How much does it cost to export wine?

Wine export costs and categories

There’s a number of costs to factor into your export plan – far more than you encounter with domestic sales.

Ultimately, you want to export wine to increase overall profits. By understanding how much it will cost to export your wine, you’re in a better position to set your export prices appropriately.

Wine export costs can largely be broken into the five categories below. 

1. Production and manufacturing

You don’t necessarily have to increase stock volumes to meet export orders. In fact, many winemakers decide to export in order to sell their existing excess production. However, there may be production and manufacturing costs to consider when exporting, including:

• Packaging and labelling changes to suit the new market
• Costs to return and replace damaged goods
• Increased working capital for inventory (holding allocated stock for each export market).

2. Documentation and regulatory fees

In order to comply with your chosen market’s regulatory requirements, you need to obtain the right documentation and pay certain fees. These may include:

• Export permits or licences, which are needed before your wine leaves Australian shores
• Certificate of Origin, which officially recognises that your wine originated in Australia, and is used to qualify for lower tariffs under free trade agreements (FTAs)
• Licensing fees to comply with local market regulations
• Product registration
• Shipping applications
• Wine testing and sampling fees to meet market technical standards. 

3. Freight and distribution

This will be a regular – and potentially significant – cost to bear if you want to export your wine. Depending on the amount of wine you plan on exporting at any one time, the cost of freight will differ. Be sure to factor in the following:

• Packaging and labour costs, including market-specific labels, carton markings and dimensions
• Shipping fees
• Cartage fees from your warehouse to a shipping port or airport
• Port handling charges (PHC) and terminal handling charges (THC).

Depending on your route to market, the fees don’t necessarily stop once your wine is shipped. Once it arrives at its destination, there are other costs such as:

• Importer/distributor fees and commissions
• Import duties, if applicable
• Local consumption taxes in your chosen export market, similar to GST in Australia
• Shipping port/airport clearance charges
• Listing fees for stores selling your wine
• Warehousing and fulfilment charges, if not already built into your distribution contract.

4. Risk management

You want to minimise your risk as much as possible when exporting wine. This comes with associated costs, including:

• Risk-mitigation insurance, such as credit risk insurance, foreign exchange insurance and marine insurance
• Any costs associated with export payment methods. These will differ depending on which payment method you agree on. You may need increased working capital to allow for slower payment terms. 
• Bid and performance bonds, which guarantee the export sale and performance, thereby protecting the importer if you fail to fulfil your exporting obligations
• Costs of managing your foreign exchange risk
• IP registration and protection. 

5. Marketing and research

Don’t underestimate the importance of marketing to your export success – and therefore the associated costs. Whether you are marketing to secure a buyer in your chosen region, or you already have your wine in the market and wish to boost sales, you will need to consider a number of potential costs. These include (but are by no means limited to): 

• Market research
• Promotion and advertising
• Costs to secure a contract (grants and funding can help cover some of these expenses)
• Digital marketing, potentially across multiple channels and languages
• Translation fees
• Market visits and travel costs
• Trade show fees
• Label redesign fees.

Wine export costs and margins: an example

To help illustrate some of the most specific costs associated with exporting wine, we’ve used our Gross Margin Ready Reckoner to assess the potential gross margin of a typical winery. This small winery (between 100–750 tonnes of grapes crushed per annum) is based in Mornington Peninsula and wants to export its Chardonnay to the United Kingdom (UK). The plan is to sell the wine for £19.99 per bottle.

After entering in the initial data, the calculator assumes the following costs and factors according to the region (in this case, the UK):

• Grape cost (AUD per tonne)
• Extraction rate (litres per tonne)
• Processing cost (AUD per litre)
• Holding cost (AUD per litre per month)
• Packaging cost (AUD per dozen)
• Distributor/agent commission    (if applicable)
• Importer commission (if applicable)
• WET (if applicable)
• Federal excise (per dozen)
• Customs duties
• Other taxes (if applicable)
• Ocean freight (per dozen)
• Domestic freight (per dozen)
• Waste factor (%)
• Retail margin (%)
• VAT (%)
• Exchange rate: GBP to AUD
• Euro exchange EUR to AUD.

The calculator then creates a benchmark result for the retail price point of both an individual bottle and a dozen. 

There are also the following production costs applied:

• Grape cost (AUD per tonne)
• Extraction rate (litres per tonne)
• Processing cost (AUD per litre)
• Oak cost (AUD per litre, if applicable)
• Holding cost (AUD per litre)
• Wastage cost (AUD per litre).

After all these calculations are made, the winery knows the wine cost (in AUD) per litre and per dozen bottles. A packaging cost is then applied, which provides three important figures:

• Total cost ex winery (AUD per dozen)
• Winery gross margin (AUD per dozen)
• Winery gross margin (per cent). 

In our example scenario, the calculator showed a winery gross margin of 36.54% for its Chardonnay exports to the UK. The winery’s individual circumstances will determine whether this is considered a sustainable price.

Do note that you may be asked by a potential importer to lower your prices in order to make your wine more attractive to consumers in an export market. Consider this advice carefully, as wine that is deemed expensive or lacking value may fail to gain traction.

Estimate your wines' RRP

While we dive deeper into how to set your export prices here, you can begin to start using tools such as our FOB to Retail Calculator to help you get a clearer picture of the cost of exporting wine.

The FOB to Retail Calculator allows you to calculate what the bottle price will be on-shelf (the RRP) in international markets for a given FOB value, and thereby assess and evaluate competitors in the market through price-point comparison. All you need to know is your FOB cost in Australian dollars (AUD). Remember that the calculator is a guide only, and you should adjust the inputs according to your experience.

There are separate calculators for a number of key markets on different tabs of the spreadsheet:

• Exchange rate sensitivity calculator – assists in determining how your FOB will change depending on the exchange rate
• Generic FOB to RRP
• China model
• Hong Kong model
• India model
• Japan model
• Singapore model
• South Korea model
• United Kingdom model
• USA model
• LCBO Wine Pricing Calculator – estimate the costs of getting through the Liquor Control Board of Ontario

Now that you understand the sheer number of costs involved with exporting wine, it’s time to start setting your export prices. Make sure you leverage our suite of tools – including the FOB to Retail Calculator – to help you determine your profitability and the ideal price point for your wine.