excluding the UK, exports to Europe declined by 6 per cent in value to $233 million and 7 per cent in volume to 104 million litres. European markets to record value growth included Denmark, up 13 per cent to $40 million, Norway, up 2 per cent to $8 million, and Poland, up 71 per cent to $7 million.
North America
The US is the second ranked destination for Australian wine exports by value and volume. In the 12 months ended March 2022, exports to the US declined 4 per cent in value to $416 million and 5 per cent in volume to 127 million litres (14 million 9-litre case equivalents).
About three-quarters of the value shipped to the US was at below $5 FOB per litre, which declined by 10 per cent to $325 million. There was growth in the price points at $5 FOB or more per litre with a strong increase recorded at $10 FOB or more per litre, up 37 per cent to $53 million – the highest value in this price point in a March Export Report since 2009. There were 27 additional exporters in this price segment compared to the previous year, taking the number to 233, and there are more than 100 additional exporters to the US in this price point compared to a decade ago.
Canada is the third biggest destination for Australian wine by volume and fourth by value. In the 12 months ended March 2022, Australian wine exports to Canada decreased by 13 per cent in value to $171 million and 7 per cent in volume to 51 million litres (5.6 million 9-litre case equivalents). A decline in exports below $10 FOB per litre more than offset growth at $10 FOB or more per litre. Exports at $10 FOB or more per litre increased by 8 per cent to $26 million, the highest for this time period since 2011.
Asia
The most significant growth in overall exports in the 12 months ended March 2022 came from Australian wine exports to Southeast Asia, which grew 63 per cent to $281 million. Exports to Northeast Asia declined 70 per cent to $337 million, driven largely by the decline to mainland China.
In Northeast Asia, Hong Kong is by far the largest destination in the region by value, and exports increased by 24 per cent to $184 million. The value of exports to Japan rebounded strongly in the 12 months to March 2022, up 15 per cent to $51 million with strong growth at $2.50 to $4.99 FOB per litre and at $10 FOB or more per litre. Exports to South Korea and Taiwan increased by similar rates (almost 30 per cent) with the $10 FOB or more per litre price segment driving growth to each destination. The price segment accounts almost half the value of exports to South Korea and almost 60 per cent to Taiwan.
Among Southeast Asian markets, the growth driver was Singapore, almost doubling in value to $168 million. Other strong performances were to India, up 134 per cent to $15 million, Thailand, up 85 per cent to a record $38 million, Philippines, up 74 per cent to $12 million, and Vietnam, up 82 per cent to $7 million.
Further export data is available through the Interactive Insights Export Dashboard.
