Crushed: SA's $300m wine export shortfall

Crushed: SA’s $300m wine export shortfall

South Australian wine exports have fallen $300 million since the 2020-21 financial year – but in a positive sign still managed to reach a value of $1.431 billion in the 12 months to June 30.

While the 21 per cent fall in value is a huge blow to one of the state’s largest export industries, the 21-22 financial year figure is up $33 million on the 12 months to March this year and $55 million up on the 2021 calendar year.

Eight of the state’s top 10 export destinations by value also increased, with only Canada and Hong Kong recording falls.

By volume, South Australian wine exports fell by nine per cent to 371 million litres, mainly driven by a 30 million liter fall in exports to China compared with the previous year.

Red wine accounted for more than 80 per cent of SA wine exports by value and more than 70 per cent by volume.

South Australia typically produces about half of Australia’s annual production and accounts for almost 70 per cent of Australian wine exports by value.

SA wine export destinations by value in 21-22 v 20-21

Image: Wine Australia

Nationally, Australian wine exports declined by 10 per cent in volume to 625 million liters and 19 per cent in value to $2.08 billion in the year ended June 30 2022, according to Wine Australia’s latest export report released today.

It said the falls were “not unexpected” and were largely the result of the continued impact of the significant reduction in exports to mainland China, driven by tariffs on bottled Australian wine of more than 200 per cent imposed in November 2020.

The adjustment to the new world of wine exports without China as a customer is expected to have a significant influence on the moving annual total data of Australian wine exports until late 2022.

Australian wine exports reached a record $2.99 ​​billion in September 2020, at the height of the China wine boom when exports to the Asian giant alone topped $1.2 billion.

However, like SA, Australian wine exports increased in the first half of 2022 by about $50 million from $2.03 billion in the 12 months to the end of December, which is a positive sign at a difficult time for the industry.

The United States has also overtaken the UK to reclaim the mantle as the largest overseas buyer of Australian wine, a position it previously held for several years before the GFC.

Wine Australia market insights manager Peter Bailey said although the total data showed declines, there were some encouraging signs in key and emerging markets.

“When mainland China is excluded from the data, exports increased by 5 per cent in value to $2.06 billion, an increase of $105 million – the highest value since 2009–2010. This is despite volume declining by 3 per cent to 619 million litres,” he said.

“The key contributors to the value growth included Singapore, the United States (US), Malaysia, Thailand, India and New Zealand.

“The above $10 or more FOB per liter price segment helped drive overall value growth to the US, which has returned to Australia’s top destination by value, and there was also a significant increase in the number of companies exporting to the US.

“This reflects the wine sales trends in many markets around the globe, which have seen a downward trend in commercial/value sales (less than US$10 per bottle retail) and sales growth in premium and above segments (US$10 or more per bottle retail). ).”

Image: Wine Australia

Bulk wine exports decreased by 13 per cent in value to $500 million and decreased 7 per cent in volume to 384 million litres.

The average value of this unpackaged wine decreased by 6 per cent to $1.30 per liter.

A decline in the volume of unpackaged exports to the UK and, to a lesser extent, Germany and the Netherlands, more than offset increases to the US, Canada and New Zealand.

In 2021–22, still red wine exports decreased by 26 per cent in value to $1.39 billion, while still white wine exports increased by 7 per cent to $579 million.

Wine Australia said the decline in red wine exports was driven by mainland China and to a lesser extent, the UK. For white wine, destinations in growth included the US, UK and Canada.

The wine industry in Australia is facing challenges on a number of fronts at the moment including rising input costs for items such as gas and fertiliser; major shipping delays that have caused exporting problems, and; an oversupply of grapes that have caused prices to fail and contracts to be cancelled.

The nation’s wine inventory levels – the amount of unsold wine in storage – is also above 2 billion litres, its highest level since 2005-06.

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