Australian wine exports increased by 1% in volume to 623 million litres and declined by 4% in value to $1.94 billion in the year ended 31 December 2022, according to Wine Australia’s latest Export Report.

The rise in volume relative to value was driven by growth in the shipments of unpackaged wine, particularly to the United States and Canada, as global shipping challenges improve.

Diversification and intensification efforts of Australian wine exporters were also evident in the report, with exporters shipping wine to 120 destinations during the period, up from 112 the previous year and the highest since the start of the COVID-19 pandemic.

Continued decline in China

Growth in the value of Australian wine exports to Southeast Asia continued through the period with a 16% rise 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% to $62 million) and Malaysia (up 78% to $61 million). A decline in the value of exports to Singapore, down 20% to $132 million, offset some of these gains.

Exports to Northeast Asia declined by 10% in value to $314 million and 15% 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 Australian wine exports to Japan offset some of this loss, up by 8% 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% 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% to $26 million.

Tough times for exporters

Notwithstanding, it was another tough year for Australian wine exporters, with rising inflation, business costs and interest rates impacting margins, and it is anticipated this will continue in 2023.

Wine Australia Manager Market Insights Peter Bailey said the increase in unpackaged wine exports is an indication of improvements to the significant shipping challenges in some markets, which have been a factor since 2021.

“It was pleasing to see positive signs of improvements emerging in shipping conditions in some markets, noting delays are still being reported along certain trade routes,” Bailey said.

“Shipments of 2021 and 2022 vintage wines had been largely delayed due to the shipping challenges, particularly unpackaged shipments. As these conditions eased in the latter half of 2022 in some regions, Australian wine producers were finally able to ship their products to customers overseas. This increase in the share of unpackaged wine shipments contributed to the decline in the total value of exports, as unpackaged wine is shipped at a lower average free-on-board value because packaging costs are excluded.

“Increases in the value of exports to Thailand, Malaysia, and Canada offset declines in value to Singapore, Hong Kong, and the US. However, decreased shipments to the United Kingdom (UK) in the second half of 2022, were greater than the increase in overall value to other markets. This drop was anticipated, as Australia experienced two years of elevated shipments as a result of Brexit deadlines and increased demand for wine in the off-trade (supermarkets and bottle shops) during the COVID-19 pandemic when many on-trade businesses were closed.”

Since Brexit was announced in 2016, exports to the UK have been unpredictable and there have been several peaks and troughs during this time.

Increase in Australian wine exports above $5 per litre

The decline in the overall value of exports was driven by shipments valued below $5 per litre free-on-board (FOB), which declined by 9% to $988 million. Exports in this segment declined in value in a number of markets – including the UK, US, Denmark, Germany, the Netherlands, and New Zealand.

Meanwhile, exports above $5 per litre increased by 2% in value to $957 million. The markets driving this trend were Thailand, Malaysia, Canada, Denmark, and Japan. Growth to these markets has been partially offset by a decline in exports in this price segment to Singapore, Hong Kong, and the UK.

“Contributing most to the growth above $5 per litre were exports valued above $10 per litre, which grew by 3% in value to $623 million. This price segment increased its share of packaged exports in many destinations, which aligns with premiumisation trends in mature markets of wine consumers drinking less, but higher priced, wine,” Bailey said.

The top five markets by value

• US (down 3% to $390 million)
• UK (down 18% to $373 million)
• Canada (up 14%)
• Hong Kong (down 13% $167 million)
• Singapore (down 20%)

The top five markets by volume

• UK (down 11%)
• US (up 13% to 140 million litres)
• Canada (up 46% to 68 million litres)
• Germany (down 15% to 29 million litres)
• New Zealand (down 6 % to 29 million litres)

Wine Australia’s Export Report is available for download here.

Progress on trade talks with China