In the 12 months ended September 2023, Australian wine exports declined by 11 per cent in value to $1.79 billion[1] and 4 per cent in volume to 604 million litres. Total value was well below the previous 10-year average of $2.31 billion and the lowest 12-month value for nearly a decade. Total volume was also below the previous 10-year average of 731 million litres and the lowest in nearly two decades (see Figure 1), reflecting the exceptionally tough global trading conditions that have prevailed since 2020. The average value declined by 7 per cent to $2.96 per litre free on board (FOB)[2].
Figure 1: Volume and value of Australian wine exports over time
While export volumes have been holding steady for the past 18 months, the latest quarter saw volumes fall by 10 per cent compared to the same quarter in the previous year. The decline in volume in the latest quarter was driven by a decline in exports to the United Kingdom (UK) and Canada in particular. This performance reflects the broad economic challenges for wine sales in the UK, such as inflation and increasing taxes and duties on alcohol. Likewise, in Canada, heightened levels of unpackaged shipments in recent times are showing signs of stabilising, while packaged volumes continued their decline.
Total export value has been on a downward trajectory since peaking at $3.1 billion in the 12 months ended October 2020. The US was a major contributor to the overall drop in value, along with Canada, and the UK. Growth to Hong Kong offset some of this decline. The decline in value accelerated in the September quarter, falling by 16 per cent compared to the same quarter in the previous year. The largest decline for the quarter was in exports to Canada, followed by Hong Kong, Singapore, and the UK. In a positive sign, the value of exports to Australia’s biggest destination by value, the United States of America (US), grew by 8 per cent.
Exports declined to 26 of the top 30 markets by value for Australian wine, reflecting the long-term decline in global wine consumption as well as the global oversupply of wine. Early estimates indicate that, while global wine production in 2023 will be below average for the fifth year in a row[3] , it is still expected to exceed demand by around 10 per cent. There has been an average annual excess wine production of just under 3 billion litres since 2012, which equates to more than double Australia's average annual wine production of 1.25 billion litres. This makes trading wine exceptionally challenging in terms of volume and pricing. Exacerbating this has been the soaring cost of living across the globe in the past 18 months.
The health and wellness trend is arguably the most influential force impacting wine consumption over the longer term. This has seen alcohol consumption fall, including for wine. Some people are abstaining from drinking wine, others are drinking less but paying more, while some are seeking no and low alcohol wine options. This trend has seen wine consumption at premium wine segments (US$10 or more per bottle) grow, while the commercial end (less than US$10 per bottle) has been declining – indicating that consumers are drinking less but choosing to purchase higher price points, although at slightly lower growth rates than recent years. These trends disproportionally effect Australia, as 90 per cent of Australian export volumes are in the commercial price segments. IWSR also reports that consumers are cutting back on alcohol spending, as prices rise for food and other necessities. Moderation trends are no longer solely driven by health and wellness considerations, but also as a money saving strategy – with consumers choosing to drink less volume, rather than trade down in price points.
Unpackaged exports increase in volume share as packaged wine continues decline
In the 12 months ended September 2023, packaged exports of Australian wine declined by 13 per cent in value to $1.31 billion and 19 per cent in volume to 188 million litres. Average value increased by 7 per cent to $7.00 per litre FOB. The markets driving the decline were the US, Canada, and the UK. In the US and UK, most of this loss was in packaged exports valued below $5 per litre FOB, while in Canada the largest loss was in exports valued between $5 and $7.49 per litre FOB.
Exports of unpackaged wine (to be then packaged in the destination market) declined by 4 per cent in value to $474 million and increased by 5 per cent in volume to 416 million litres. Average value dropped by 9 per cent to $1.14 per litre FOB, the lowest level since 2018. The global oversupply of wine is depressing prices in the bulk wine market.
The growth in the volume of unpackaged exports is overwhelmingly driven by Canada, but also the US, Sweden, and the UK to a lesser extent.
The increase in the volume of unpackaged exports and the decline in packaged exports has resulted in the share of unpackaged exports growing by 6 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.
Figure 2: Volume of packaged and unpackaged wine exports over time
Swing towards white wine as packaged red exports decline
In the 12 months ended September 2023, the volume share of white wine exports increased from 44 per cent to 46 per cent, with the red wine share falling to 51 per cent. The largest swings away from red wine and towards white wine were in the US and Canada. On the other hand, there was growth in the red wine share in exports to the UK and Germany. Rosé maintained its overall volume share of 3 per cent.
Still red wine exports declined by 14 per cent in value to $1.14 billion and 8 per cent in volume to 306 million litres, the lowest volume of red exports since 2003 and approaching the level of white wine exports (see Figure 3). Value declined at a faster rate than volume as much of the loss was in packaged exports, while unpackaged exports of red wine were stable. The value decline in red wine exports was most significant to the US, Canada, the UK, Singapore, and Malaysia.
Still white wine exports declined by 4 per cent in value to $547 million, but increased by 1 per cent in volume to 273 million litres. The largest decline in both value and volume was in exports to the UK. The decline in volume to the UK was more than offset by increased white wine exports to the US and Canada. Packaged exports of white wine declined by 16 per cent in volume, while unpackaged white wine exports increased by 9 per cent in volume.
Figure 3: Volume of red and white exports over time
Sparkling and carbonated exports declined by 13 per cent in value to $67 million and 16 per cent in volume to 12 million litres. Driving the decline in sparkling wine exports were Canada (down 43 per cent in value) and semi-carbonated exports to both Canada and the US (down 94 and 25 per cent in value respectively). Carbonated wine exports grew by 25 per cent in value, driven by exports to Singapore, Japan, and New Zealand.
Mixed results in Asia as North America and Europe continue decline
In the 12 months ended September 2023, Australian wine was exported to 112 destinations, down from 118 in the previous year. Fifty of these destinations recorded growth in the value of exports during the year, while 62 declined. Those in growth were mainly very small markets (less than $5 million in exports).
The value of exports by major region were relatively evenly split between Europe (30 per cent share), North America (29 per cent) and Asia (33 per cent). Exports to Europe and North America declined by similar amounts during this period. Europe declined by 13 per cent in value to $537 million, driven mostly by the UK, but 11 of the top 13 other European destinations also declined in value. North America declined by 14 per cent to $516 million, with exports to the US and Canada declining by similar values. Exports to Asia declined by 5 per cent to $596 million. There were mixed results across the Asian region, including a decline in exports to Singapore and an increase in exports to Hong Kong, two key trading hubs in the region, reflecting volatile market conditions at present. Key emerging markets such as Thailand and Philippines grew in value during the period.
Figure 4: Export value by destination region, 12 months ended September 2023
The top five markets by value were:
- US (down 11 per cent to $366 million. 20 per cent share of total export value)
- UK (down 10 per cent to $354 million. 20 per cent share of total export value)
- Hong Kong (up 26 per cent to $205 million. 11 per cent share of total export value)
- Canada (down 22 per cent to $148 million. 8 per cent share of total export value), and
- Singapore (down 12 per cent to $117 million. 7 per cent share of total export value).
The top five markets by volume were:
- UK (down 3 per cent to 215 million litres. 36 per cent share of total export volume)
- US (down 4 per cent to 134 million litres. 22 per cent share of total export volume)
- Canada (up 20 per cent to 74 million litres. 12 per cent share of total export volume)
- New Zealand (down 3 per cent to 31 million litres. 5 per cent share of total export volume), and
- Germany (down 9 per cent to 28 million litres. 5 per cent share of total export volume).
For more detailed information, please read the full Export Report. You can also explore the data on the Export Dashboard.
[1] Unless otherwise stated all values are given in Australian dollars.
[2] All export wine values are the ‘Free on board' (FOB) value of the wine, where the point of valuation is where goods are placed on board the international carrier, at the border of the exporting country. The FOB value includes production and other costs up until placement on the international carrier but excludes international insurance and transport costs.
[3] OIV