One thing that the Aussie industry wisely did immediately as China bludgeoned them with unjustifiably high import duties was to start exploring newer markets. “A positive in the Report by Wine Australia is that their diversification into these emerging markets is starting to bear fruit, which is beneficial for longer-term stability and growth. Southeast Asia grew strongly at both the commercial and premium ends of the price spectrum, and to key emerging markets including Thailand, Malaysia, Indonesia, Vietnam and Philippines,” according to Wine Australia Manager Market Insights, Peter Bailey.

The emerging markets do not include India in this Report. Southeast Asia is an emerging market, with exports to the region up 9% at A$301m.Another positive is the number of export markets that increased to 118 destinations, compared to 112 in the same period in 2022.

The wine export industry has had a difficult few years because of the heavy taxes imposed on the imports by China and with declines in value and volume and unfortunately, the trend does not seem to be ending in 2023.

Here are the numbers from a few of the important, established Aussie markets:

North America was down five per cent to A$557m. However, due to economic challenges and conflict in the region Europe experienced the sharpest decline, down 17 % to A$568m. Peter Bailey also noted a continuing decline in exports to the UK which “is still experiencing the decline we’ve previously reported- the result of higher shipments over the past two years due to pre-Brexit demand and COVID-19 induced changes in consumer preferences,” he says. Exports to Northeast Asia also declined 5% to A$318m.

In terms of value exports in segments below A$10 per liter FOB, all exports experienced a decline in value, with the biggest loss in exports valued between A$2.50 to A$4.99 per liter segment. This segment is typically glass bottles exported to the UK, US, and New Zealand, and its decline affects the overall performance of the wine export industry.

Fortunately, exports above $10 per liter FOB remained stable in both value and volume, remaining at A$621 million in value and 24 million liters in volume. Bailey attributes this change to a shift in customers’ purchasing habits. “In traditional markets for Australian wine, the decline in the demand for wine is being felt the most in lower price segments while premium wine is still finding growth, as consumers purchase wine less frequently but are choosing to spend more on each wine product they purchase,” he explained, a sentiment often expressed by the wine industry in India as well.

Wine exports also declined overall in volume, although less sharply than in value. Export volume was down only 1 % to 620 million liters. However, this is still 16 % below the 10-year average volume of 736 million liters.

“In comparison to value, total shipment volume was relatively stable – with the large decline to the UK being outweighed by volume growth to the United States (US) and Canada, particularly in unpackaged wine, as global shipping conditions continue to improve,” Bailey said.

On a varietal basis, Chardonnay was the most popular export and increased by 8% to 162 million liters whereas Shiraz was the second most popular export but declined by 7%. The third most popular variety, Cabernet Sauvignon grew by 1% while the 4th place Merlot declined by 7%. Pinot Gris/Grigio, the fifth most popular variety, decreased by 3%.

The top five export destinations by value, as reported by The Shout were:

• US (down eight per cent to A$381m, 20 % value share of total export value)
• UK (down 20 % to A$359m, 19 % share of total export value)
• Hong Kong (down 1% to A$182m, 10 % share of total export value)
• Canada (up 2% to A$174m, 9% share of total export value), and
• Singapore (down 20 % to A$134m, 7% share of total export value).

The top five export destinations by volume were UK, US, Canada, New Zealand and Germany).

In the meanwhile, Australians are hoping that after the barley import settlement, Australia might lift the embargo by reducing import duties resulting in the exports that stood at A$1.9 billion but saw a crash of 99% since its peak. But the general word of caution is not to depend on China ever again, by putting all eggs in one basket.

Australians are also hopeful that the Indo- Australian FTA that came into effect on 30th November, 2022 will also result in opening of a new frontier of premier Australian wines into India, though the Indian market has not seen any significant changes in the consumers’ preference so far.

Subhash Arora