Crushed: $300 million SA wine export shortfall - InDaily

South Australia’s wine exports have fallen by $300 million since the 2020-21 financial year – but still managed to hit a value of $1.431 billion in the 12 months to June 30.

Image: Tom Aldahn/InDaily

While the 21 percent drop in value was a major blow to one of the state’s largest export industries, the 21-22 financial year figure was up $33 million in the 12 months to March this year and $55 million in calendar year 2021.

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

By volume, South Australia’s wine exports fell nine percent to 371 million liters, mainly driven by a decline in exports to China of 30 million liters compared to the previous year.

Red wine accounts for more than 80 percent of SA’s wine exports by value and more than 70 percent by volume.

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

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

Image: Australian wine

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

It said the decline was “unexpected” and largely the result of the continued impact of a significant reduction in exports to mainland China, driven by tariffs on more than 200 per cent packaged Australian wines imposed in November 2020.

Adjusting to a new world of wine exports without China as a customer is expected to have a significant effect on the movement of the total annual data for Australian wine exports through the end of 2022.

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

However, like SA, Australian wine exports increased in the first half of 2022 by around $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 Britain to reclaim the mantle as the biggest 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 a decline, there were some encouraging signs in key markets and emerging markets.

“When mainland China was excluded from the data, the value of exports increased by 5 percent to $2.06 billion, an increase of $105 million – the highest value since 2009–2010. Even though the volume decreased by 3 percent to 619 million liters,” he said.

“The main contributors to this growth in value include Singapore, the United States (US), Malaysia, Thailand, India and New Zealand.

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

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

Image: Australian wine

Bulk wine exports fell 13 percent in value to $500 million and 7 percent in volume to 384 million liters.

The average value of these unpacked wines fell 6 percent to $1.30 per liter.

The decline in unpackaged export volumes to the UK and, to a lesser extent, Germany and the Netherlands, more than offset increases to the US, Canada and New Zealand.

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In 2021–22, red wine exports still fell 26 percent in value to $1.39 billion, while white wine exports still increased 7 percent 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 include the US, UK and Canada.

The Australian wine industry is facing challenges in a number of areas today including rising input costs for goods such as gas and fertiliser; major shipping delays causing export problems, and; an oversupply of wine which causes prices to drop and contracts to be cancelled.

The level of the national wine stockpile – the amount of unsold wine in cellars – is also above 2 billion liters, the highest level since 2005-06.

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