Production of white wine has exceeded red wine in Australia for the first time in 12 years as the industry recalibrates from oversupply issues.
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.
Wine production was just over 1 billion litres (116 million 9-litre case equivalents), an 8% increase compared with 2022–23 but still the second-smallest reported production in 17 years, and 16% below the 10-year average of 1.24 billion litres.
Wine Australia Manager, Market Insights Peter Bailey said that the below-average production from the small 2024 vintage was the result of a combination of seasonal factors and economic and market conditions.
“This was another difficult season in many regions, with heavy rainfall and flooding, widespread windy conditions affecting flowering, and dry spring weather leading to cold nights and the potential for frost damage,” Bailey said.
“However, the result has also stemmed from deliberate decisions by grapegrowers and wine businesses to reduce production or intake, driven by the current economic and market conditions affecting demand for wine.”
The overall increase of 8% compared with 2022–23 was made up of a 20% increase in white wine production in Australia, partly offset by a 2% decrease in red wine production. This saw white wine’s share of production increase from 46% to 51% — the first time in 12 years that the production of white wine has exceeded that of red wine in Australia.
Bailey said that this change reflected adjustments made by the sector to counter the oversupply of red wine that had arisen over the past three years.
Sales volume decline despite reopening of China market
The total volume of sales of Australian wine in export and domestic markets was 1.08 billion litres (120 million 9-litre cases). This was a decrease of 1% compared with 2022–23, with both domestic and export sales showing very small declines. Contrary to the change in share of production, white’s share of total sales declined due to 4% growth in red wine exports.
Bailey said that the growth in red wine exports was driven by the re-commencement of exports to mainland China following the removal of import tariffs in late March 2024. The volume of exports to China grew from 1 million litres to 32 million litres (5% of total wine exports) in the 2023–24 financial year, almost all of which (96%) was red table wine.
However, Bailey cautioned that this was likely to represent the re-stocking of Australian wine in the market after a long absence, and did not necessarily equate to retail sales.
“It will take some time before there is a clearer picture of how Chinese consumers are responding to the increased availability of Australian wine in–market,” he said
Small vintages contribute to reduction in stock overhang
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 10% reduction in inventory as at 30 June 2024 and a corresponding decrease in the stock-to-sales ratio (SSR), which fell by 14 per cent to 1.82. The SSR for white wine fell to below its 10-year average, while the SSR for reds remained 15% above its 10-year average despite falling by 23% over the past two years.
“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,” Bailey said.
“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.”
Global market conditions remain challenging
Bailey said the global outlook for Australian wine remained challenging due to world wine consumption continuing to decline over the past 12 months.
It 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.
“There are no easy solutions for increasing sales,” Bailey said.
“Total global wine imports to China have fallen by two-thirds since 2017, so it is unlikely that we would return to our previous level of exports to that market. Meanwhile our wine sales to the rest of the world, including Australia, have been under pressure for the past several years as consumption has declined and competition has increased. We are unlikely to see a return to our previous average of 1.2 billion litres in the next few years.”
The Australian Wine Production, Sales and Inventory Report 2024 can be downloaded here.
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