Steady growth in Singapore

Singapore recently moved into fifth place for Australian wine exports by value, after recording double-digit growth in the 2019 calendar year. The double-digit growth was seen in both value and volume and is a continuation of the steady growth Australian wine exports have experienced to Singapore over the past four years.

Singapore jumped into the top five export destinations for Australian wine exports (behind China, the USA, the UK and Canada) for the first time as value increased by 18 per cent to a record $105 million. Volume also grew, up 16 per cent to 7.4 million litres (823,000 9-litre case equivalents).

Figure 1: Export markets for Australian wine by FOB value (ranked 5 to 10)

The growth was driven by increases across all price segments except at the commercial end (i.e. below $2.49 per litre free on board (FOB)) as well in the $15–19.99 and to a lesser extent at the $100–199.99 price segments.

Unlike other markets in Australia’s top 5, Australia exports only packaged wine to Singapore with three quarters of this valued at $10 or more per litre FOB. With such a strong contribution, along with growth in this price segment, average value increased by 2 per cent to $14.14 per litre FOB.

Compared to other markets, the high average value is also the result of alcohol being one of the few imports to which an excise duty is attached, making it relatively expensive to purchase in Singapore.

Figure 2: Exports by price segment (AUD, millions)

In 2019, the republic was home to 5.7 million people and welcomed more than 3-times as many international visitors (19 million arrivals).

The International Wine and Spirit Record (IWSR) reported a 5 per cent growth in the Singaporean consumption of Australian wine in 2018 and predicts growth to continue out to 2023. However, not all wine imports are consumed in Singapore.  

Singapore maintains a status as a major entrepôt^[1] due to its proximity and access to other destinations in Asia. 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.

Australian wine exports to destinations across south east Asia and Hong Kong show that there has been movement in recent times between major entrepôt like Singapore, Hong Kong, Thailand and Malaysia, strongly influenced by changes in customs and excise duties.

Figure 3: Australian wine exports to Hong Kong and south east Asian destinations

Wine imports and re-exports

Singapore imported 31 million litres of wine in 2019, but this was down 12 per cent on the previous year, driven by a decline in all major source markets except for Australia (up 9 per cent). Australian brands made up a quarter of all wine imports, second behind France at 43 per cent.

Figure 4: Import volume growth rates by country of origin (percentage change on 2018)

^{Source: IHS Markit (International Enterprise Singapore)}

Re-exports accounted for 30 per cent of total trade (imports and exports) for Singapore and these were down 23 per cent in volume for 2019 to 13.7 million litres, although value increased by 11 per cent to A$746 million.

Japan is the largest market for re-exports from Singapore (representing 31 per cent), followed by Hong Kong (11 per cent), Australia (12 per cent) and China (8 per cent).

With the volume of re-exports down and value up, the average price per litre has increased from A$38 to A$55 in the last year, driven largely by increased value to most of the major markets except for Australia.

Figure 5: Average price per litre of re-exports from Singapore

^{Source: IHS Markit (International Enterprise Singapore)}

Wine drinking in Singapore

This small yet highly populated country does not have a local wine production sector, so all wine beverages consumed are imported. Based on the imports and re-exports of wine on average there are around 17 million litres (or 2 million 9-litre case equivalents) remaining in Singapore for consumption each year.

According to Wine Intelligence, around 52 per cent of the adult population drink wine at least twice a year (referred to as Singaporean semi-annual wine drinkers) they have a higher tendency to be male (58 per cent) and more than half are aged between 35 to 54 years (57 per cent).

Red wine is the most dominant style of wine consumed and this is in line with Australian wine exports with 77 per cent of the volume red, with 13 per cent white.

While Singapore imports more French than Australian wines each year, Wine Intelligence reports that these Singaporean semi-annual wine drinkers have a higher awareness of and have drunk Australian wine in the past six months. Another source, the IWSR, also support this with 31 per cent of wine consumed in Singapore coming from Australia in 2018, while only 18 per cent consumed French wine. These consumers were also more aware of Australian brands.

Singapore semi-annual wine drinkers have a high to medium involvement with wine, but – with wine being an expensive commodity – higher proportions found cost savings by purchasing wine through more affordable channels like duty free and online. They also look for promotional offers when choosing wines and find lower alcohol wines like Moscato more appealing.

Despite consumers looking for ways to save money, most alcoholic beverages in Singapore are sold through the more traditional on-trade channels to tourists and locals alike enjoying the vibrant food and wine experiences on offer, and locals are willing to spend over $100 for a bottle of wine at a party/celebration (25 per cent) or with a formal dinner in a restaurant (31 per cent).

Figure 6: On-trade spend by occasion

^{Source: Wine Intelligence}