Wine Australia’s latest Export Report has indicated a continuing decline in Australian wine’s export value, part of a decline in the international wine market.

In the financial year ending in June 2023, exports declined 10 per cent in value to $1.87 billion, and 1 per cent in volume to 621 million litres. Wine Australia attributes this decline to a reduction in exports to the US and UK, as well as a decline in lower-priced packaged exports.

This is indicative of a broader decline in the international wine market, with IWSR indicating that global wine consumption fell 3 per cent in volume in 2022. However, premium wine is continuing to grow, albeit at a slower rate than previous years.

Even so, Australian wine was exported to 117 global destinations during the year, up from 112 in 2022. Sixty-six of these destinations recorded growth in the value of exports during the year, while 51 declined.

According to Peter Bailey, Wine Australia manager, market insights, more than half of the decline in Australia’s export value was in shipments with an average value of $2.50 to $4.99 per litre free on board. These wines are generally exported in their final packaging and sold in lower priced retail segments.

“Wine consumption in mature markets is in decline, driven by decreases in the commercial price segments. This is impacting Australia’s export performance, especially in the US, as Australia is very exposed to the price segments in decline,” Bailey said.

Unlike value, export volume remained relatively stable. Declines in many export destinations were mitigated by a short-term, supply driven increase in unpackaged wine shipments, especially to Canada. These two diverging trends resulted in exports with an average value below $5 per litre declining by 11 per cent in value, but increasing by 1 per cent in volume.

“The growth in unpackaged shipments comes as the shipping challenges of the past couple years have eased, allowing Australian exporters to catch up and ease pressure on inventory,” Bailey noted.

“The increase in unpackaged exports and the decline in packaged exports has resulted in the share of unpackaged exports growing by 8 percentage points to a 69 per cent volume share. This has an impact on the overall average value of exports, as unpackaged exports do not include packaging costs and are therefore inherently lower in value,” he added.

Exports above $5 per litre declined by 14 per cent in volume and 9 per cent in value, driven by Singapore, the US, Canada, and the UK. However, growth to Hong Kong was able to offset part of this decline.

“According to IWSR, the value of global premium wine sales grew by 2 per cent in 2022, a lower growth rate compared to recent years due to economic and inflationary pressures. Globally, consumers are cutting back on alcohol spending as prices rise for food and other necessities but are choosing to drink less often rather than trade down price segments,” Bailey explained.

The UK previously saw two years of elevated shipments due to pre-Brexit demand and COVID-19 related market impacts, but has now decreased by 14 per cent to $364 million. This drove the decline in exports to Europe, which declined by 15 per cent to $556 million. The decline was not limited the the UK, with 12 of the top 13 destinations in the region also declining in value. This was mirrored in decreases in volume, with the UK down 3 per cent to 220 million litres and Germany down 12 per cent to 28 million litres.

Additionally, North America declined by 14 per cent to $525 million, with the US down 18 per cent to $359 million and Canada down 6 per cent to $163 million.

The Asian market saw a 4 per cent decline in value, to $637 million. This segment saw mixed results, with a decline in exports to Singapore – down 24 per cent to $128 million – and an increase in exports to Hong Kong. The divergent trends in these two key trading hubs reflect unpredictable market conditions at the present. However, key emerging markets such as Thailand, Philippines and Vietnam grew in value during the period.

The report indicates a difficult period for Australian wine exports, with declines across most of the major  export regions, but a number of promising trends in smaller markets and premium price points.

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