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Small reduction in national inventory as global conditions set to remain challenging for wine

Market Bulletin | Issue 303
21 Nov 2023
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The smallest vintage in a generation, combined with steady sales, saw a small reduction in overall national stocks in 2022–23, according to Wine Australia’s Wine Production, Sales and Inventory Report 2023


Based on the results of the 2023 Production, Sales and Inventory survey (PSI survey), total Australian wine production in 2022–23 is estimated to be 964 million litres (107 million 9-litre case equivalents) – the lowest since 2006–07 and the first time since then that wine production in Australia has fallen below 1 billion litres. It was nearly 300 million litres (38 million cases) below the 10-year average[1] of 1.26 million litres (Figure 1).

Figure 1 - Wine production by colour over time

Source: Wine Australia Production, Sales and Inventory surveys and ABS

The near-record low production was not unexpected, after the 2023 vintage was the smallest in more than 20 years at 1.32 million tonnes.

Red wine fell by more than white wine in total volume and percentage terms, leading to white’s share of production increasing by one percentage point to 46 per cent, in line with its share of the crush, and its highest share since 2017–18.


The total volume of Australian wine sales in 2022–23 was 1.07 billion litres (118 million 9-litre case equivalents). This was a reduction of just 1.4 million litres (0.1 per cent) compared with 2021–22, with a 1 per cent increase in domestic sales offset by a similar-sized decrease in exports.

The 2022–23 financial year was the first time in 5 years that sales have remained effectively steady (with a decline of less than 1 per cent). Total sales of Australian wine peaked in 2017–18 at 1.35 billion litres (150 million cases) and have since declined by 284 million litres (21 per cent). Exports peaked at 852 million litres in 2017–18 and decreased by 27 per cent over the following 5 years to 2022–23, while domestic sales peaked a year earlier (2016–17) at 500 million litres, and have since declined by 11 per cent.

White wine sales accounted for 463 million litres (44 per cent of total sales volume), an increase of 10 million litres (2 per cent). White wine sales have been virtually flat for nearly 20 years, with an overall decline of just 3 per cent between 2005–06 and 2022–23. Red wine sales have decreased by 17 per cent over the same timeframe, with almost all the decrease occurring in the past 5 years (Figure 2).

Figure 2 - Total sales of Australian wine by colour over time

Source: Wine Australia Production Sales and Inventory surveys and ABS

Sales exceeded production by 100 million litres, making 2022–23 the first time that sales have been higher than production since 2019–20.

Inventory and supply-demand balance

As a result of sales exceeding production, the national wine inventory decreased by 82 million litres (4 per cent) to an estimated 2.2 billion litres on 30 June 2023[2]. Despite the decrease, stocks were 288 million litres (15 per cent) above the 10-year average of 1.9 billion litres.

The reduction was driven by red wine stocks, which were down by 10 per cent compared with the previous year.  White wine stock levels did not change significantly, and the other categories increased. Sparkling, fortified and ‘other’ wine products increased from 141 million litres to 205 million litres – an increase of 45 per cent. However, these accounted for only 9 per cent of the total inventory.  It is likely that at least some of the reduction in red wine inventory, which was greater than the difference between production and sales, is accounted for by changes in use – e.g. from red wine to white wine or to concentrate (which is included with ‘other’ products in the inventory figures).

The national stock-to-sales ratio (SSR) – a measure of how many years’ worth of sales is held in inventory and therefore an indication of supply-demand balance – was 2.57 for reds, still 45 per cent above the 10-year average despite decreasing by 7 per cent in 2022–23 due to the reduction in inventory (Figure 3). If the SSR is too high, this can reduce demand and the price for winegrapes.

The current level of red wine inventory is the equivalent of over two-and-a-half years’ worth of sales, which is very high in historical terms.  Despite the smallest vintage in a generation, it only decreased by 7 per cent, indicating how challenging it may be to bring supply and demand back into balance at the current level of sales.

The results of the survey indicate that white wines are in a better position than red wines. The SSR for white wine declined 2 per cent to 1.49, still 10 per cent above the 10-year average of 1.35 but much closer to a balanced level. It decreased by 2 per cent in 2022–23 due to the slight increase in sales.

Figure 3 - Stock-to-sales ratios for red and white wine over time

Source: Wine Australia Production Sales and Inventory surveys and ABS


Rebalancing supply and demand presents a significant long-term challenge, not only for Australia but all major wine-producing countries. World wine production has exceeded consumption every year for at least the past 10 years, despite production declining by 9 per cent over the past 10 years (Figure 4). The average annual global oversupply of wine since 2013 is the equivalent of more than double Australia’s normal production.

On the other side of the equation, wine consumption is declining around the world – albeit very slowly. Global wine consumption has declined by a total of 4 per cent over the past 10 years, and IWSR[3] forecasts that it will decline by a further 1.5 per cent between 2022 and 2027 – losing a total of 386 million litres over that timeframe, or approximately 30 per cent of Australia's total annual production.

A small positive in the outlook is that global production is expected to be the lowest on record in 2023, according to preliminary estimates by the OIV[4]. The OIV estimate of 24.4 billion litres is 7 per cent smaller than the already below-average 2022 vintage, but is still likely to exceed global consumption by at least 1 billion litres, based on the IWSR forecast of a further decline in global consumption of 1 per cent in 2023.

Figure 4 - World wine production and consumption over time

Source: OIV and IWSR


Declining global wine consumption is principally a result of three major trends: an overall health/moderation trend leading to general decreases in alcohol consumption, changing consumer tastes – mainly among younger demographics – leading to increased competition from other drink categories (particularly ready-to-drink (RTDs) and cocktails), and increased cost-of-living pressures and/or economic downturns reducing consumer spending in many countries. In addition, premiumisation (and/or an increase in price) is seeing wine drinkers ‘trading up’ – i.e. increasing the average value of the wine they drink, but reducing the volume to compensate. This trend has particularly negative consequences for Australian wine, which has traditionally been sold in the lower price segments in key markets including the United States of America (US) and the United Kingdom (UK) and has had a very small market share in higher price segments.

The overall decline in global consumption, in spite of population growth, means that increases in demand at a macro level are unlikely to occur in the next 5 years, so any growth in sales volume for Australia is likely to come as a result of taking market share from other wine-producing countries. 

Opportunities for export growth exist particularly in Southeast Asian markets where wine consumption is growing at the expense of traditional spirits and beer, and the on-premise and international tourism numbers continue to recover from the effects of the pandemic, and in the US, which is still considered the most attractive wine market in the world[5] with 86 million regular wine drinkers. Australian exports to the US have been generally declining for the past 10 years in both volume and value, but recently white wine exports have shown growth: increasing by 12 per cent in 2022–23 to 78 million litres, driven by Chardonnay, which grew by 16 per cent to 53 million litres.

In addition, opportunities may exist in mainland China, as and when the tariffs on Australian packaged wine into this market are lifted. China is the tenth-most attractive global wine market according to Wine Intelligence and was the seventh-largest wine importer in 2022, but its volume of imported wine has dropped from 745 million litres in 2017 to 334 million litres in 2022. The opportunity in future for Australia is likely to be much smaller than it was at its peak in 2017–18, when it reached 120 million litres of almost entirely red wine.

On the domestic market, IWSR forecasts that consumption of Australian wine will decline by 9 per cent over the next four years. If this forecast proves to be correct, Australian wine sales on the domestic market will reduce by around 40 million litres by 2027. This reduction is expected to be concentrated in commercial wines (retail price $10 per bottle or below), with premium wine expected to increase very slightly in volume (up 9000 litres) over that timeframe (Figure 5).

Figure 5 - Commercial vs premium wine consumption in Australia over time (including forecasts)

Source: IWSR

In summary, given the high national inventory levels and downward global trend in wine consumption, conditions remain very tough for growers and winemakers ahead of the 2024 vintage, particularly with respect to red grapes.

While supply and demand for white varieties appear to be more balanced, it should be noted that sales of white wine in 2022–23 were approximately 460 million litres, which is the equivalent of approximately 627,000 tonnes. This is considerably lower than the 10-year average crush of 839,000 tonnes.

[1] 2012–13 to 2021–22

[2] The reduction in inventory is less than the difference between production and sales. This is likely to be the result of limitations in reporting accuracy and differences in the respondent cohort between 2022 and 2023, as the difference in inventory is measured based on the reported inventory in the 2022 PSI survey.

[3] Global alcohol market research and data analysis company

[2] International Organisation of Vine and Wine – first estimates November 2023

[3] Wine Intelligence Global Wine Compass 2023

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This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.