Australia is one of the world’s leading wine producers and exporters. Critics agree that it offers a wide range of top quality wine, as well as large volumes of attractively-priced branded fare. It is, however, currently confronting a serious crisis.
- Latest figures from Wine Australia reveal that, over the year ending September 2023, exports declined by 4% in volume to 604m litres (67m 9-litres case equivalents) and, even more concerning, by 11% in value to AU$1.79bn ($1.14bn).
- By comparison, over the year ending October 2020, exports were worth AU$3.1bn ($1.96bn).
The average price also fell by 7%to AU$2.96 ($1.88) per litre.
More bulk volume at lower value
Drilling down into these figures, 416m litres were exported in bulk – a rise of 5%. The value of this wine dropped, however, by 4% - to AU$474m $300m). Bulk wine now represents 69% of Australian wine exports by volume – 6% more than in 2022 – at an average price of to AU$1.14/l ($0.72/l) - 9% less than 12 months earlier.
Australian producers are currently crossing their fingers tightly in the hope of a reopening of the Chinese market early next year but, while this would be helpful, it will not solve fundamental problems that have become particularly clear over the last quarter. Prior to that, exports were described by Wine Australia as ‘relatively stable’ for a period of 18 months. Over the three months ending in September, however, they fell by 10% when compared to 2022.
A shift from bottle to bulk
Apart from the fall in volumes, it was the shift to bulk from bottle – especially in Canada, the US, Sweden, and the UK - that has caused most of Australia’s financial woes. The average price of bottled wine actually rose by 7% to AU$7.00/l ($4.43/l), but this could not compensate for sales volumes plummeting by 19%. The 188m litres of bottled wine were worth just AU$131bn ($830m), a fall of 13% from 2022.
Analysis of where Australia is selling its wines and at what price, reveals one ray of hope – in an 8% rise in the value of exports to the US over the last quarter. Most of the other statistics, however, are depressing. The number of export markets has fallen – from 118 to 112 – with over half – 62 – of these buying less wine. The UK and Canada – both important markets – saw particularly big decreases, along with Hong Kong and Singapore.
Changing consumer expectations
Industry analysts in Australia and elsewhere will be examining these figures carefully in the hope of finding a solution. It might be more worthwhile for them to spend some money and effort studying the way Australian wine is perceived in export markets, though this might yield results that many in the industry would find unpalatable. At the peak of its success, Australia offered a relatively simple message, centred around ‘sunshine in a bottle’. Consumers in the UK in particular relished the consistency and style of rich reds and fruity whites, often with generous amounts of oak, Since then, there has been a far greater diversity of wines on offer, of which many producers are justifiably proud. Some may, however, argue that this has created more confusion than benefit among consumers – especially given the disproportionate attention that has been attracted by brands like Yellow Tail and 19 Crimes which, while still highly popular, have done nothing to build Australia’s image as a quality brand.