Cheap wine sales slump hits Aussie exports in tight times

Even cheaper priced wine categories are feeling the leaner times, with exports which retail for less than $10 a bottle among the hardest hit.

Export sales in 2022-23 slipped in value to $1.87 billion, although the total volume of wine shipments dipped just 1pc as Canada emerged a big buyer of our bulk, unpackaged wine.

Hong Kong was the only significant Australian market to spend more on Australian imports - up 29pc to $220m.

Emerging markets such as Thailand, Philippines and Vietnam also grew, with Thailand also recording the highest growth in Australian exporter businesses in the wine trade.

The total number of Australian wine exporters grew, too, by 4pc to 1221, but was still well below its 2020 peak when China slapped import bans on Australian labels.

Despite wineries worldwide reporting an overall 3pc decline in global consumption, Australia's wine export market destinations also continued creeping up during the financial year, from 112 to 117.

Exporters were rewarded with 66 of those markets growing in value.

In total, Australia shipped 621 million litres of wine in the year to June 30, according to Wine Australia's 2022-23 export report.

An 18pc downturn in the value of US sales to $359m largely reflected declining interest in lower priced bottled product, notably in the $US4 to $US8 a bottle take home sales segment, where more than four in every five bottles of Australian wine is sold in America.

Sales of even cheaper lines in the $US2.50 to $US5 price range dropped 22pc.

But Australia has outperformed the total US off-trade wine market in higher price segments.

It grew 8pc in the $US15 and $US25/ bottle category at a time when that market was relatively flat.

US export sales in the higher price and quality bracket were primarily driven by Cabernet Sauvignon.

Exports to Britain, our biggest overseas market by volume and value, also continued sliding - down 14pc in value to $364m - after two years of elevated shipments due to pre-Brexit demand and COVID-19's market impact.

The latest export results partially reflected global trends reported by market research firm, IWSR, with all wine consumption globally declining 3pc in 2022.

However, IWSR noted premium price segments bucking the trend and still growing, albeit at slower rates than recent years as global recession crimped consumer spending.

"Consumers are cutting back on alcohol spending as prices rise for food and other necessities," said Wine Australia's market insights manager, Peter Bailey.

"They are choosing to drink less often rather than trade down to cheaper price segments."

IWSR found premium wine sales grew 2pc in value last year, although global economic and inflationary pressures had reduced that growth when compared with recent years.

Indeed, the only Australian export categories to enjoy higher global sales figures last financial year were wines in the $50 a litre to $200/l free on board (FOB) category, up as much as 11pc, and a modest 1pc value rise in the 15/l to $20/litre segment.

"Wine consumption in mature markets is in decline, driven by decreases in the commercial price segments" Mr Bailey said.

"This is impacting Australia's export performance, especially in the US.

"Australia is very exposed to the price segments in decline."

More than half of the slide in Australia's total export value had occurred in shipments with an average value between $2.50/l to $5/l FOB.

These were generally bottled exports sold in lower priced retail categories.

In comparison to the value story, Australia's relatively stable export volumes were attributed to bigger shipments of unpackaged wine which was bottled on arrival in offshore markets.

"Growth in unpackaged shipments comes as the shipping challenges of the past couple years have eased, allowing our exporters to catch up and ease pressure on their inventory."