In the year ended December 2018, Australian wine exports increased by 10 per cent in value to $2.82 billion free on board (FOB) and 5 per cent in volume to 850 million litres (94 million 9-litre case equivalents). The average value of exported wine increased by 5 per cent to $3.32 per litre FOB.
Packaged and unpackaged wine
Bottled wine shipments increased by 7 per cent in value to $2.24 billion and decreased in volume by 3 per cent to 361 million litres (40 million 9-litre case equivalents). This resulted in an unprecedented growth rate in the average value of bottled wine of 10 per cent; bottled wine reached a record value of $6.20 per litre.
Unpackaged exports also experienced outstanding growth, reaching record levels in both volume and value. The value of unpackaged shipments of wine increased by 27 per cent in value to $560 million and 12 per cent in volume to 480 million litres (53 million 9-litre case equivalents). The average value of unpackaged exports continued to grow, increasing by 14 per cent to $1.17 per litre.
A large global wine harvest in 2018, economic uncertainty and static consumption are putting downward pressure on world bulk wine prices as Australia heads into vintage 2019. Australian wine prices are holding up thanks to strong demand and a favourable exchange rate, but international competition is likely to increase in the medium term as supply pressures ease.
As illustrated in Figure 1, there was growth in Australian exports to nearly every region in 2018. Exports to North America are starting to level out after being in decline for more than 12 months.
The value of exports to:
- Northeast Asia grew by 19 per cent to $1.23 billion
- North America declined by 0.1 per cent to $636 million
- Europe grew by 7 per cent to $615 million
- Southeast Asia grew by 3 per cent to $171 million
- Oceania grew by 12 per cent to $105 million, and
- the Middle East grew by 36 per cent to $33 million.
Figure 1: Value change by region (million AUD FOB)
Exports to China (including Hong Kong and Macau) in the 12 months to December 2018 increased by 18 per cent in value to $1.14 billion and 7 per cent in volume to 172 million litres (19.1 million 9-litre case equivalents). Average value increased by 11 per cent to $6.64 per litre FOB.
Value increased by 26 per cent in the 3 months to December 2018, compared to the same quarter in 2017, ahead of tariffs on wine imported from Australia being cut to zero on 1 January 2019 under the China–Australia Free Trade Agreement. This indicates that exports have recovered somewhat after the weak September 2018 quarter, in the lead up to Chinese New Year in February.
United States of America (USA)
In the year ended December 2018, exports to the USA declined by 5 per cent in value to $425 million and 7 per cent in volume to 161 million litres (17.9 million 9-litre case equivalents). As the volume decline outpaced value decline, average value increased by 1 per cent to $2.64 per litre FOB.
However, there were signs of the decline easing at the end of the year. In the last quarter of 2018, total value increased by 1 per cent compared to the same quarter in 2017. It is also pleasing to see exports with an average value of above $10 per litre FOB improve on recent performance; they increased by 21 per cent on a quarterly basis.
United Kingdom (UK)
In the year ended December 2018, Australian wine exports to the UK increased by 12 per cent to $389 million, the highest value since 2013. Volume also increased, by 10 per cent to 246 million litres (27.3 million 9-litre case equivalents), solidifying the UK’s position as the number one destination by volume.
Unpackaged wine drove overall value growth, increasing by 27 per cent to $214 million. The average value of unpackaged wine also increased, by 10 per cent to $1.06 per litre FOB. Many larger brands bottle in the UK for domestic consumption or for shipment to other European countries. This growth of shipments to the UK is largely due to producers getting their product into market before trade regulations potentially get more difficult to navigate with the scheduled date for Brexit looming (29 March 2019).
Australian wine exports to Canada increased by 12 per cent in value to $210 million, the highest value since 2011. Volume increased by 19 per cent to 74 million litres (8.2 million 9-litre case equivalents), a record level. Average value decreased by 5 per cent to $2.84 per litre FOB.
A record value and volume of unpackaged wine shipments drove the growth, with value increasing by 43 per cent to $47 million FOB. In the past year, unpackaged wine shipments have moved from having a 55 per cent volume share of exports to a 61 per cent share. Double digit growth in the volume of unpackaged shipments to Quebec and British Columbia is driving this trend.
However, bottled wine shipments also increased, growing by 6 per cent to $160 million. Key price segments driving the growth in bottled wine are the $5 to $7.49 segment, up by 17 per cent to $72 million and the above $10 segment, up by 12 per cent to $26 million.
Further analysis can be found in the full Export Report, available to levy-payers here.