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Stocks fall after sales exceed production, but demand remains flat

Market Bulletin | Issue 328
11 Dec 2024
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Total sales of Australian wine exceeded production for the second year in a row, following successive small vintages, according to the Australian Wine Production, Sales and Inventory Report 2024 released today by Wine Australia. 

Production

For the second year in a row, the 2024 vintage was well below average, coming in at 1.43 million tonnes – 300,000 tonnes below the 10-year average of 1.73 million tonnes. The below-average crush was partly a result of difficult seasonal conditions in many regions – including heavy rainfall and flooding, widespread windy conditions affecting flowering, and dry spring weather leading to cold nights and the potential for frost damage. However, deliberate decisions made by grapegrowers and wine businesses also contributed, driven by low grape prices, stock overhangs (despite the very small 2023 vintage) and reduced global demand for wine. This applied particularly to reds, which decreased further compared with 2023, whereas whites increased by 20 per cent. 

Total Australian wine production from the 2024 vintage is estimated to be 1.04 billion litres, or 116 million 9-litre case equivalents. This is an 8 per cent increase compared with 2023 but is still the second-smallest reported production since 2006–07 and 16 per cent (nearly 200 million litres) below the 10-year average of 1.24 billion litres.

The overall increase of 8 per cent was the result of a 20 per cent increase in white wine production, partly offset by a 2 per cent decrease in red wine production. Red wine was down 24 per cent from its 10-year average of 671 million litres, and white wine – despite the significant year-on-year increase – was still 6 per cent below its 10-year average of 567 million litres.

White wine’s share of production increased by five percentage points from 46 per cent to 51 per cent, in line with its share of the crush. This was the first time since 2011–12 that the production of white wine has exceeded the production of red wine in Australia (Figure 1).

Figure 1: Share of wine production by colour over time

Sales

The total sales volume of Australian wine in 2023–24 was 1.08 billion litres (120 million 9-litre cases), a reduction of just over 8 million litres (-0.7 per cent) compared with 2022–23, and 11 per cent below the average for the past 10 years of 1.21 billion litres. Both exports and domestic sales declined slightly overall. Domestic sales made up 42 per cent of total sales, down by 1 percentage point from the previous year but 5 percentage points higher than in 2017–18, when exports were at their peak. 

Red (including rosé) wine sales accounted for a total of 522 million litres, an increase of 3 million litres (1 per cent) compared with 2022–23 and 15 per cent below the 10-year average of 616 million litres. Red’s share of total sales increased slightly, as the result of a 4 per cent increase in export sales of red wine, driven by the re-commencement of exports to mainland China following the removal of import duties in late March 2024.

White wine sales accounted for 463 million litres (43 per cent of total sales volume), a decrease of 9 million litres (2 per cent) and 8 per cent below the 10-year average. The overall decline was driven by a decrease of 14 million litres in export sales, partly offset by a 5 million litre increase in domestic sales.

Sales of both red and white wine have been on a declining trend over the past 10 years. For white wine, the average for the latest five-year period including 2023–24 is 468 million litres, compared with 520 million litres for the five years before that.  For red wine, the average for total sales comparing the same two time periods has decreased by even more: down 15 per cent from 661 million litres to 563 million litres – see Figure 2.

Figure 2: Average sales volume for red and white over successive 5-year periods (and percentage change)

Inventory and stock-to-sales ratios

Despite the decline in sales, the below-average production meant that sales exceeded production, with the combined shortfall over the past two years being estimated at 155 million litres. This contributed to a reduction in inventory and a corresponding decrease in the stock-to-sales ratio (SSR). 

The national inventory of Australian wine as at 30 June 2024 is estimated to be 1.96 billion litres, a decrease of 228 million litres (10 per cent) compared with the same time last year and very close to the 10-year average of 1.94 billion litres.

The decrease in red wine inventory, which fell to 1.1 billion litres, saw it return to being closely in line with the 10-year average and the lowest since 2019–20, following two years of well below average wine production. However, it is worth noting that the 10-year average prior to 2020–21 was 991 million litres, arguably more representative of normal levels prior to the record 2021 vintage of 2.1 million tonnes. Compared with that figure, the 2023–24 figure is still 12 per cent higher.

White wine inventory decreased to 621 million litres, 8 per cent below the 10-year average and the lowest since 2013–14.

After reaching a record of 2.13 in 2021–22, the overall national SSR has declined by 14 per cent across the past two years to be 1.82 in 2023–24. While this is a big decline, the SSR is still 12 per cent above the 10-year average of 1.63, representing approximately 200 million litres more stock on hand than if the SSR were at the 10-year average. 

Red wine accounts for the continued elevation, with its SSR being 15 per cent above the 10-year average despite falling by 15 per cent in 2023–24 from 2.50 to 2.13 (Figure 3). This indicates more than 2 years’ worth of red wine sales is held in tanks in total – 144 million litres more than if the SSR were at the 10-year average. 

Conversely, the SSR for white wine fell by 8 per cent to 1.34, which is 2 per cent below its 10-year average of 1.37 (Figure 3), indicating slightly less stock on hand than average and a margin of only around 3 months’ worth of sales above annual turnover. 

Figure 3: Stock-to-sales ratios for red and wine wine over time

Summary

The survey results indicate that stock-to-sales ratios have reduced, and production and sales are closely aligned. However, that is based on the current production levels, which are well below the long-term average. 

Any increase in production is likely to result in stock levels rising again, unless there is a corresponding increase in sales. This is a particular concern for reds, where the stock-to-sales ratio is still well above the long-term average.

Meanwhile the global outlook for Australian wine remains challenging. Although exports to mainland China have continued to increase in the September MAT (ie in the period after that covered by the figures in this report), total global wine imports to mainland China have fallen by two-thirds since 2017, so it is unlikely that Australian wine exports will return to their previous level in the near future. Meanwhile Australian wine sales to the rest of the world, including Australia, have been under pressure for the past several years.

World wine consumption has continued to decline over the past 12 months and is expected to decline further in the next five years, driven by economic constraints, overall alcohol moderation trends and competition for wine from other beverages.

The Wine Production, Sales and Inventory Report 2024 is available for download on the Wine Australia website. The Grape Price Indicators dashboard has been updated with the PSI figures for 2024, as well as the OIV global production and consumption estimates for 2024.


This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.

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This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.