In the 12 months to 30 September 2022, the value of Australian wine exports declined by 11 per cent to $2.01 billion1 and declined in volume by 1 per cent to 627 million litres (69.7 million 9-litre case equivalents). This translated to a 10 per cent decline in the average value to $3.20 per litre Free on Board (FOB)2.
The decline in exports to mainland China was the key driver behind the drop in overall exports; of the $257 million loss in export value during the year, the loss of exports to mainland China made up $253 million. Excluding mainland China, exports to the rest of the world were stable in value, declining by 0.2 per cent to $1.99 billion and increasing by 1 per cent in volume to 622 million litres. The steadiness of the value of exports to the rest of the world is a result of declines in exports to the United Kingdom, Hong Kong, and Singapore offsetting strong growth to markets including the United States, Canada, Malaysia, and Thailand.
The operating environment for Australian wine exporters has been unprecedentedly challenging due to the significant decline in exports to mainland China, the ongoing impact of the pandemic – including severe shipping delays and increased freight costs – and rising inflation, business costs and interest rates.
While total exports look to be stabilising, 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 market.
Destinations
In the 12 months to September 2022, Australian wine exporters shipped to 118 destinations globally, up from 111 the previous year. As illustrated in Figure 1, the strongest growth came from North America, up 6 per cent to $604 million, and Southeast Asia (up 15 per cent to $291 million). However, the large decline to Northeast Asia (down 46 per cent to $321 million, driven by mainland China) and to Europe (down 12 per cent to $621 million, driven by the UK’s return to more normal shipping levels) outweighed the growth to other regions.
Figure 1: Export value growth/decline by region ($ million FOB)
The top five markets by value were:
- US (up 5 per cent to $412 million. 21 per cent share of total export value)
- UK (down 14 per cent to $395 million. 20 per cent share of total export value)
- Canada (up 10 per cent to $190 million. 10 per cent share of total export value)
- Hong Kong (down 21 per cent to $163 million. 8 per cent share of total export value), and
- Singapore (down 16 per cent to $132 million. 7 per cent share of total export value).
The top five markets by volume were:
- UK (down 12 per cent to 222 million litres. 36 per cent share of total export volume)
- US (up 14 per cent to 139 million litres. 22 per cent share of total export volume)
- Canada (up 26 per cent to 62 million litres. 10 per cent share of total export volume)
- New Zealand (up 14 per cent to 32 million litres. 5 per cent share of total export volume), and
- Germany (down 7 per cent to 31 million litres. 5 per cent share of total export volume).
- North America
United States
In the 12 months to September 2022, exports to the United States increased by 5 per cent in value to $412 million and 14 per cent in volume to 139 million litres (15.5 million 9-litre case equivalents). The average value declined by 8 per cent to $2.96 per litre FOB. Figure 2 below shows the acceleration of volume and the slight weakening in value in the last quarter.
Figure 2: Volume and value of exports to the United States
There are several drivers of the latest moving annual total figures. Firstly, the volume of unpackaged wine shipped to the United States increased by 53 per cent to 68 million litres during the period. The substantial size of this increase is because the Australian 2021 vintage was the largest on record and the shipments of this vintage had been delayed due to the ongoing global shipment challenges. In the past few months, shipments of this vintage have intensified. The average value of unpackaged wine shipments to the US declined by 14 per cent to $1.36 per litre, as volume has increased more than value. However, the US still has the highest average value for unpackaged wine shipments of the top ten unpackaged wine destination markets.
Secondly, packaged wine declined by 1 per cent in value to $319 million and 9 per cent in volume to 71 million litres. As volume declined more than value, the average value of packaged wine increased by 9 per cent $4.47 per litre FOB. Driving this increase in average value is the decline of packaged commercial wines (mainly the $2.50 to $4.99 price segment in Figure 3) and an increase in exports above $7.50 per litre, up 32 per cent to $71 million.
Figure 3: Value of exports to the United States by price segment ($ million FOB)
The number of exporters to the US is at the highest level since 2008 and of the exporters to the US that ship wine at a value of $10 or more per litre FOB, 75 per cent experienced growth demonstrating that green shoots continue in the market for premium Australian wine.
Canada
In the 12 months to September 2022, wine exports to Canada increased by 10 per cent in value to $190 million and 26 per cent in volume 62 million litres. Average value declined by 13 per cent to $3.08 per litre FOB. As seen in Figure 4, volume and value have both been on upward trends since the start of 2022, following a steady decline in 2021.
Figure 4: Volume and value of exports to Canada
The largest driver of the increase in volume was growth in unpackaged wine shipments. The volume of unpackaged shipments increased by 44 per cent to 36 million litres. However, this increase in volume did come at a 25 per cent decrease in average value to $0.94 per litre.
The increase in total value of exports to Canada was driven by packaged shipments, especially at the premium end. The value of packaged shipments increased by 11 per cent to $156 million while volume increased by 7 per cent to 26 million litres. This translated to a 4 per cent increase in average value to $6.10 per litre FOB. Shipments valued at $5 per litre and above grew by 18 per cent in value to $122 million, the highest value for this price segment since 2009.
United Kingdom
In the year ended September 2022, exports to the United Kingdom (UK) decreased by 14 per cent in value to $395 million and 12 per cent in volume to 222 million litres (24.7 million 9-litre case equivalents). Average value declined by 3 per cent to $1.78 per litre FOB. Figure 5 illustrates the gradual decline in volume and value during 2022, following a stable year in 2021.
Figure 5: Volume and value of exports to the United Kingdom
This decline in wine exports to the UK was expected, if somewhat delayed. There were two factors elevating exports to the UK since 2020. Firstly, the Brexit transition period saw many exporters increase their exports ahead of the 31 December 2020 deadline. Secondly, Australian wine holds the number one position in the off-trade – a category that benefitted greatly from the closure of the on-trade during the COVID-19 pandemic, and now, as the on-trade has opened back up, there is a counter-swing in the demand for Australian wine. While this counter-swing occurred much earlier in the US and Canada, another two markets where Australia has a larger share of the off-trade than on-trade, the shift has been much slower in the UK and exports are only now starting to be affected.
Packaging types
In the year ended September 2022, the value of packaged exports declined by 12 per cent to $1.51 billion and volume declined by 6 per cent to 231 million litres (25.6 million 9-litre case equivalents). Mainland China was the main driver of the decline in packaged exports. Excluding mainland China, the value of packaged exports increased by 2 per cent in value and declined by 1 per cent in volume. Most packaged exports were shipped in glass bottles (97 per cent of volume), with the remainder made up of exports in soft pack (2.8 per cent) and other alternative packaging such as cans, PET, and flagons (0.5 per cent). In the past 12 months soft pack exports increased by 0.1 per cent in value to $14 million, while alternative packaging increased by 3 per cent in value to $7 million. Driving the growth in alternative packaging is canned wine (up 173 per cent) and PET containers (up 82 per cent), but from a low base.
Figure 6: Volume share by packaging type
Exports of unpackaged wine shipments declined by 8 per cent in value to $494 million and increased by 2 per cent in volume to 397 million litres (44.1 million 9-litre case equivalents). The average value of unpackaged shipments declined by 9 per cent to $1.25 per litre FOB. Figure 7 illustrates, that in the past few months, the record 2021 vintage has started to outpace the much smaller 2020 vintage in the volume shipped. This anticipated acceleration of shipment volume was delayed principally due to the global shipping challenges. Driving the growth in volume of unpackaged exports are shipments to the US, Canada, and New Zealand.
Figure 7: Volume of unpackaged wine shipments by vintage and shipment month/year
For more detail, please see the full Export Report and the Export Dashboard.
1. Unless otherwise stated all values are given in Australian dollars.
2. ‘Free on board' value of the wine, where the point of valuation is where goods are placed on board the international carrier, at the border of the exporting country. The FOB value includes production and other costs up until placement on the international carrier but excludes international insurance and transport costs.