In the 12 months to December 2023, Australian wine exports declined by 2 per cent in value to $1.90 billion and 3 per cent in volume to 607 million litres. While these levels of exports are still well below long-term averages, this is an improvement from the $1.8 billion published in the September 2023 Export Report.
Total export value in the December quarter was $600 million (see Figure 1), a 23 per cent increase compared to the same quarter in 2022 and the highest quarterly value since December 2020. Volume increased by 2 per cent to 162 million litres for the quarter (see Figure 2). As volume and value moved similarly over the 12 months to December 2023, average value of exports stayed level at $3.13 per litre free on board (FOB).
Figure 1: Value of Australian wine exports by quarter
The improved performance by value in the December quarter, was mostly driven by an increase in exports to Hong Kong. In addition, exports to Singapore, the United Kingdom (UK), Malaysia and Thailand showed good growth in the December quarter. Offsetting some of this growth was a decline in exports to Canada, the United States (US) and South Korea.
Total export volume has generally been holding steady, with a recovery in exports to the UK helping to strengthen the position in the latest quarter. Partially offsetting this growth was a decline in the volume of exports for the December quarter to New Zealand, Canada, Germany and the US.
Figure 2: Volume of Australian wine exports by quarter
Overall, trading conditions remain extremely challenging for Australian exporters. Out of the 112 markets that received Australian wine during the year, only 44 imported more value than the previous year. Globally, wine consumption is declining, due largely to a combination of a global economic tightening resulting in less discretionary spending and consumers being more conscious of their health. This has seen alcohol consumption fall, including for wine. Adding to these pressures is the global oversupply of wine, with an average excess wine production of just under 3 billion litres every year since 2012 – more than double Australia’s total annual wine production.
With regards to health and wellness, some consumers are abstaining from drinking wine, others are drinking less but paying more, while some are seeking no or low alcohol wine options. This trend has seen wine consumption at premium wine segments (US$10 or more per bottle) grow, while the commercial end (less than US$10 per bottle) has been declining – an indication that consumers are drinking less but choosing to purchase higher price points, although this is at slightly lower growth rates than recent years. These trends disproportionally effect Australia, given the majority of Australian export volumes are in the commercial price segments.
The negative consumption trends have become more pronounced in 2023 due to economic factors. IWSR research conducted in the first half of 2023 indicated a “significant negative shift” in spending on all alcohol, with all regions except Asia trending negative. Consumers cited “economic moderation” as the main reason and that they are prioritising spending on essential items.
Price segments
In the 12 months to December 2023, exports below $5 per litre FOB declined by 5 per cent in value to $938 million and 1 per cent in volume to 545 million litres. The volume decline was less than that for value as the decline in packaged exports in this price segment outweighed the growth in unpackaged wine. Both packaged and unpackaged exports declined in value below $5 per litre, particularly packaged exports which declined by 8 per cent ($40 million).
Exports valued $5 or more per litre increased by 1 per cent in value to $961 million but declined by 16 per cent in volume to 62 million litres. The growth in value despite the decline in volume was due to growth at $10 or more per litre of 11 per cent to $690 million offsetting a decline between $5 and $9.99 per litre) of 19 per cent to $270 million. This was the highest export value for the $10 or more per litre segment since the 12 months ended September 2021 and was driven by exports above $50 per litre (see Figure 3) that were destined for Hong Kong, Singapore and Malaysia.
Figure 3: Exports by price segment (Million AUD FOB)
Exporters
The number of Australian wine exporters increased to 1,298 in the 12 months ended December 2023, an increase of 140 on 2022, but well below the peak of 2,912 in the 12 months to February 2020. The market with the highest growth in the number of exporters amongst the top 20 markets was Hong Kong, followed by Taiwan, Thailand and Vietnam (see Figure 4). Markets that lost the most exporters included the US, Denmark, New Zealand, Singapore and the UK. Japan has overtaken the US by total number of exporters. Hong Kong, the UK and Singapore were the top three markets by number of exporters but as they are major trading hubs some of this wine is on-shipped to other markets.
Figure 4: Top 20 markets by number of exporters, change in 2023
Destinations
In the 12 months to December 2023, Australian wine was exported to 112 markets, down from 120 in 2022. Forty-four of these markets grew in value. Of the 15 largest markets by value, Hong Kong, Singapore and New Zealand experienced value growth.
Asia is now the major region by value for Australian wine exports with a 37 per cent value share, driven by strong growth (34 per cent) into Northeast Asia. Although declines to Europe and North America were smaller than those experienced in recent periods, the value share of these two regions has now dropped to 29 and 27 per cent respectively. Exports to Europe declined by 7 per cent in value to $546 million, with all the top 15 destination markets in this region declining by value as the region continues to struggle through higher inflation rates than North America and Asia Pacific and supply chain issues. The Red Sea conflict is exacerbating this further, with sources including The Economist reporting that the conflict is increasing the costs of transport along some shipping routes.
Exports to North America declined by 12 per cent to $509 million driven by a decline in exports to both the US and Canada. Oceania grew by 3 per cent in value to $115 million, driven by growth in the value of exports to New Zealand.
Figure 5: Export value by destination region in 2023
The top five markets by value were:
- • US (down 7 per cent to $364 million. 19 per cent share of total export value)
- • UK (down 3 per cent to $361 million. 19 per cent share of total export value)
- • Hong Kong (up 74 per cent to $290 million. 15 per cent share of total export value)
- • Canada (down 24 per cent to $143 million. 8 per cent share of total export value), and
- • Singapore (up 1 per cent to $133 million. 7 per cent share of total export value).
The top five markets by volume were:
- • UK (up 2 per cent to 220 million litres. 36 per cent share of total export volume)
- • US (down 5 per cent to 134 million litres. 22 per cent share of total export volume)
- • Canada (up 7 per cent to 73 million litres. 12 per cent share of total export volume)
- • New Zealand (down 2 per cent to 29 million litres. 5 per cent share of total export volume), and
- • Germany (down 7 per cent to 27 million litres. 4 per cent share of total export volume).
For further commentary on individual markets please go to the full Export Report. The Export Dashboard has also been updated with the latest data. The Grape Price Indicators dashboard has been updated with fresh export data, as well as freight rates, exchange rates, and consumer confidence figures for key markets.