In the year ended December 2022, Australian wine exports declined by 4 per cent in value to $1.94 billion1 and increased by 1 per cent in volume to 623 million litres (69.2 million 9-litre case equivalents). The average value dropped by 5 per cent to $3.12 per litre Free on board (FOB)2.
It was another tough year for Australian wine exporters, with rising inflation, business costs and interest rates impacting margins, and it is anticipated that this will continue in 2023. In a positive sign for the sector, there are indications that shipment complications that have been a factor since 2021 may be easing in some regions as freight rates start to return to a pre-pandemic level. However, some delays remain due to ongoing interruptions at ports and global restricted shipping capacity3.
The decline in value was mostly driven by decreased shipments to the United Kingdom (UK). The amount of wine shipped from Australia to the UK dropped in the second half of 2022, following two years of elevated shipments due to Brexit deadlines and increased purchasing of wine in the off-trade during the COVID-19 pandemic. Elsewhere, increases in the value of exports to Thailand, Malaysia, and Canada offset declines in value to Singapore, Hong Kong, and the United States (US).
Figure 1: Value of Australian wine exports by quarter, 2021 vs 2022
The overall increase in the volume of wine exported was driven by growth in the shipments of unpackaged wine, particularly to the US and Canada. This anticipated acceleration of the 2021 and 2022 vintages had been delayed due to global shipping challenges. As Australian wine producers were finally able to ship their large inventories to customers overseas, the unpackaged volume share of exports increased from 62 per cent in 2021 to 65 per cent in 2022. This increase in share of unpackaged wine shipments contributed to the decline in the total value of exports as unpackaged wine is shipped at a lower average value because packaging costs are excluded.
In the year ended December 2022, Australian wine exporters shipped wine to 120 destinations, up from 112 the previous year and the highest since the start of the COVID-19 pandemic, which disrupted shipping and restricted the movement of people – making finding new markets very difficult. In the past 12 months, the strongest growth was in exports to Southeast Asia, up 16 per cent to $305 million. North America also grew, by 2 per cent to $580 million. Offsetting this growth was a decline in exports to Europe, down 16 per cent to $586 million. European markets are experiencing tough operating conditions resulting from economic challenges, shipping delays and conflict in the region. Northeast Asia also declined, down 10 per cent to $314 million.
Figure 2: Export value growth/decline by region ($ million FOB)
North America
In 2022, Australian wine exports to North America increased by 2 per cent to $580 million.
Exports to the US declined by 3 per cent in value to $390 million and increased in volume by 13 per cent to 140 million litres. As volume growth outpaced value, the average value dropped by 14 per cent to $2.78 per litre. The number of exporters to the US grew by 5 per cent to 303, the highest since 2008.
Exports to Canada increased by 14 per cent in value to $188 million and 46 per cent in volume to 68 million litres. The average value of exports declined by 22 per cent to $2.76 per litre FOB.
Driving the growth for both markets was the rise in unpackaged wine shipments, increasing in volume by 67 per cent to 76 million litres in the US and up by 81 per cent to 44 million litres in Canada. Packaged exports on the premium end of the price spectrum also grew in both markets. Exports to Canada valued at $5 per litre and above grew by 13 per cent to $114 million, while exports to the US above $10 per litre grew by 4 per cent to $50 million.
Europe
Australian wine exports to Europe declined by 16 per cent to $586 million.
Since Brexit was announced in 2016, exports to the UK have been unpredictable and there have been several peaks and troughs during this time (see Figure 3). In the latest figures, Australian wine exports to the UK declined in value by 18 per cent to $373 million and in volume by 11 per cent to 216 million litres. The average value of exports also declined, by 8 per cent to $1.72 per litre FOB.
Figure 3: Value of exports to the UK with Brexit/COVID-19 timeline
Australian wine holds the number one position in the UK off-trade – a category that benefitted from the closure of the on-trade during the COVID-19 pandemic, and as the on-trade re-opened in 2021 and 2022, there was a counter-swing in the demand for Australian wine as Australia’s share in the on-trade is substantially lower. However, as the off-trade sales volume of wine has declined, Australia has seen a smaller reduction than the total market, declining by 4 per cent in volume in the year ended December 2022, while the total off-trade wine market declined by 8 per cent (IRI Worldwide).
Figure 4: Year-on-year change in UK off-trade wine sales vs. volume of exports
Source: IRI Worldwide and Wine Australia
European markets are experiencing tough operating conditions. Nearly every European destination declined during 2022, with the largest contributor to the decrease, besides the UK, being Germany (down 22 per cent in value to $38 million), followed by the Netherlands (down 19 per cent to $29 million) and Denmark (down 13 per cent to $37 million).
Asia
Exports to Southeast Asia increased by 16 per cent in value to $305 million. Exports to all key Southeast Asian destinations increased, with the exception of Singapore. The main drivers behind this growth were Thailand (up 118 per cent to $62 million) and Malaysia (up 78 per cent to $61 million). A decline in the value of exports to Singapore, down 20 per cent to $132 million, offset some of these gains. Singapore remains the number one destination in Southeast Asia for Australian wine exports but is a trading hub and some of the wine is on-shipped to other Asian markets. As with all trading hubs globally, export levels can vary to these markets depending on changes in business practices of shipping directly to the selling destination or vice versa.
Exports to Northeast Asia declined by 10 per cent in value to $314 million and 15 per cent in volume to 32 million litres. The results in this region were mixed – with markets such as Hong Kong and mainland China continuing their decline. Growth in exports to Japan offset some of this loss, up by 8 per cent to $51 million and driven by exports above $10 per litre, which reached a calendar year record of $13 million. The number of exporters to Japan grew by 23 per cent to 260 in 2022, up from 211 in 2021. While exports to South Korea declined overall, the above $10 segment showed strong growth, up 28 per cent to $26 million.
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.
3. Hillebrand Gori